Income tax - How is income from a life insurance contract taxed? - Contract signed since 26 September 1997

Verified 17 avril 2024 - Directorate for Legal and Administrative Information (Prime Minister)

Your situation

  • Contract signed since 26 September 1997
  • You get your insurance back after a layoff
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Premiums paid since September 27, 2017

Taxation depends on the age of your contract.

Contract under 8 years

The interest on your life insurance contracts is taxed in 2 stages.

1. When they are paid, they shall be subject to flat-rate levy without discharge of 12.8% (unless you are applying for an exemption based on your reference tax income).

2. Interest is recorded on your tax return for taxation by one of the following means:

Any excess is returned to you.

Contract over 8 years

The interest on your life insurance contracts is first taxed in 2 steps.

1. Earnings shall be subject on payment to a flat-rate levy without discharge of 7.5% (unless you are applying for an exemption based on your reference tax income).

2. You have to report these gains on your income tax return after deducting the abatement next:

  • €4,600 for a single person
  • €9,200 for a couple.

Warning  

The allowance is granted for all life insurance contracts held by the same taxpayer.

The interest is then taxed at the following flat rates:

  • 7.5% for interest corresponding to premiums not exceeding €150,000
  • 12.8% for interest on premiums in excess of €150,000

However, you may be required to progressive scale of income tax if you choose this option when you file your tax return

Any excess is returned to you.

Premiums paid before September 27, 2017

Taxation depends on the age of the contract.

Contract under 8 years

The interests of your life insurance contracts of under 8 years can be taxed in one of the following 2 ways:

  • Or, at the time of their payment, at standard final levy of 15%, if you choose this option at the time of payment
  • Or, at the time of processing your tax return, at the progressive scale of income tax, if you have not opted for the flat rate when paying interest.
Contract over 8 years

The interests of your life insurance contracts older than 8 years can be taxed in one of the following 2 ways:

  • Or, at the time of their payment, at standard final levy of 7.5%, if you choose this option at the time of payment
  • Or, at the time of processing your tax return, at the progressive scale of income tax, if you have not opted for the flat rate when paying interest.

Recovered interest may be exempt from tax in certain cases.

It depends on why you are asking for the redemption or termination of the contract:

The interests of a life insurance are exempt of income tax if the termination of the contract is the result of dismissal.

Dismissal is retained if you are one of the following:

  • Whoever signed the contract
  • Spouse or partner of Civil partnerships: titleContent of the subscriber.

Warning  

The exemption does not apply in the event of a contractual breach or termination of a fixed-term contract.

The exemption applies if the redemption or termination of the contract takes place before the end of the year following that in which the redundancy occurs.

Example :

You were fired on May 5, 2024.

The contract must be redeemed or terminated by 31 December 2025.

To make your tax return, you can view the following documents:

If a pre-filled amount is inaccurate, you must correct or complete it.

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