Living in France means French tax, whatever the container. But the container matters: since the 2026 CSG increase, gains in a life insurance contract are taxed at 24.7% after eight years against 31.4% in a direct portfolio, and a Luxembourg contract adds the strongest asset protection in Europe. A Luxembourg company used to hold income, by contrast, is brought back into French tax by article 123 bis and the abuse-of-law rules.
What Luxembourg can and cannot do for a French resident
If you live in France, France taxes your worldwide income. Moving money or a company to Luxembourg does not change that. What Luxembourg offers French residents are better containers: contracts, funds and holdings that French law itself treats more gently, or that protect the assets better, while the tax stays French.
The tools that work are legal, declared and used by French private banks every day. The ones that do not work are equally well known to the French tax office, and several were tightened again in the 2026 budget.
Luxembourg life insurance
French tax rules, lower social charges than a direct portfolio since 2026, stronger asset protection, succession allowances.
Accumulating funds
Luxembourg UCITS that reinvest income defer French tax until you sell.
EU holding for an exit
Contribution to a Luxembourg holding before a sale defers the gain, if 70% is reinvested within three years.
A company to park income
Article 123 bis, place of management and the abuse-of-law rules bring the income back to France.
The 2026 change: 31.4% on a portfolio, 24.7% in a contract
The 2026 Social Security financing law raised CSG on capital income from 9.2% to 10.6%. Social charges on dividends, interest and securities gains rose to 18.6%, and the flat tax (PFU) to 31.4%. Life insurance and capitalisation contracts were left out: they stay at 17.2%.
| Held how | French tax on gains | Notes |
|---|---|---|
| Directly, in a securities account | 31.4% (12.8% + 18.6%) | Or the progressive scale on option |
| Life insurance, under 8 years | 30% (12.8% + 17.2%) | Only on the gain part of a withdrawal |
| Life insurance, over 8 years | 24.7% (7.5% + 17.2%) | After EUR 4,600 / 9,200 a year; 12.8% on premiums above EUR 150,000 |
| On death, premiums before 70 | EUR 152,500 per beneficiary tax-free | Then 20% and 31.25%; spouse exempt |
A Luxembourg contract is taxed exactly like a French one. The difference is not the tax; it is what sits around it.
Portfolio or Luxembourg contract: your numbers
A simplified comparison of French tax when everything is cashed in at the end. It ignores fees, which differ by contract.
Portfolio or Luxembourg life insurance?
The same investments, held directly in an accumulating fund or inside a Luxembourg contract, cashed in at the end. French tax only.
Why a Luxembourg contract and not a French one
- The security triangle. The insurer, an independent custodian bank and the regulator (CAA): your assets are held separately from the insurer's own.
- The super-privilege. Policyholders rank first, ahead of all other creditors, over the assets backing their contracts. In France the guarantee fund covers EUR 70,000.
- Open architecture. Dedicated internal funds, several currencies, several custodian banks and a wider range of assets than most French contracts.
- Mobility. If you later move abroad, a Luxembourg contract adapts to the new country's rules more easily than a French one.
Declare the contract every year on form 3916-BIS. The fine is EUR 1,500 per undeclared contract, and the tax office can then look back ten years. Social charges on a foreign contract are paid when you withdraw, through the insurer's tax agent if it has one.
A Luxembourg holding before selling your company
Contributing your shares to a holding before a sale defers the gain under article 150-0 B ter. The holding may be in Luxembourg or another EU country if it is subject to corporate tax and you control it. For sales after 20 February 2026 the holding must reinvest 70% of the proceeds (previously 60%) within three years (previously two) in business activities and keep them for five years; most real estate no longer counts.
A Luxembourg holding is rarely better than a French one for this purpose, unless you plan to live abroad or the group's future is outside France. If you leave France, the deferred gain falls into the exit tax base.
What does not work any more
| Idea | Why it fails |
|---|---|
| A Luxembourg company to collect dividends or consulting fees | Article 123 bis (10% stake, mainly financial assets, low tax), article 155 A for services, and place of effective management if you run it from France |
| An SPF family wealth company | A textbook privileged regime for article 123 bis |
| French property through a Luxembourg company | IFI looks through; a 3% annual tax on property held by entities unless filings are made; France taxes gains on property-rich companies |
| Yachts, cars or a holiday home in a holding | A new 20% tax on luxury assets held by family holdings from 2026, including foreign ones controlled from France |
| A company with no one in Luxembourg | Mini abus de droit (L.64 A LPF): main purpose tax is enough |
Luxembourg gives French residents better containers, not a different tax system. Only moving does that.
If you actually move to Luxembourg
Becoming resident in Luxembourg changes everything above. Personal income tax runs from 0% to 42%, plus a solidarity surcharge of 7% or 9%. Half of qualifying dividends are exempt, and gains on holdings below 10% are tax-free after six months. The French exit tax applies to large shareholdings, but payment is deferred automatically for a move within the EU and cancelled after two years (five above EUR 2.57 million) if you do not sell.
Living in France means French tax, whatever the container.
24.7% after 8 years against 31.4% on a direct portfolio in 2026.
Super-privilege and security triangle, not a lower rate.
123 bis, 155 A and abuse of law close that door.