Talk to an independent French wealth adviser
We help US persons living in France structure a Luxembourg life insurance policy, subject to the insurer's acceptance and to review by a French-US tax adviser.
Your contact on this topic
Quentin Hagnéré
Independent French wealth adviser, specialised in Luxembourg life insurance
Quentin Hagnere advises French residents on Luxembourg life insurance. The firm does not prepare US tax returns and does not provide US legal or tax advice.
Contents
- 1. Sorting Luxembourg's brochure
- 2. Triangle of Security and super-privilege: which risk?
- 3. A policy in dollars: the strength built for you
- 4. Portability and tax seniority
- 5. The expanded universe: the strength that works against you
- 6. You pay in France, you report to the United States
- 7. Same money, two architectures: a worked case
- 8. When this is not the right answer
- 9. How Hagnéré Patrimoine can help
- FAQ - 13 questions
Sorting Luxembourg's brochure
You have two quotes in front of you. On the left, an assurance-vie, the standard French life insurance wrapper, opened in a few clicks. On the right, a Luxembourg policy: a larger entry ticket, an application measured in weeks, and a brochure promising a triangle of security, a super-privilege and open architecture. Every line of that brochure is true. None of it was written with your passport in mind.
Start with the number the brochures lead on. The French guarantee fund stops at EUR 70,000 per person and per company, while the Luxembourg claim carries no legal cap. That gap is real, and it is also the part of the offer with the least to do with your passport. The features that do turn on your passport sit further down the list, and one of them raises your annual cost instead of lowering it.
Everything below assumes one thing: you live in France and are a French tax resident, while remaining a US person in the eyes of the IRS. Your policy is taxed in France and reported to the United States, and, depending on how it is structured, US tax may fall due on its internal gains. If you live in the United States, or are about to move back, the analysis below does not apply to you.
Scope of this guide, and what it is not
This guide is written for US persons who are French tax residents — people who live in France, pay French income tax, and file US returns on top. It is not addressed to persons resident in the United States, and the analysis does not hold if you move back.
It is general information only. It is neither US legal advice nor US tax advice, neither a personalised investment recommendation nor an offer or solicitation to buy any investment product. Hagnéré Patrimoine is regulated in France: registered with ORIAS under number 23002291 as a financial investment adviser (conseiller en investissements financiers, member of CNCEF Patrimoine), insurance broker and banking and payment services broker. It is not registered with the US Securities and Exchange Commission, and it is neither an investment adviser nor a broker-dealer under US law.
Every US aspect of your situation, from your filing status to how a policy would be characterised, must be reviewed by a US-qualified tax attorney or a French-American CPA. Hagnéré Patrimoine does not prepare US tax returns; that cost is not included in its fees and remains payable by the client. Unit-linked funds carry a risk of capital loss and no return is guaranteed.
Whose advantage is it?
1. Same for you as for anyone
Triangle of Security, super-privilege, and the French guarantee fund as a benchmark. Real protections, answering one risk: the insurer failing. Your passport changes nothing here.
2. Built for your situation
A reference currency in USD, aligned with commitments you already carry in dollars, and French tax seniority, which cannot be bought back later.
3. Works against you
The expanded fund universe, a policyholder-driven dedicated fund, and portability on the day the destination is the United States.
Are you a US person? The six situations
The term is broader than a passport, and it is the reason this page exists. It generally applies to you if:
- you hold US citizenship, including as a dual national;
- you are an accidental American, born in the United States, taken away as a child and never resident since;
- you hold a green card, including one you believe has lapsed;
- you were born in the United States;
- you spent enough days in the United States to meet the substantial presence test;
- or a long-stay visa made you a US tax resident at some point.
Being born outside the United States to an American parent can also transmit citizenship, but that transmission is conditional and turns on the parent's own prior residence in the United States. One of these and you are within scope; the borderline cases are taken apart in the six situations that make you a US person. Your status must be confirmed by a US-qualified tax attorney or a French-American CPA.
Triangle of Security and super-privilege: which risk do they answer?
