André, reader of Capitaladdresses the following question: “Hello, as part of a life insurance fed before the 70th anniversary of the subscriber, on what basis applies the reduction of 152,500 euros for the beneficiaries? On bonuses paid alone or on the premiums and interests available on death? THANKS.” Hello André, and thank you for your question. It clarifies an important point in matters of succession and taxation in life insurance. To answer you, the exact field of the reduction of 152,500 euros is detailed by article 990 I of the general tax code.
This article provides that if the payments were made before your 70 years, the reduction of 152,500 euros per beneficiary applies to the capital transmitted and the interest generated by these premiums. Concretely, this means that the abatement applies to all the sums present on the contract at the time of death, therefore the capital plus gains. On this total amount, the beneficiary (s) receive up to 152,500 euros without paying inheritance tax. Beyond that, taxation is 20% up to 700,000 euros transmitted, then then 31.25%.
After 70 years, a limited reduction, but with an exemption from the gains
On the other hand, for the premiums paid after your 70 years, it is another diet that applies (article 757 B of the general tax code). The overall reduction is only 30,500 eurosto be distributed among all the beneficiaries. It is therefore no longer valid for each beneficiary. After this amount, the sums transmitted are subject to inheritance tax. But the latter only apply to the part corresponding to the premiums. Unlike transmission before 70 years, gains are exempt from inheritance tax here, however, social security contributions (17.2%) will have to be paid.
Take the example of a contract powered before 70 years, worth 200,000 euros on death (150,000 euros in premiums and 50,000 euros in interest). The beneficiary will receive 152,500 euros completely exempt, and will only be taxed on the remaining 47,500 euros. Imagine the same contract, but with bonuses having been paid only after 70 years. The reduction of 30,500 euros applies to the part corresponding to the premiums, or 150,000 euros. Once the allowance is used, therefore 119,500 euros in capital remains, and 50,000 euros in interest, or 169,500 euros. But as the gains are exempt, inheritance taxes apply only to the remaining 119,500 euros corresponding to the payments made.
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