What is the Single Lump Sum?
An emblematic measure of tax reform in France, the PFU applies to household income up to 30%. This levy is divided into two categories of income: 12.8% for income tax and 17.2% for social security contributions.
Among the savings income taxed by the PFU, there are also the Housing Savings Accounts (CEL) and the Epagne Housing Plans (PEL), which have been open since the beginning of 2018. Capital gains and receivables Expatriation of French taxpayers is also subject to a levy with the "exit tax".
Different taxation for life insurance contracts
The Single Lump Sum will apply to the vast majority of savings income. However, the impact of the PFU will not be the same for all these revenues, especially for life insurance contracts. Indeed, the tax rate of 30% provided for by this reform will only concern certain products of life insurance contracts.
Premiums paid from 27 September 2017 by taxpayers with life insurance greater than 150 000 euros will be affected by this new tax. For couples who are under a common taxation system, the minimum threshold has been fixed at 300,000 euros.
Before the PFU is applied, the rate of 7.5% will remain effective for two products:
- Products relating to a redemption in the event that the amount of the contract does not exceed 150,000 euros.
- Products related to a redemption whose payments were made before September 27, 2017.
More favorable income tax schedule
In some cases, it may be more beneficial for taxpayers to have their income subject to the Income Tax (IR) schedule. Indeed, if the progressive scale provided by the IR is more favorable to you, you have the possibility to choose to be affiliated to this scale.
If the taxpayer decides to submit these revenues to the IR scale, he may benefit from a deduction of 5.10% of the General Social Contribution (CSG) on his income the following year. Due to the increase of the CSG in 2018 (+ 1.7 points), the deduction rate will increase to 6.8%.
With this reform, the public authorities are therefore directly targeting dividends related to movable products as well as life insurance. Depending on your situation, you will be able to choose which tax system is most beneficial to you.