The mechanism, in brief
Your assets sit with an approved custodian bank, supervised by the Luxembourg insurance regulator, the Commissariat aux Assurances, and ring-fenced from the company's own balance sheet. If the company fails, you rank as a first-ranking preferred creditor over those assets, with no legal cap.
Set that against the French policyholder guarantee fund for life and personal insurance. It covers only insurers authorised in France, and it stops at EUR 70,000 of technical provisions per insured person, policyholder or beneficiary. Read that ceiling carefully: it applies per person and per company, all policies combined, never per policy, contrary to what is often written. And you get one regime or the other, never both: a Luxembourg policy gives up the French safety net and takes an uncapped creditor rank in exchange.
And for a US person? The correction
The super-privilege is a rank in a liquidation, not a guarantee that you get everything back. It puts you ahead of other claimants on the company; it says nothing about whether the estate is large enough to satisfy every claim in full. And these mechanisms answer a single question: can the insurer pay? They are not protection from a creditor, not protection from a tax authority, French or American, and no guarantee of the value of your unit-linked funds.
On creditors, French law is blunt. The sum payable to a named beneficiary cannot be claimed by the policyholder's creditors; but a French administrative third-party debt notice (saisie administrative à tiers détenteur) served on a surrenderable policy triggers a forced surrender, contractual limits notwithstanding. No policy, Luxembourg or otherwise, is beyond reach by nature. If your concern is a claim brought against you personally, that is a question for a lawyer, not for a wealth adviser.
For an American, the delay is the real cost
Nobody can predict how a liquidation would actually run, so this has to be put carefully. A life insurer's liquidation is counted in years, and values can be frozen while it runs. The asymmetry is that a frozen policy would not freeze your US filing obligations. Depending on the structure of the policy and on your US counsel's analysis, the compliance bill would keep running on capital you cannot reach. That is a liquidity risk, and an expensive one for you, because you pay in forms where a French policyholder pays nothing.
A policy denominated in dollars: the one strength built for your situation
The exposure you already carry
Part of your life is denominated in dollars whether you like it or not: an American employer or American clients, a future US pension or Social Security entitlement, a child studying in the United States, heirs there, and sometimes the prospect of moving back. The exchange rate is not something you opt into; you carry it whether or not you ever think about it. A pocket denominated in USD does not create that exposure. It can reduce it, by aligning the currency of your savings with the currency of your commitments. French law puts nothing in the way: a French resident may take out a policy denominated in a foreign currency.
The reference currency is not the currency of the funds
This is the most expensive confusion on the subject. The reference currency is the unit in which the surrender value is expressed. It is not the currency of the underlying funds. A policy denominated in USD can perfectly well hold funds denominated in EUR, and the reverse. Choosing one without looking at the other is believing you are hedged when you are not.
| What you choose | What it decides | What it does not decide |
|---|---|---|
| The reference currency of the policy | The currency in which the surrender value and the death benefit are expressed | The currency of the assets held inside |
| The currency of the underlying funds | Your real market exposure to a currency pair | The unit in which your statement is denominated |
| Nothing, if you leave both to chance | Nothing useful | Your commitments, which stay in the currency they were always in |
What the dollar does not fix
For French tax purposes the regime is identical to a euro policy, but the taxable base is computed in euros. Premiums paid and sums withdrawn are converted at the exchange rate applying on the date of each transaction, so the currency effect is built into the taxable gain: a dollar policy can produce a gain taxable in France on the movement of the currency pair alone. On the American side, a currency choice does nothing to your filing position, and not one filing obligation disappears with it.
A currency exposes you as much as it shelters you
Nothing above is a promise. Unit-linked funds carry a risk of capital loss and no return is guaranteed: on those funds the insurer commits to the number of units, not to their value. A USD pocket held without a real dollar commitment hedges nothing at all; it simply adds a source of volatility. The decision belongs with the attorney or CPA who handles your US filings, and the company may decline the application.
Portability and French tax seniority: decisive, until the day you go home
What cannot be bought back: seniority
The policy travels with you when you move: European freedom to provide services, plus Luxembourg tax neutrality. For a mobile life that is a genuine advantage, but one that is used up at the first change of tax residence. Portability itself depends on the markets the company has notified and on its internal policy, which may not cover your destination. And the tax analysis has to be redone at every change of residence, because the policy takes on the tax rules of the country where you live.
