Amounts transferred from life insurance to an individual PER are deductible in taxable income (Photo credit: 123RF)
The covenants law has given a tax advantage when transferring savings from a life insurance contract to an individual PER. This tax benefit expires on 31 December 2022. What does it consist of and what conditions must be met to benefit from it?
Promulgated in May 2019, the Pacte Act (Action Plan for Growth and Transformation of Businesses) aims to remove obstacles to business growth, to better share the value created with employees and to encourage businesses to take better account of social and environmental questions in their strategy. With this in mind, the Pacte law enabled the creation of the PER (Retirement Savings Plan), which aims to simplify retirement savings and replace the old systems (PERP, Madelin pension, Perco, Article 83, etc.). To encourage the French to prepare for their retirement within the framework of a PER, the law has established a tax advantage for the transfer of savings from a life insurance contract to an individual PER. This tax benefit expires on 31 December 2022. What does it consist of and what conditions must be met to benefit from it?
Tax advantage when transferring life insurance to an individual PER
The sums redeemed on life insurance to be invested in a PER benefit from an extraordinary tax scheme until 31 December 2022. Normally, gains made on the occasion of a withdrawal of sums on life insurance over 8 years are exempt from tax and are only subject to social security contributions (at a rate of 17.2%) within a ceiling of 4,600 euros for a single person and 9,200 euros for a couple. If this saving is withdrawn to be transferred to an individual PER, these caps are doubled. Profits obtained on life insurance for more than 8 years are thus tax-free up to 9,200 euros for a single person and 18,400 euros for a couple.
In addition, the amounts transferred from life insurance to an individual PER are deductible from the taxable income within the limit established by law, namely 10% of the taxable income, within the limit of 32,908 euros.
The conditions that must be met to benefit from the tax benefit
In order to benefit from this extraordinary tax advantage, several conditions must be met:
Have had their life insurance contract for more than 8 years
All amounts redeemed on the life insurance contract must be transferred to the individual PER
The transfer must take place before 31 December 2022 and the amounts from the life insurance must be transferred to PER before 31 December in the redemption year
Be more than five years from the legal retirement age, i.e. be under 57 years of age.