Michel, reader of Capital, asks us the following question: “I have life insurance contracts in euro funds. I am 77 years old. In order to avoid the tax on unproductive wealth (IFI), on which units of account (UC) could I switch my euro fund? »
Hello Michel, and thank you for your question. It is at the heart of the concerns of many savers following the adoption by deputies of an amendment to the 2026 budget, which would transform the current IFI (Real Estate Wealth Tax) into an unproductive wealth tax, surprisingly including euro life insurance funds. To answer your question, there are different secure arbitration solutions to get out of the base of this new tax.
The euro fund is included in the base of goods deemed unproductive
If the amendment is definitively adopted, it would apply to goods deemed “unproductive” for the real economy: gold bars, cryptocurrencies, works of art, and, therefore, euro funds. First, as with the current IFI, you would only be concerned if the value of your net taxable assets (including real estate, euro funds and other “unproductive” assets) exceeds the threshold of 1.3 million euros. If this is the case, the excess portion would be subject to 1% taxation.
The aim of this tax is to encourage savers to invest in a more “productive” way, that is to say in units of account (UC), part of which in fact finances companies. This is the case, for example, of UCs which invest in shares, in the form of traditional investment funds or ETFs. The problem is that these investment vehicles are much riskier than the euro fund, guaranteed in capital. Now, at your age, Michel, you probably want to secure your savings, and not get into risky bets on the stock market.
Switching from euro funds to UC always means taking a risk of capital loss
Also, arbitrage – that is to say changing the investment medium – towards UC shares to escape the IFI would entail a risk of capital loss which you may not wish to take. Fortunately, it is possible to find UCs which limit your risk of loss, but if your savings will then no longer be 100% guaranteed as with the Euro fund.
“For savers wishing to limit their risk while avoiding possible taxation on unproductive wealth, it is recommended to invest in bond or monetary units of account. These vehicles present a lower level of risk than that of equity funds while maintaining high liquidity.agrees Andréa Ganovelli, general director of Green-Got.
A money market fund is a fund that invests in short-term debt securities of governments, banks, or large companies. Also, even if your capital is not guaranteed, these funds are generally rated 1/7 on the SRI risk indicator, because the risk of default of the issuers of these securities is low, or even very low. Bond funds are similar UCs, since this also involves investing in debt securities (bonds), with limited risk, generally rated between 2 and 3 out of 7.
However, keep in mind that there are currently no figures published on the number of people who would actually fall into this new plate. As Florence Lustman, the president of France Assureurs, recalled on Wednesday, November 5: “More than half of life insurance contracts have an outstanding amount of less than 10,000 euros.» Also, before embarking on arbitration, which may incur costs, it is more prudent to wait to know whether the budget is indeed adopted with this amendment, and to ensure that you exceed the threshold of 1.3 million euros.
