— Finance Bill for 2027
Article 6 of the draft: three conditions for the tax benefits of life insurance
Draft bill, not enacted. The Finance Bill for 2027 (No. 3210), in the version tabled in the National Assembly on 1 October 2026, contains an Article 6 titled "Protecting the life insurance model". What follows describes that tabled text. None of these rules is in force, and the wording may be amended in the course of the parliamentary process.
The bill adds a paragraph 3 to Article 122 of the French Tax Code (CGI), setting three cumulative conditions. They do not govern the whole life insurance regime: they condition two income tax benefits and serve as the test for a separate inheritance tax sanction, described below.
- Premiums paid in cash. Premiums paid from 1 October 2026 are paid in cash, in accordance with the first paragraph of Article L. 113-3 of the Insurance Code. In the firm's view, a premium discharged by delivering securities would no longer meet this condition; a premium paid in cash and then invested in securities calls for a different analysis.
- Equivalent reference assets. Assets expressed in units of account have characteristics similar to those of the assets on the list provided for in the second paragraph of Article L. 131-1 of the Insurance Code.
- No asset linked to the policyholder, the insured person, the beneficiary or their circle behind the unit-linked commitments. Where the policy contains commitments similar to those of the new Article L. 131-1-3 of the Insurance Code, they may not be backed by any asset issued, guaranteed or owed by the persons that article lists.
The new Article L. 131-1-3 of the Insurance Code. It targets units of account that support that policy alone, or a number of policies that cannot be increased without the policyholders' consent: this describes a dedicated fund. They may not include any asset issued, guaranteed or owed by the policyholder, the member, the insured person or a beneficiary; by their spouse or partner, ascendants, descendants, brothers and sisters; by a legal entity they control; or by an interposed entity whose assets consist, beyond a threshold set by decree, of such assets. Assets whose value or return depends mainly on such assets are also excluded. If the prohibition ceases to be met solely because of an event beyond the control of the insurer and the policyholder, the insurer remedies the situation within a period set by decree; the policyholder must provide the necessary information. The bill repeats the same rule for the Mutuality Code (Article L. 223-2-1).
The two income tax benefits. The conditions in paragraph 3 of Article 122 would apply first to the allowance of EUR 4,600 or EUR 9,200 that the second subparagraph of paragraph 2 of the same article extends to policies taken out with insurers established outside France, in a European Union Member State or in another State party to the European Economic Area Agreement that has concluded an administrative assistance convention with France. They would apply next to the 7.5% rate of Article 125-0 A, II, 2, b, for the policies referred to in point 6 of Article 120, that is, policies taken out with insurers established outside France.
On death, a stand-alone sanction. The reinstated II bis of Article 757 B covers any insurance policy, French or foreign: if it does not meet the conditions of paragraph 3 of Article 122 on the date of death, the sums, annuities or values owed by the insurer give rise to inheritance duties according to the degree of kinship between the beneficiary and the insured. In the tabled text, those sums thus fall within Article 757 B and therefore outside Article 990 I, which is not amended and applies only to sums outside the scope of Article 757 B. In the firm's reading, they would enter, for their full amount, the base of ordinary inheritance duties, not only the portion of premiums paid after age 70, subject to exemptions (notably for a spouse or partner), allowances and rates specific to the beneficiary; the EUR 30,500 allowance of II of Article 757 B, which covers only the sums in I, would not apply.
Timetable in the bill. For income tax, the conditions would apply to policies taken out from 1 October 2026 and, for earlier policies, to the income arising from premiums paid from 1 October 2026. The Insurance Code and Mutuality Code rules would apply to policies taken out from 1 October 2026 and, for earlier policies, from 1 July 2027. The inheritance sanction would apply to deaths from 1 July 2027.
For a Luxembourg policy. The explanatory memorandum states that foreign policies will have to show similar characteristics to benefit from the life insurance tax regime. The text does not name Luxembourg, but it affects the practice of dedicated internal funds: premiums paid in securities, or securities of companies owned by the policyholder or their family held in the fund. Pending the vote, the firm recommends neither paying a premium in securities nor placing such securities in a dedicated fund without a prior review of the policy.
