Comparison of the taxation of capitalisation policies in Belgium, France, Luxembourg, Monaco and Portugal

Premiums paid before 27/09/2017:
Capital gains tax may be deducted from the policyholder's income + social security contributions 17.2%
OR option for flat-rate withholding tax (35%/15%/7.5% depending on the length of the holding period) + social security contributions 17.2%.

Premiums paid as from 27/09/2017:
At the time of surrender: compulsory lump-sum withholding tax not in full discharge (12.8%/7.5% depending on the length of the time held) + social security contributions 17.2%
Year following surrender: withholding tax imposed on single lump-sum payments (12.8%/7.5% depending on the length of time held and the amount of premiums paid)
OR option for capital gains tax on the subscriber's income.

Deduction of a tax credit equal to the mandatory lump-sum withholding tax paid in the year of surrender.

No taxation as long as a minimum period of 6 months is respected between the subscription date and the surrender date.

Residents in Monaco deemed to be tax resident in France:
Taxation is the same as the one applying to French tax residents.

Subscibers who are tax resident in Monaco:
No taxation on capital gains
No social security contributions.

Capital gain taxable at a fixed rate of 28% or at the subscriber's income tax according to the following rules:

- 100% of the taxable capital gain for the first five years;

- 80% of the taxable capital gain between 5 and 8 years;

- 40% of the taxable capital gain after 8 years.

Wealth Tax on Real Estate (WTRE):
Surrender value at 1 January taken into account when calculating the tax base for WTRE, up to the value represented by the units of account invested in real estate assets and rights located in and/or outside France.

No wealth tax in Monaco
Possible application of the French wealth tax on property:
Tax residents in Monaco who transferred their domicile to Monaco as from 01/01/1989:
Surrender value at 1 January taken into account in the taxable base for wealth tax on real estate up to the value represented by the units of account invested in real estate assets and rights located in and/or outside France.

Tax residents in Monaco, including French nationals who transferred their domicile to Monaco before 01/01/1989:
Surrender value at 1 January taken into account in the taxable base for wealth tax on real estate up to the value represented by the units of account invested in real estate assets and rights located only in France.

Surrender value taken into account in the assets of the estate and subject to inheritance tax depending on the amount transferred and the family relationship between the policyholder and his heirs.

Surrender value taken into account in the assets of the estate and subject to inheritance tax depending on the amount transferred and the family relationship between the policyholder and his heirs.

Residents in Monaco, including French nationals who have been habitually resident in Monaco for more than five years at the time of their death:
No inheritance tax in Monaco if the assets are deposited in a custodian bank not located in Monaco
Failing this, the surrender value will be taken into account in the assets of the estate and subject to inheritance tax depending on the family relationship between the policyholder and his heirs.

Residents in Monaco who are French nationals habitually resident in Monaco for less than five years at the time of their death:
Subject to French inheritance tax: the surrender value taken into account in the assets of the estate and subject to inheritance tax depending on the amount bequeathed and the family relationship between the policyholder and his heirs.

 No inheritance tax in direct line of succession.

Legal entities subject to income tax:
Realised capital gains are subject to withholding tax (currently 30%).


Legal entities subject to corporation tax:
Realised capital gains are subject to withholding tax, but may be recovered subject to certain conditions.

In both cases, capital losses are deductible.

Legal entities subject to income tax:

Realised capital gains are subject to tax in the hands of the partners/shareholders depending on their the amount of their shareholding and in accordance with the same rules as if the shares were held by an individual.

Deduction of a tax credit equal to the mandatory lump-sum withholding tax paid in the year of surrender.

Legal entities subject to corporation tax:
Annual taxation calculated on a lump sum basis set at 105% of the Monthly Rate for Long-Term Government Bonds (the ‘MRL’) in force on the date of subscription of the policy
On surrender/at term: regularisation of tax by taxing the difference between the surrender value and the lump-sum revalued value at the rate of 105% of the MRL.

Legal entities subject to a system of tax transparency:
Realised capital gains are subject to tax in the hands of the partners/shareholders depending on the amount of their shareholding and in accordance with the same rules as if the shares were held by an individual.

No taxation provided a minimum period of six months between the subscription date and the surrender date is respected.

Legal entities in the form of limited companies:
Capital gains taxable as a legal entity for the purposes of the local authority income tax and the municipal business tax (26.01% for Luxembourg City).

Legal entities subject to Income Tax:
Inclusion of capital gains as part of the income which is taxable at Income Tax rate (28% for 2020).

Legal entities not subject to Income Tax:
No taxation.

Special cases of non-commercial partnerships, limited partnerships, commercial partnerships with partners resident in Monaco who are deemed to be tax resident in France:
Capital gains are taxable in the hands of each partner, up to the amount of their share (taxation similar to that applicable to individuals).

See the same taxation applicable to surrender by individuals.