Life insurance: towards an increase in inheritance taxes to be paid by beneficiaries?

This Thursday, October 17, the deputies adopted an amendment which aims to modify the exceptional taxation in the case of the transfer of life insurance contracts. The text proposes to apply the direct line inheritance tax model for contracts with payments made before age 70.

Life insurance could be taxed more harshly in the context of an inheritance. This Thursday, October 17, the deputies indeed adopted an amendment from the elected representative of Pyrénées-Atlantiques, Jean-Paul Mattei (Les Démocrates), reports

Capital

. The text provides

“to align the taxation of the transfer of life insurance contracts after deduction with the model of direct inheritance tax”

.

Currently, payments made before age 70 on a life insurance contract are exempt from inheritance tax up to 152,500 euros. All beneficiaries benefit from this reduction. Beyond this sum, a 20% levy applies up to 700,000 euros. The rate rises to 31.25% beyond this ceiling. If payments take place after age 70, inheritance tax

“are due on the fraction of premiums exceeding 30,500 euros”

specifies the Notaries of France website. And this reduction is this time shared between all the beneficiaries. The inheritance tax scale varies depending on the degree of relationship between the deceased and the beneficiary.

A progressive scale of up to 45%

MP Jean-Paul Mattei therefore wants to tackle this advantageous taxation for heirs in the case where payments are made on the contract before age 70. It is about applying

“the same rate as for direct line inheritances”

. The scale would then be completely modified.

After the reduction of 152,500 euros, the balance would be taxed at 20% up to 552,324 euros. Then it would increase to 30% up to 902,838 euros, to 40% up to 1,805,677 euros and finally to 45% beyond this amount. For the taxable fraction above 1,805,677 euros, the rate would therefore be 45% compared to 31.25% currently. This amendment must be examined again and then voted on in a public session from October 21.