Taxation of French life insurance and the third Swiss pillar

Taxation of French life insurance and the third Swiss pillar


Life insurance and the third pillar are forms of savings to advantageous taxation. However, their destinations and duration are different: French life insurance is mainly used to protect its relatives or to carry out a life project, while the third Swiss pillar is essentially intended to complete the retiree's revenues.
Operation of contracts

Life insurance is a contract where the individual places savings by investing in funds in euros or other products (units in real estate investments, in particular). He pays the premium into one or more times, and the money placed generates interest in accordance with the terms of the contract and the market situation where the investments are made. The contract can last 8 years or more, and the withdrawal of capital makes it possible to finance important projects (studies, real estate purchase, renovation works ...) or to promote a beneficiary. Life insurance also represents a means of transmitting a capital. Life insurance is open to anyone wishing to spare.

The third Swiss pillar is a voluntary savings in order to benefit from a comfortable retirement standard of living, complementing revenues from mandatory contributions. The third linked pillar 3a is powered regularly and then removed to the retirement age. The third free pillar 3B is fed according to the possibilities of the subscriber and can be removed before retirement. This second type of 3rd pillar can therefore be used to finance real estate acquisition or other projects, it represents a more flexible form of savings than the 3rd linked pillar. The third pillar is reserved for people working or residing in Switzerland.
The tax benefits of life insurance

Life Insurance The perceived gains (capitalized interest) of life insurance is taxable, and this taxation is only in case of redemption. In addition, the amount saved is not subject to succession duties, hence the use of life insurance to transmit capital. However, the subscriber must fulfill social levies each year.

The amount of the tax due depends both on the duration of the contract (4, 8 years or older) and the amount of taxable products. In general, the longer life insurance lasts, the less the subscriber pays tax. For example, a lump sum of € 4,600 (single person) or 9,200 € (married couple or pacsé) is applied to contracts over 8 years. When paying taxes, the subscriber has the choice between a liberating package (7.5% or 12.8% of the taxable amount) and a progressive calculation.

In the event of a redemption following a redundancy of the subscriber, a cessation of activity (judicial liquidation) or invalidity of the subscriber or the spouse, the capital withdrawn receives a total exemption of tax.
The tax benefits of the third pillar

SwitzerlandFor The third pillar linked 3a, the capital does not fit into taxable fortune. For the third linked pillar 3a, the subscriber even benefits from a deduction from CHF 6826 (employee) or CHF 34128 (independent) each year on taxable income. In the event of a redemption, the capital is subject to reduced taxation, which remains largely lower than the tax savings carried out during the contract.

Regarding the third pillar 3b, there are also deductions, but they are lower than those relating to the 3rd pillar 3a, and remain reserved for the cantons of Geneva and Friborg. The accumulated capital returns to taxable fortune, but no tax is due at the time of the withdrawal of this capital. Note that to take advantage of tax deductions, a resident or near-resident status must be justified if you are a frontier worker. Thus, the flexibility of the 3rd free pillar implies less advantageous tax than that applicable to the 3rd linked pillar.