“My contract is over 15 years old. I thought we could withdraw 4600 euros per year and even 9200 euros for a couple, without paying tax. My insurer tells me that I can take out a lot more because only the interest is taxed . Is it true?
The answer of Florence Brau Billod, wealth manager.
From eighth grade of your contract you can withdraw money by benefiting from‘a tax allowance up to 4600 euros per year and 9200 euros for a couple. In practice this means you can withdraw more money tax free (CSG and CRDS social security contributions remain due). Indeed, it is only the part corresponding to the interests, within the amount withdrawn, which is taxed. The capital withdrawn is not taxed. At each withdrawal (also called redemption) the insurer calculates the capital part and the interest part.
I give you a numerical example: You opened your contract with 10,000 euros. Your contract is valued today at 25,000 euros. The share of interest is therefore 25,000 – 10,000 = 15,000 euros and this represents 60% of the total value of your contract.
If you withdraw 5000 euros, the insurance company will apply the same proportion: 60% interest. That is to say that on 5000 euros withdrawn, there will be 40% capital and 60% interest. That is 5000 x 60% = 3000 euros of taxable interest.
The reduction being 4600 euros for one person, you will have no tax.
Single or regular withdrawals, repayable advance, depending on your situation, there are several tactics for withdrawing money from your life insurance.
Read: How to dip into my life insurance.
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