The advantage that is genuinely yours lies elsewhere. French tax seniority — antériorité fiscale, the age of the policy, which drives how withdrawals are taxed — cannot be bought back. A policy opened today starts its clock today; if you move away and come back, the intervening years cannot be replayed.
Seniority attaches to the policy, while the applicable tax regime follows your residence. The two are constantly blurred, and they are not the same thing: the French allowances after eight years are only worth something if you are taxable in France when you withdraw. Starting the clock early makes sense; believing that it locks in a tax regime does not.
The day you move back to the United States, everything changes
Said flatly rather than buried in a footnote: everything above assumes French tax residence. The day it switches to the United States, the analysis has to be redone from scratch, and a standard European policy calls for considerably more caution in the hands of someone who becomes a US tax resident. That is a conversation to have before you move, and it belongs with the attorney or CPA who handles your US filings.
The green card you think has lapsed
Many conversations start with the same sentence: "I had a green card, but that was fifteen years ago and it expired." As a matter of US tax law, permanent resident status does not lapse merely because the card has expired or because the person has left the country. It ends by formal relinquishment before the US authorities, or by an administrative or judicial decision. Until then you may still be treated as a US person, with everything that follows.
This is not a point to settle with a wealth adviser. It is established before any application, with your US tax counsel. The six situations are taken one by one in our US person self-assessment.
The expanded investment universe: the strength that works against you
The luxury of choice is paid for in forms
Open architecture, dedicated internal funds, private equity, structured products, direct securities: this is Luxembourg's number one selling point. That is exactly the problem here. It is not Luxembourg's flexibility that costs you; it is the number of lines you draw from it. Used well, that same flexibility builds a portfolio in few lines.
For a US taxpayer, each European fund, whether a SICAV, a UCITS or an ETF, generally meets the definition of a passive foreign investment company (PFIC). And the IRS instructions are explicit: a separate Form 8621 must be filed for each PFIC in which stock is held directly or indirectly. Thirty fund lines can mean thirty filings. Every year.
A EUR 300,000 policy with thirty lines carries the same number of Forms 8621 as a EUR 3,000,000 policy with thirty lines. The bill tracks the number of lines, not the size of the pot. What that translates into in dollars, year after year, is priced out in our guide to what Form 8621 reporting costs per fund, per year.
One US cost runs the other way. A premium paid to a foreign insurer on the life of a US citizen or resident is in principle subject to a 1% federal excise tax, reported on Form 720, Quarterly Federal Excise Tax Return. That is the one US cost that follows the amount rather than the number of lines, and it is priced out in the same cost guide. A treaty-based exemption is sometimes raised: it depends on the treaty between the United States and the insurer's country, presupposes a formal position taken by the company, and can never be presumed. It is checked case by case with your US adviser.
The dedicated fund: the deeper trade-off
The second trade-off is structural. A dedicated internal fund whose underlying assets the policyholder steers personally can, in some cases, lead US law to look through the wrapper — the investor control doctrine. Its mechanics are set out in our guide to whether a Luxembourg policy is itself a PFIC. This is not a defect of the product: a dedicated fund remains an excellent tool for many profiles. It is a constraint specific to your situation, and it calls for analysis before the policy is issued.
One PFIC or thirty? A contested position
The PFIC rules contain no express look-through rule for an insurance wrapper. The regulation on indirect ownership lists the holding vehicles exhaustively — a non-PFIC foreign corporation held 50% or more, a PFIC, a partnership, an S corporation, an estate, a trust — and no life insurance policy and no segregated asset account appear in that list. If the policy is recognised as a life insurance contract under US law, the policyholder is not treated as holding the underlying funds. The fund-by-fund reading takes over only where the wrapper does not stand up.
"One PFIC at policy level" and "fund by fund" are therefore two advisory positions, dependent on the structure of the policy and on the analysis of US counsel — never certainties, and never a sales argument. No policy can be described as "compliant" with US rules without written confirmation from the insurer. The architecture of the policy is decided before it is taken out, with a US-qualified tax attorney or a French-American CPA.
