The deputies of the Finance Committee adopted on Thursday October 17 an amendment to the 2025 budget aimed at increasing the taxation of inheritance tax on life insurance.
Thunderbolt for life insurance? Thursday October 17, an amendment providing for “aligning the taxation of the transmission of life insurance contracts after deduction with the model of direct inheritance taxes” was adopted by the Finance Committee of the National Assembly, as spotted by Capital.
Tabled by the deputy for Pyrénées-Atlantiques Jean-Paul Mattéi (Les Démocrates), the text was adopted against the opinion of the general budget rapporteur Charles de Courson, but with the support of Eric Coquerel (LFI), president of the commission.
This amendment is in accordance with the recent recommendations of the Court of Auditors in its report published on September 25. The latter had received a request for an investigation a year ago from Eric Coquerel.
Tax measures that “favor households with significant assets” for the Court of Auditors
While the Court of Auditors’ report considers it possible to reduce inheritance tax, in return and in order to finance this reduction, it recommends reducing the tax advantages on life insurance. For the financial jurisdiction, the tax regime for life insurance (as well as the tax advantages on the transfer of family businesses) is “more favorable than common law”. These derogatory tax measures “de facto favor households with significant assets”, summarizes the Court.
Payments made before age 70 particularly targeted
It is the inheritance benefits of life insurance contracts on which the holders have made payments before their 70th birthday which are particularly targeted by this amendment.
Éric Coquerel, LFI deputy – chairman of the Finance Committee of the National Assembly – 09/25
Currently, the legislation is as follows: when a person holding a life insurance contract dies, the capital is transmitted to the beneficiaries designated in the contract. The plan is not the same if the premiums are paid before the age of 70 or after the policy holder turns 70.
A current scale “unjustified” according to Eric Coquerel
Before turning 70, the amounts transferred benefit from a reduction of 152,500 euros per beneficiary. Above this limit, a levy of 20% applies for the fraction of each beneficiary’s taxable share less than or equal to €700,000, and 31.25% for the fraction of each beneficiary’s taxable share exceeding this limit. limit.
If the premiums are paid after the life insurance policy holder turns 70, there is a reduction of 30,500 euros which is shared between all the beneficiaries. Then classic inheritance taxes apply, with a scale varying depending on the degree of relationship.
But this current scale is not justified for Eric Coquerel because it is even more favorable than that applied to common inheritance law.
“This scale after reduction from which life insurance products benefit is even more advantageous than that applied to direct line inheritances,” argues the presentation of the amendment.
A difference in treatment which “does not seem to find any justification at present”. The amendment is justified in “a concern for restoring our public finances”.
31.25% levy today: up to 45% inheritance tax tomorrow?
The amendment voted on October 17 aims to subject life insurance contracts paid before the age of 70 to inheritance tax. The same rates as for direct line inheritances would apply (child, grandchild or parent).
Thus, the tax scale would be as follows if the amendment is voted on: after the reduction of 152,500 euros, the balance would be taxed at 20% up to 552,324 euros, then at 30% up to 902,838 euros, at 40% up to 1,805,677 euros and finally 45% beyond this amount.
Next step: voting on this amendment in public session.
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