François, reader of Capitaladdresses the following question: “My son will inherit my death insurance on my death on the ceiling of 152,500 euros, paid before my 70s. Could you tell me what are the taxes and taxes he will have to pay on this capital? I assume that the 152,500 euros ceiling transferable without inheritance rights unfortunately includes taxes, and that my son will not receive the sum of 152,500 euros, but much less. ”
Hello François, and thank you for your question, which allows us to recall the tax mechanism applicable to beneficiaries of life insurance in the event of the death of the subscriber.
The reduction of 152,500 euros is clear from any taxation
For life insurance contracts fed before the 70th anniversary of the subscriber, article 990 I of the general tax code provides for a reduction of 152,500 euros per beneficiary. In other words, as you understood, this means that the beneficiary is exempt from taxation until this amount. This reduction covers both the payments and the gains they have produced. Concretely, in your case, your son will receive 152,500 euros completely exempt from inheritance and tax rights, without any additional tax.
On the other hand, beyond this threshold, a taxation applies: 20 % between 152,500 euros and 852,500 euros, then 31.25 %. But as long as the capital transmitted does not exceed 152,500 euros, there is no deduction, neither withdrawal, nor tax. Your son will therefore receive exactly the sum of 152,500 euros, if the amount appearing on the contract on the day of your death. If this amount reaches for example 200,000 euros, it will receive 152,500 euros net and exempt, then will be taxed at 20% on the fraction exceeding this limit, or 47,500 euros. In this case, he will therefore have to pay 9,500 euros in tax (20% x 47,500).
In summary, François, in the situation you describe, your son will receive all of the 152,500 euros without any puncture. The threshold of the allowance is understood to be “net”, which means that as long as the capital transmitted does not exceed it, the beneficiary fully affects the sum.