And the universe has just widened again
The Commissariat aux Assurances issued a circular letter (LC 26/1) on 28 January 2026, applicable from 1 February 2026 to policies issued from that date. It relaxes the rules on collective internal funds and widens the investment universe further. It says nothing about US persons. But for you it makes the "how many lines?" trade-off more decisive still. The same logic applies to a Lombard loan (crédit lombard) secured on the policy: technically available, but its US tax consequences must be validated by US counsel before anything is put in place.
Sorting your priorities before you settle on a policy structure
Reference currency, number of fund lines, management style: where the client is a US person and a French tax resident, those three trade-offs decide how comfortable the next ten years will be. We work through them with you, subject to the insurer's acceptance and to review by your French-American tax adviser.
Luxembourg neutrality: you pay in France, you report to the United States
Luxembourg withholds nothing: the policy takes on the tax rules of your country of residence, France. Luxembourg's tax neutrality spares you a third tax system, not a second one. On the American side it neutralises precisely nothing.
Why does the French advantage not travel? Because the United States taxes its citizens on their worldwide income wherever they reside: the regulation says all citizens of the United States, wherever resident. And because the France-US tax treaty contains a savings clause reserving to the United States the right to tax its own citizens as if the treaty did not apply. Nor is reporting always neutral: depending on the structure of the policy, the PFIC rules can produce actual US tax on internal gains, and not merely forms.
The French rules, in brief
Nothing exotic on the French side: your Luxembourg policy is taxed exactly like a French one. Four rules carry most of the weight.
| The rule | What it gives you | The detail people miss |
|---|---|---|
| Withdrawals after eight years | An abattement, a tax-free allowance, of EUR 4,600 for a single filer and EUR 9,200 for a couple | It bites on income tax only. Prélèvements sociaux, France's social levies, at 17.2% stay due on the whole gain |
| The rate above the allowance | 7.5% income tax on the gain attributable to premiums up to EUR 150,000, 12.8% above | That EUR 150,000 is measured on premiums net of repayments, across all your policies, at 31 December of the preceding year — not on the value of this policy |
| On death | EUR 152,500 per beneficiary for premiums paid before age 70; a separate regime after 70, with a global allowance of EUR 30,500 | Under the post-70 regime only the premiums are taxed and the gains stay exempt. The surviving spouse or PACS partner (a French civil partnership) is exempt outright |
| Every year, whatever happens | French form 3916-BIS, the annual declaration of a policy held with a non-French insurer | Due even if you made no withdrawal during the year. Omitting it carries a penalty of EUR 1,500 per policy and per year |
The reporting mirror, both sides of the Atlantic
France: form 3916-BIS, every year, even with no withdrawal. United States: the FBAR, FinCEN Form 114, Report of Foreign Bank and Financial Accounts, once foreign financial accounts exceed USD 10,000 in aggregate at any time in the year — a threshold a Luxembourg policy crosses mechanically. Then Form 8938, Statement of Specified Foreign Financial Assets, above USD 200,000 on the last day of the year for a single filer living outside the United States (USD 400,000 for a couple filing jointly).
The 8938 thresholds are generous for someone living abroad, but the FBAR threshold is low enough that in practice there is no reporting exit.
The same money, two architectures: Séverine's case
Séverine, 46, lives in Grenoble. A French-American dual national and a French tax resident, she is fully compliant with the US authorities and files every year. Part of her income is denominated in dollars (an American employer), and one of her children is studying in the United States. She has EUR 850,000 to invest, and is weighing two architectures of the same Luxembourg policy.
| Architecture A | Architecture B | |
|---|---|---|
| Reference currency | EUR | USD, aligned with her income and her child's tuition |
| Fund lines | 26 | 6 |
| Currency exposure | Carried and unmanaged: nothing hedges her dollar commitments | Reduced: part of the savings now follows the currency of the commitments |
| Potential Forms 8621 per year | 26 | 6 |
| Over ten years | 260 filings | 60 filings |
Twenty forms a year, on these assumptions, for the same EUR 850,000 and the same French tax treatment. What those twenty forms are worth in dollars, and the policy size at which the whole exercise starts to make sense, are priced out in our guide to the cost of Form 8621.
