Luxembourg life insurance and US persons: what an American living in France can actually do

The short answer: yes, it is possible - on conditions

“We are not in a position to take your request any further.” Four lines, no reasons given, and it lands a few days after you write “place of birth: United States” on a form. You are a US person - American, a dual national, born there, or a green card holder - you live in France and you pay your income tax here. Two banks have closed your accounts. An insurer has declined your application. You have done nothing wrong, and no statute on either side of the Atlantic says you cannot hold a life insurance policy.

What you are owed on Luxembourg life insurance for a US person is an answer, not a brochure: what remains possible, on what conditions, and at what annual cost. The short version runs like this. Such a policy is neither prohibited nor automatic, because no insurer owes you a contract. It stays taxed in France, where you live, and is merely reported to the United States. And the American paperwork on top runs, broadly, from 650 to 9,000 USD a year- a bill set by how many funds you hold, not by how much you invest. Nothing here is promised on an insurer's behalf, or on your US tax adviser's behalf.

One distinction decides everything that follows, so make sure you are on the right page. You are a US person who lives in France and is tax resident here: the American obligations land on top of a French tax bill. That is not the position of someone moving to the United States, where the analysis changes in nature and the answer becomes markedly more cautious. This is not a quibble about wording - it decides which country taxes the policy.

“US person” does not mean what you think it means

Two definitions sit behind the honest “yes”. In tax law, citizenship alone is enough: IRC 7701(a)(30) covers “a citizen or resident of the United States”, worldwide taxation being confirmed by Treasury Regulation 1.1-1(b) and by Cook v. Tait, 265 U.S. 47 (1924). In securities law, Regulation S defines a U.S. person, for a natural person, as “any natural person resident in the United States” (17 CFR 230.902(k)(1)(i)): residence, not nationality. The securities-law obstacle attaches to where you live, while the US tax and filing obligations attach to your passport and never go away. The Regulation S analysis belongs to the insurer and its own advisers, not to us.

Why so many banks and insurers say no

After three refusals you end up believing that some statute bars you from French savings products. No statute says any such thing, which is why the door is not shut.

The law: FATCA, the excise tax, the PFIC rules

FATCA (IRC 1471 to 1474, implemented in France by a model 1A intergovernmental agreement signed on 14 November 2013) provides for a 30% withholding on certain US-source payments made to a non-compliant foreign financial institution. That withholding hits the failing institution, not the client as a taxpayer- although an account holder classified as “recalcitrant” may, depending on the applicable regime, find certain payments withheld or the relationship terminated. For a Luxembourg policy, it is Luxembourg's own agreement that governs: your insurer sits in Luxembourg, and it reports the policy under FATCA through the Luxembourg tax authorities. On top of that sit the 1% excise tax (IRC 4371) and the PFIC regime, which make an application expensive and awkward to explain. None of these texts prohibits anything; they make the client expensive to service, and that is what gets applications refused.

Market practice: the insurer's own risk policy

Turning American clients away is not required by any law: it is an internal risk policy, driven by compliance cost and exposure to the FATCA penalty. Institutions screen for indicia of US status at onboarding, place of birth first among them. In banking, France has a safety net - the droit au compte, the right to a basic bank account. In life insurance there is none. An insurer is never obliged to accept you: it has no duty to contract. Practices observed in July 2026 do look more open than a few years ago towards US persons living outside the United States. But that is an observed market trend, not a rule, and it tells you nothing about how your own application will be handled when it reaches an underwriter's desk.

A word on the IRC 953(d) election, which comes up a lot: it is, in principle, closed to a Luxembourg company owned by a European group. Being promised a policy “made compliant by a 953(d) election” should put you on your guard. Acceptance conditions, including that one, are set out in our page on which insurers may consider an application from a US person.

Expect no rescue from the courts either. On 30 January 2024, France's Conseil d'État, its supreme administrative court, dismissed the challenge brought against FATCA data transfers by the Association des Américains Accidentels, the French accidental-Americans association (No. 466115). In Washington, the residence-based-taxation bill has still not been enacted. Build no strategy on the assumption that citizenship-based taxation is about to disappear.

One consolation: you are not an isolated case. There are roughly 40,000 of you in France and 300,000 European citizens in all, on an estimate by the Fédération bancaire française, the French Banking Federation, picked up in French parliamentary work - ballpark figures, not official statistics. The profile is familiar enough that some insurers may still be willing to look at an application, on the terms set out below.

