Life insurance and international transmission: the territoriality of Article 990 I

Article 990 I of the French Tax Code establishes a standalone levy on the capital paid by insurance undertakings upon the death of the insured, in respect of premiums paid before the insured turned 70. After an allowance of 152,500 euros per beneficiary, the levy applies at a rate of 20 percent up to 700,000 euros of taxable capital, then 31.25 percent above that threshold. This levy is distinct from inheritance duties and follows its own territoriality rules.

Article 990 I, I sets out two alternative connecting criteria. The levy is due, first, where the insured is a French tax resident, within the meaning of Article 4 B of the French Tax Code, on the date of death. It is also due where the beneficiary is a French tax resident, within the meaning of the same Article 4 B, on the date of death and has been for at least six of the ten years preceding the death. It is sufficient for one of these two criteria to be met for the levy to apply.

The criterion relating to the beneficiary involves a twofold condition assessed on the date of the insured's death: the beneficiary must be a French tax resident within the meaning of Article 4 B of the French Tax Code, and must have been for at least six of the last ten years preceding the death. A beneficiary who recently settled in France, present for less than six years, is therefore not liable on this basis, unless the insured was a French resident on the date of death, in which case the first criterion suffices.

No. The territoriality of Article 990 I rests exclusively on the residence of the insured and of the beneficiary on the date of death, assessed under Article 4 B of the French Tax Code. The place where the policy was taken out, the nationality of the insurer, or the policyholder's domicile at the date of conclusion, are irrelevant. A Luxembourg policy taken out by an insured who remained a French resident thus remains fully within the scope of the French levy.

The dividing line is the insured's age when the premiums were paid. Capital arising from premiums paid before age 70 falls under the Article 990 I levy, with its allowance of 152,500 euros per beneficiary. Premiums paid after age 70 fall under Article 757 B of the French Tax Code: they are subject to inheritance duties, according to the family relationship, on the fraction exceeding a global allowance of 30,500 euros, while income and interest remain exempt. A single policy may therefore fall under both regimes depending on the dates of payment.

Not systematically. The Article 990 I levy has a particular nature, distinct from inheritance duties, which raises the question of whether it falls within the scope of inheritance tax treaties. Depending on the wording of the applicable treaty and the characterisation adopted, a risk of double taxation may remain with the beneficiary's State of residence. A case-by-case treaty analysis is essential in order to identify any available relief mechanisms.

The Luxembourg policy provides recognised asset protection, notably through its asset segregation regime, but it does not alter the French connecting factor. As long as the insured remains a French resident on the date of death, Article 990 I applies regardless of where the policy is located. The value of such a policy in an international context lies in legal certainty and mobility, not in an exemption from the levy.

Securing the transmission requires a precise mapping of the tax residences of the insured and of each beneficiary, an allocation of the premiums according to whether they were paid before or after age 70, and a rigorous drafting of the beneficiary clause. It also requires reviewing the applicable tax treaty and the reporting obligations incumbent on the insurance undertaking. The firm conducts this analysis upstream, in order to anticipate liability to the Article 990 I levy and to avoid double taxation.