Do you reside in France? Restructure your wealth differently with Luxembourg life insurance

Taking out a Luxembourg life insurance policy as a French resident naturally raises the question of the applicable tax treatment. The answer is clear: as a French tax resident, your Luxembourg policy remains subject to the French tax rules applicable to life insurance. Luxembourg does not apply its own taxation to the policy, thereby leaving the taxing rights to the policyholder’s country of residence. This tax-neutral solution allows you to benefit from all the advantages of Luxembourg life insurance, without calling into question your tax environment of residence. You benefit from an international wealth structuring solution within a clear and transparent framework.

As with any bank or investment account held abroad, we remind you that the existence of a Luxembourg life insurance policy must be declared in your country of residence.

Unlike certain investments, Luxembourg life insurance is also a capitalising solution: as long as no surrender is made, no maturity is reached and no death benefit is paid out, no taxation is triggered. In the event of a partial or full surrender, only the income generated by the capital is subject to taxation.

This alignment with your residence in France is not the only advantage of Luxembourg life insurance. It also stands out for a feature that is particularly sought after in wealth structuring strategies: asset protection. As your wealth grows, you do not focus solely on return potential. You also place increasing importance on the strength of the framework surrounding your investments.

Luxembourg has built a strong reputation in this area. Its protection framework, often referred to as the “triangle of security”, is unique to Luxembourg and is based on a simple structure: the insurance company, an independent custodian bank holding the assets linked to the policy, and the Commissariat aux Assurances (CAA), which acts as the regulator and supervises the insurance sector in Luxembourg. This structure explains the high level of protection associated with Luxembourg life insurance.

For you, this means that:

• your assets benefit from enhanced protection;
• the assets linked to your policy are clearly segregated from other holdings;
• the framework offers a reinforced level of security through dedicated oversight.

Your wealth does not always stop at your country of residence. You may live in France while having beneficiaries abroad, assets spread across several countries, a mobile career or projects that extend beyond a single market. In such situations, you remain free to change your tax residence at any time without losing the policy’s prior history.

Luxembourg life insurance has been designed to support this type of journey. Its cross-border portability allows you, if you move to another country, to retain your policy as a cornerstone rather than abandoning it to start over elsewhere. The policy can then be adjusted to reflect your new country of residence, its legal and tax environment, and, where applicable, investment options better suited to your new situation. In this way, you build on an existing foundation rather than starting from scratch.

This cross-border portability has three very tangible benefits:

• you preserve the consistency of your wealth strategy;
• you retain greater flexibility as your circumstances evolve;
• you avoid being constrained by a strictly domestic approach that could limit your choices.

Luxembourg life insurance also stands out for its highly flexible investment architecture, notably through the Dedicated Internal Fund (DIF). This structure allows a fund to be established within the policy, designed specifically for a single client or a limited circle of beneficiaries, in line with their wealth objectives, investment horizon and risk profile.

In practical terms, the DIF offers a level of personalisation that is rarely accessible in life insurance policies subscribed in France. It enables the definition of a fully tailored investment strategy, with broad flexibility in the selection of asset classes, financial instruments and asset managers, while benefiting from the protective and regulated framework of Luxembourg life insurance.

This approach offers several key advantages:

• an asset allocation tailored to more complex or more substantial wealth;
• greater alignment between the investment strategy and the client’s overall situation;
• the ability to incorporate less standardised assets or solutions within a structured and supervised framework.

The Dedicated Internal Fund thus fully fits within a long-term wealth structuring approach. It allows you to move beyond a “catalogue” approach and build an investment solution that is genuinely aligned with the policyholder’s ambitions, constraints and evolving wealth profile.

Within the framework of a DIF, please note that the triangle of security applies only to the portion of assets invested in financial instruments. Cash holdings are not protected.

Like any investment solution, Luxembourg life insurance requires a clear assessment of the risks and limitations associated with it.

The first point to bear in mind is the following: depending on the selected investment options, capital is not guaranteed. The value of the policy may fluctuate, both upwards and downwards, in line with market developments. The potential for returns therefore comes with a level of risk that must be carefully considered.

Another important point: the breadth of the Luxembourg offering, which is a key advantage, also requires a rigorous selection of investment options.

Finally, the benefits of Luxembourg life insurance should never be considered in isolation. Your overall wealth situation, tax residence, objectives, risk tolerance and wealth transfer plans must remain the primary starting points.

Investments made within a life insurance policy involve risks (market, credit and liquidity risks). Please note that the value of the policy may fluctuate and that both capital and returns are not guaranteed. The suitability of these products will be assessed based on your knowledge and experience, your personal financial situation and your investment objectives.

Life insurance is a preferred instrument for anticipating the transfer of your wealth with flexibility and efficiency. It allows you to freely designate beneficiaries while remaining within the legal framework.

In France, from a tax perspective, life insurance may offer more favourable transfer conditions than those applicable to standard inheritances. During their lifetime, the policyholder retains full control over the assets, with the ability to adapt the beneficiary clause as their family situation evolves. It thus facilitates a progressive, structured and secure transfer of wealth.

In this environment, being well supported becomes essential. Not because it eliminates the risks associated with investing, but because it helps you better understand them and make informed decisions.

At ING Private Banking, you benefit from its status as an insurance agent. You can also rely on your Private Banker and ING’s wealth planning experts to define the right parameters for your policy and ensure it holds the appropriate place within your overall wealth structure. You also gain access to a wide range of financial instruments tailored to your risk profile and return objectives. Finally, you can rely on the strength of an international financial institution, anchored in the heart of Europe and supported by in-depth expertise of the French market.