Your policy is taxed in France and reported to the United States

Because you are tax resident in France, your Luxembourg policy is taxed in France, under French life insurance rules. It is not “taxed in the United States”: it is reported there and, depending on how it is structured, its internal gains may be taxed there as well. The American obligations are additional, and none of them displaces a French one. No confusion costs us more time in a first meeting than this one, and it is usually the letter from the bank that planted it.

What France taxes

The authorities say so themselves. BOFiP, the published doctrine of the French tax authorities, expressly covers, at BOI-RPPM-RCM-20-10-20-50, policies taken out with undertakings established outside France, in an EU state bound to France by an administrative assistance agreement. Your policy falls under the same regime as a French one - the assurance-vie, France's life insurance savings wrapper.

Three rows in that table are misread more often than the rest. The 150,000 EUR threshold is neither the policy value nor the amount withdrawn: it is the total premiums paid, net of withdrawals, across all your policies, assessed at 31 December of the preceding year. The social levies (prélèvements sociaux, the French social charges on investment income, levied alongside income tax) stay at 17.2% for life insurance (art. L. 136-8, IV, of the French Social Security Code, reinstated by article 12 of the 2026 Social Security Financing Act, Law No. 2025-1403 of 30 December 2025), whereas the general rate on capital income rises to 18.6%. And article 990 I does apply to undertakings that are not established in France.

On the French reporting side, the policy must appear each year on Forms 3916 and 3916-bis, the French return of life insurance policies held outside France (French General Tax Code, art. 1649 AA), even with no movement, on pain of a fine of 1,500 EUR per policy per year (art. 1766) - not 10,000 EUR, Luxembourg being a state bound by an administrative assistance agreement. Think of it as the French mirror of the FBAR (FinCEN Form 114): you report on both sides.

What the United States requires

Everything that follows sits on top of that table, without removing a single row from it. How each obligation works is set out in our page on is a Luxembourg life insurance policy a PFIC?

Luxembourg: segregated assets, creditor ranking, allocation freedom

Suppose a door does open. Two of the classic arguments for Luxembourg have nothing to do with your passport, and they are worth stating plainly before the third one, which does. Your assets never sit on the insurer's balance sheet: they are held with an approved custodian bank, under the supervision of the Commissariat aux Assurances, the Luxembourg insurance regulator. That is the Triangle of Security. If the insurer fails, you rank ahead of its other creditors over those segregated assets - the super privilege. Read that second one carefully: it is a ranking in a liquidation. You are paid first; nobody promises you are paid in full. What that framework does and does not change for a US person is set out in the Triangle of Security and the super privilege explained.

The third argument is the only one that changes your arithmetic: allocation flexibility, along with the ability to run the policy in EUR or in USD. Flexibility is what lets you build a portfolio out of a handful of funds rather than thirty, and so drive the cost of your US compliance down. Fewer funds does not mean safer funds: the unit-linked funds held inside such a policy carry a risk of capital loss, and neither the capital nor any return is guaranteed.

Which insurers may look at an application from a US person

Read this section for what it is: dated observations, non-exhaustive and binding on no insurer. Acceptance policies change without notice, and nothing binds an insurer until it accepts in writing.

Vitis Life, a Luxembourg company of the Monceau Assurances group and an insurance partner of Hagnéré Patrimoine, may consider an application from a US person who is a French tax resident, on a case-by-case basis and subject to acceptance after a full review: no acceptance can be guaranteed in advance. This reflects practices observed as of July 2026 in our own dealings with the insurer, which makes no public statement on the point.

Baloise Vie Luxembourg states publicly on its own site, in a French-language post dated 30 May 2024and still online when we checked in July 2026, that it offers “solutions for US persons residing in the markets covered by the company, in compliance with FATCA” (our translation from the French original). The insurer does not specify which markets are covered and does not name France: this must be confirmed directly with them.

This list is not exhaustive, and acceptance policies change without notice: reconfirm the position before you take any step. A large number of institutions do, in practice, turn this type of application down, and no law requires them to. The exact conditions, the documents you will be asked for, and how an application actually proceeds are set out in which insurers may consider an application from a US person, and on what conditions.

