Besides Christmas, the end of the year can also be the occasion for a… tax gift. And what’s more, you can treat it to yourself! Indeed, if you have life insurance that is more than eight years old, you benefit, each year, from a reduction on your earnings of 4,600 euros (and 9,200 euros if you are a couple). To put it simply, if you make a withdrawal of earnings (or “capital gains”) below this amount, you won’t have to pay taxes on it.
As this reduction is renewed every year, it can also allow you to benefit from a great deal between the end and the beginning of the year. To double this tax gift, you can make a first withdrawal (or “redemption” in insurance jargon) for example at the end of December, and a second at the beginning of January, to benefit from the reduction twice a few days or weeks apart. If you are a couple with a joint income tax return, you can withdraw up to 18,400 euros of earnings (9,200 x 2) tax-free, provided you separate the two redemptions.
Deadlines for a buyout may extend at the end of the year
However, to carry out this operation successfully, things must be anticipated somewhat. Indeed, processing times for a partial surrender request – that is to say only part of your life insurance – can lengthen at the end of the year, due to the influx of requests which accumulate from insurers. Not to mention that, for the latter, this period is also that of massive payment operations into retirement savings plans (PER). Also, so that your withdrawal request is properly registered in 2025 and therefore benefits from the reduction, it is better to take the lead.
So, “you should try to avoid making your withdrawal request after December 20”advises Henri Réau, development director at the online broker placement-direct.fr. However, the way you make your request will also have an impact: “with a redemption made online, the process is more or less automated, it can go faster. On the other hand, it will be necessary to anticipate well for a request in paper format. Mail can get lost, take longer than expected, etc.”warns this sector professional.
Another point to ensure that there are no hitches: that your file is complete. In other words, that you attach all the necessary documents to a partial redemption request. Nothing too complicated: you will need a valid identity document and an up-to-date RIB. “Online, you will only be able to carry out your operation if your profile and documents are up to date, so no worries”indicates Henri Réau. However, be sure to attach these documents to your letter if you opt for the paper route.
Don’t panic if the funds withdrawn don’t reach you until 2026
Finally, don’t worry if you don’t receive your money before 2026. “Typically, funds from a buyout take less than a week to arrive in your account, but even if they arrive after January 1, the property buyout may have been registered in 2025”reassures Henri Réau. In other words, you will not necessarily have lost your 2025 allowance even if you receive your money next year.
As a reminder, if this reduction is not used before December 31, it is lost for the current year and cannot be carried forward. Reason why the simplest way not to miss it is to schedule an automatic partial redemption before December 20 of each year. Last subtlety: if your contract has an anniversary date before 2017, you will have the choice between the flat-rate withholding tax (PFL) of 7.5% or the progressive scale of income tax. In the first case, you will be reimbursed for this deposit next year on your tax notice. The second option saves you this advance, if you are certain to remain under the reduction.
