Living in Europe - offshore Assurance Vie

Raph23

Hello,
I have moved to France from the UK and still have ISAs / cash accounts there as well as setting up their equivalent in France. I may stay in France but also may move again for work so need to be flexible.
I recently spoke to an IFA in France who recommended consolidating everything into an offshore Assurance Vie product (domiciled either in Ireland or Luxembourg) as this would be tax efficient across Europe (not just the UK and France) whereas the local products would not be. 
I did not feel hugely comfortable with the IFA as they only recommended one product and were not super transparent on fees although when I questioned them, they did provide the details. The fees they mentioned seemed reasonable although I would want a lot more in writing before proceeding and am also doing some more digging... 
I would be very interested if anyone has taken out an offshore Assurance Vie or had any comments/ feedback on this area. 
Many thanks

dunstonh

I did not feel hugely comfortable with the IFA as they only recommended one product and were not super transparent on fees although when I questioned them, they did provide the details.

An IFA cannot be restricted to one product/provider.  The whole point of an IFA is that they are whole of market and not restricted to any product or provider.      

In France, commission is still allowed unless you are a "conseiller" (the equivalent to a UK IFA) and in 2019, there was only one IFA firm in the whole of the country.  The rest were sales reps of the banks and insurers.    France is also very expensive for investments compared to the UK.  And the life assurance wrapper is still a prominant option in France whereas it is very niche in the UK.

Are you sure this person was an IFA (conseiller) and not a sales rep of the insurer or bank?   

IFAs by requirement, are transparent on fees.  However, in France salesforces are not as France didn't take the EU directive as far as the UK).  Only IFAs in France follow MiFIDII requirements.  Salesforces of the banks/insurers do not.

I would be very interested if anyone has taken out an offshore Assurance Vie or had any comments/ feedback on this area. 

This is a UK site.  So, its unlikely you will have many, or even any, regular posters here who live in France and have taken that out.   It is a product that is specific to France and French legislation.

Raph23

Many thanks for your reply. The person was not a sales rep of a bank/ insurance company but did work for a financial advice firm. They would get commission for the product though so I will check this further. I also fully agree with you that they should recommend more than one product. 

The product they recommended was not a French Assurance Vie but an offshore one. The aim is that, as it is flexible, people can move with it between countries and it is also not sold out of France but out of Ireland or Luxembourg. This is why I posted here as it would be targeted to people moving between the UK and France (or other European countries) as it is supposed to be tax efficient across Europe.

 

dunstonh

The person was not a sales rep of a bank/ insurance company but did work for a financial advice firm. They would get commission for the product though so I will check this further.

That means they are not an IFA.  Don't worry, in the UK, over half of people seeing FAs also make the mistake of thinking they are seeing an IFA.   It sounds like you have spoken to the equivalent of a restricted FA in the UK (being paid commission is the giveaway). 

The product they recommended was not a French Assurance Vie but an offshore one. The aim is that, as it is flexible, people can move with it between countries and it is also not sold out of France but out of Ireland or Luxembourg. This is why I posted here as it would be targeted to people moving between the UK and France (or other European countries) as it is supposed to be tax efficient across Europe.

Assurance vie exists to suit the French tax rules but can be held onshore or offshore.  The closest UK product/wrapper is the investment bond which is onshore or offshore.  Although there are differences that are biased to the French tax system.  Just as the UK versions are biased the UK tax systems.

The real issue with all of these offshore versions is that they are tax deferred.  i.e. free of tax until you need to start drawing.  And then you are subject to the rules in place in your country of residence at the point of the withdrawal.    They tend to be very inflexible.     So, whilst it may have a place for those with large amounts to invest, it is unlikely to be the best option in isolation.  e.g. if you went heavy into it, then moved to a different country and needed the money out, you could be hammered.

The ability to take them across different tax jurisdictions is both a positive and a negative depending on the tax jurisdiction when you actually need the money out.

bostonerimus

Beware such products, they usually come with large fees.

You should make sure you understand the basics of tax treaties between countries and your best bet is usually to place your funds inside pension plans as the common rubric of tax treaties preserves the tax deferred nature before drawdown. Things like ISAs ie tax non-pension tax advantage schemes often don't maintain that tax advantaged status across borders.

Raph23

Many thanks for your replies - you are definitely reflecting the concerns that I had.

I fully agree as well about the point on pensions. I have a UK pension and do have cash that I could add to it but as I am out of the UK, I am not sure this would necessarily be beneficial (e.g. it would lock the money away and the money has already been taxed at source, although I am aware that future growth would be tax free). 

I may need to go for a hybrid, less than ideal solution, with ISAs and the French equivalent for the moment. I am finding it frustrating that there is a lack of solid, professional advice that covers the two countries.