The 1994 treaty and its saving clause

The instrument in play is the income and wealth tax treaty of 31 August 1994, published by Decree No. 96-222 of 15 March 1996 and amended by the protocols of 8 December 2004 and 13 January 2009. It removes double taxation through a tax credit, and the IRS accepted on 19 July 2019 that CSG and CRDS, two French social contributions, give rise to a US foreign tax credit (BOFiP BOI-INT-CVB-USA-10). That relief is real, but it stops at the tax itself.

On estates, a different instrument governs the US side of a death benefit - the estate and gift tax convention of 24 November 1978, as amended by the protocol of 8 December 2004 - while article 990 I governs the French side. That is a case-by-case analysis with a French notaire, the civil-law notary who settles estates. For how the saving clause and the PFIC regime interact, see is a Luxembourg life insurance policy a PFIC?

What US compliance on a Luxembourg policy costs each year

US-expat specialist preparers, whose published price lists we reviewed in July 2026, all price the same way: a base fee, then a surcharge for each Form 8621. That sorts returns into three profiles, with a separate one-off fee for a first year or a catch-up filing, and the gap between the first profile and the third is where the whole decision sits. The ranges below are indicative, taken from mid-market preparers, and exclude a tax attorney's fees, which are materially higher.

None of this is a line on our invoice: the firm does not prepare US tax returns. That cost is not included in its fees and is borne by the client. The detail is priced out, item by item, in what PFIC reporting and Form 8621 really cost, line by line.

You already hold a policy and you have just become a US person: keep it or surrender it?

It comes up at every first meeting, usually last and almost apologetically: “and my existing policy - what do I do with it?” It faces the person who becomes a US person - a green card, including one obtained after a marriage, or a return from a US posting - and, more often still, the person who discovers they have been one all along. There is no default answer. What follows is the case for each side, laid out so you can price your own.

The case for keeping it

Eight years on the clock cannot be bought back. What French practice calls the policy's tax seniority (antériorité fiscale) is the eight-year mark that opens the annual allowance of 4,600 EUR or 9,200 EUR and the 7.5% rate. A full surrender (rachat total) resets that clock to zero. Add the immediate tax cost of the surrender itself, which can swallow several years of compliance fees in one go, and the French estate framework you have already built - 152,500 EUR per beneficiary under article 990 I. One nuance on that last point: the allowance attaches to premiums paid before age 70, not to the policy's age. At 52 you can still rebuild it on a new policy. At 70 or beyond it is gone for good, later premiums falling under article 757 B.

The case for trimming or surrendering

The other way round, the first argument is the number of funds held, because that is what drives the bill. The second is the structure of the policy: the more bespoke it is, and the more say the policyholder has over the investments, the harder the US analysis becomes. We do not settle that point: it is your US adviser's call. After those come a policy value too small to carry the compliance cost, an unregularized US position, or a need for cash in the short term.

The third way: trim without closing

Reducing the number of funds without surrendering cuts the Form 8621 bill in the same proportion, where the policy is analyzed fund by fund and subject to your US adviser's analysis, and leaves the French tax seniority intact. It is a switch inside the policy, not an exit - and it is the option clients rarely arrive with.

A worked example: Frank, 52, born in Cleveland, living in Bordeaux

Frank was born in Cleveland during his parents' three-year posting and came back to France before he started school. He is a French tax resident, single, and lives in Bordeaux. He finds out at 52, when his bank asks him to sign a Form W-9. His Luxembourg policy, opened in 2015 (eleven years), shows 620,000 EUR of surrender value for 440,000 EUR of net premiums and 180,000 EUR of gains. All premiums are assumed paid after 27 September 2017 - a simplifying assumption that is unfavorable to surrender, since earlier premiums would fall under the older, more favorable regime (7.5% with no 150,000 EUR cap) and would lower the exit cost computed below. No other policy; allocation: 22 unit-linked funds. Most demanding US assumption, to be conservative: fund-by-fund treatment, one Form 8621 per fund. That characterization is not settled: it depends on the structure of the policy and on a US adviser's analysis.

Surrendering costs 50,403 EUR once; compliance on 22 funds costs about 3,465 to 6,840 EUR a year. But surrendering does not remove all compliance: the Form 1040, FBAR and Form 8938 base is still due, and reinvesting in European funds - including inside a French policy, which is still a foreign policy under US law - would recreate the PFIC issue. The saving is therefore only the Form 8621 share, about 2,895 to 5,790 EUR a year: the surrender “pays for itself” in roughly 9 to 17 years, before the opportunity cost of the 50,403 EUR paid out in tax and before any US tax on the surrender gain. At 5 funds, compliance falls to 1,228 to 2,368 EUR a year and it would take well over twenty years. For Frank, then, the real trade-off is between option 1 and option 3: an outright surrender only becomes rational if the insurer will not allow the allocation to be simplified. A decision to be taken only after a French-US tax attorney or CPA has analyzed the exact structure of the policy.

