Assurance Vie

July 9, 2010

Many clients ask us whether an investment in a French assurance vie contract is permissible under US  law.  The answer is “yes, but….”   As an assurance vie contract is treated for US purposes as a PFIC (Passive Foreign Investment Company), reporting must be done in a prescribed manner.  You do not get the benefit of the undeclared accumulation of dividends, interest, etc., as you would if you were not a US taxpayer.  Instead, you must report the increase in value of your contract each year on your US tax return.   Reporting in this manner more or less nullifies the U.S. tax advantages of the assurance vie.  There may be other advantages, though, especially under French law and tax rules.