Three caveats on this illustration
First, this is an illustrative example built on stated assumptions, neither a personalised recommendation nor a quote.
Second, it assumes a fund-by-fund reading. Under a "single PFIC" reading, the gap between the two architectures would narrow sharply. Nobody can settle that for you: it is what your US counsel must establish before the policy is taken out.
Third, risk of capital loss; no return guaranteed. And this is not an argument for investing worse: six well-chosen lines are not less diversified than twenty-six badly chosen ones. The real trade-off is made with your US counsel, and no acceptance is secured in advance.
When the Luxembourg framework is not the right answer
There are files we turn away, and there are files where the honest answer is "not yet". These are the ones where the Luxembourg detour does not stand up.
Four situations in which this framework is generally not suitable
- Your balance is too small relative to the US compliance cost. That cost is counted in forms: below a certain balance it absorbs a disproportionate share of whatever the policy can return.
- Your US situation is not in order. That comes first: a wealth plan does not get built on top of an unresolved filing history. The IRS operates Streamlined Filing Compliance Procedures for taxpayers living outside the United States, conditional on non-willful conduct: neither an entitlement nor a guarantee, and a matter to examine with a US-qualified tax attorney or a French-American CPA.
- You will need this cash in the short term. A policy meant to be surrendered within three years has no purpose here, and an insurer's liquidation can freeze values for years.
- The insurer can decline your application: no acceptance is secured in advance. Judging by practices observed in July 2026, acceptance policies are revised without notice and must be reconfirmed with the company before any step is taken. Which companies may look at an application at all is the subject of our page on insurers that may consider a US person's application.
A reminder that holds in every case: unit-linked funds carry a risk of capital loss and no return is guaranteed.
How Hagnéré Patrimoine can help
Our job is to keep what genuinely serves you inside the Luxembourg framework and set aside what merely costs you. We can review whether a policy could be arranged through our partner insurers, subject to the insurer's acceptance after a full review of the application, and we set the reference currency against your real commitments. We then build the allocation to keep the number of underlying fund lines down, and with it the number of potential PFICs and the recurring cost of your US compliance.
On the US side, we put you in touch with partner tax attorneys and French-American CPAs. Hagnéré Patrimoine does not prepare US tax returns; that cost is not included in our fees and remains payable by the client. All of the above is subject to the insurer's acceptance and subject to review by a US-qualified tax attorney or a French-American CPA: no policy can be described as "compliant" with US rules without written confirmation from the insurer.
This page deals with the Luxembourg framework itself. Whether a policy is open to you at all is covered in what an American living in France can do with a Luxembourg policy; which companies may look at an application, in insurers that may consider a US person's application. What the reporting costs each year is set out in what Form 8621 costs per fund; and whether the policy is itself a PFIC, in is a Luxembourg policy a PFIC?. This guide is also available in French.
A US person and a French tax resident: the whole picture, end to end
We set the structure of the policy, present the application to our partner insurers, and put you in touch with a French-American tax adviser for the reporting side, the cost of which remains payable by you. The insurer may decline, and every US aspect stays with a US-qualified tax attorney or a French-American CPA.
Regulatory information
Hagnéré Patrimoine — registered office at 7 Rue Ernest Filliard, 73000 Chambéry, France. Registered with ORIAS under number 23002291 as a financial investment adviser (conseiller en investissements financiers, CIF, member of CNCEF Patrimoine), insurance broker (courtier en assurance) and banking and payment services broker (courtier en opérations de banque et services de paiement). Not registered with the US Securities and Exchange Commission, and neither an investment adviser nor a broker-dealer under US law.
This article provides general information. It is not a personalised investment recommendation within the meaning of article L. 533-13 of the French Monetary and Financial Code, and it is not legal or tax advice — least of all US tax advice, which is the preserve of professionals licensed in the United States. This page is written for US persons who are French tax residents, not for persons living in the United States. All investments carry risk, including the risk of capital loss: on unit-linked funds the insurer commits to the number of units, not to their value, and no return is guaranteed. Last updated: 28 July 2026.