One last point, and we put it no higher than a possibility: for a taxpayer with a high revenu fiscal de référence, France's reference taxable income, the contribution différentielle sur les hauts revenus (CDHR, article 224 of the French General Tax Code, introduced by the Finance Act for 2025 and carried over by the Finance Act for 2026: a minimum charge of 20% of reference taxable income above 250,000 EUR for a single person and 500,000 EUR for a couple) could neutralize the benefit of the 7.5% rate. The exact computation is to be confirmed case by case.

Not how much, but how it is built

“How much does it take for this to be worth it?” is the first question asked, and the only one that no policy-value figure answers. No fee schedule we have seen bills US compliance as a percentage of the policy value; all of them bill Form 8621 per fund. The cost follows the number of funds, not the amount invested.

At 150-300 USD per form per year, two policies of 400,000 EUR do not cost the same: ten unit-linked funds means 1,500 to 3,000 USD a year in Form 8621 fees alone; thirty funds means 4,500 to 9,000 USD.

If you want a policy-value benchmark all the same: 4,000 USD of annual compliance is about 0.5% of a policy of 700,000 to 800,000 EUR (at the summer 2026 rate, EUR/USD about 1.14 - a rough guide, and this rate moves). Treat that as a benchmark; reducing the number of funds remains more effective than reaching a policy value. The full tier-by-tier calculation is set out in the tier-by-tier calculation of your annual Form 8621 bill.

One PFIC, or one per fund? The structure decides

Depending on how it is built, the policy may be analyzed as a single investment or fund by fund, and that point drives the whole compliance cost - each fund caught by the PFIC rules being, in IRS language, a section 1291 fund in the absence of an election. It is a contested technical position: it depends on the structure of the policy and on your US adviser's analysis, and it can never be presented as settled. How the analysis works is explained in single PFIC or fund by fund: how the analysis works.

How Hagnéré Patrimoine can help - and where our role stops

We do not fill in your American forms. Our work sits upstream: making sure that whoever does fill them in has five to produce rather than twenty-two.

We can review whether a Luxembourg policy could be arranged for a US person who is a French tax resident, through our partner insurers, including Vitis Life - subject to the insurer's acceptance after a full review. In practice that means: place of birth and US tax status declared on the first page of the application, Form W-9 and the FATCA documents gathered upfront, and an insurer that agrees to examine the application, case by case, with no pre-approval before that review.

We then build an allocation designed to limit the number of forms. That is where most of your annual bill is decided: in the example above, moving from 22 funds to 5 takes the annual cost from 3,950-7,800 USD to 1,400-2,700 USD, at an identical policy value. This discipline has a price: fewer funds means less diversification. And the unit-linked funds selected carry, in any event, a risk of capital loss, with no guarantee of return.

Then we make the introduction and stop there: we refer clients to partner French-US tax attorneys and CPAs chosen for their practice in this area. US return preparation is not part of our engagement: it is a cost you bear directly. Budget for it alongside your management charges - 650 to 9,000 USD a year depending on how many funds you hold.

On a 90,000 EUR policy spread over twenty funds, our answer is no, and we say so at the first meeting. Two conditions apply throughout: everything above is subject to the insurer's acceptance and subject to review by a French-US tax attorney or CPA. We do not guarantee the US tax compliance of any policy: that requires written confirmation from the insurer on the characterization of the policy under section 7702 of the Internal Revenue Code, and the analysis of a US adviser.

The five companion guides

This page sets out the framework; the five guides below take the detail.

• Whether you are caught at all: am I a US person? The six-case self-diagnosis.
• Who would review your application, and on what documents: which insurers may consider an application from a US person.
• How to price your own annual bill: what PFIC reporting and Form 8621 cost, line by line.
• How the US analysis of the policy works in practice: is a Luxembourg life insurance policy a PFIC?
• What the Luxembourg framework protects, and what it does not: the Triangle of Security and the super privilege.

Read this guide in French: assurance vie Luxembourg et US person.