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Belgian Tax implications on surrender of a life insurance



I am considering the sign up for life insurance , for about 100, 000 euro, where nominee would me my wife and three dependent children, who are resident in Belgium. I will likely sign insurance with an insurance company in Belgium, Switzerland or a non EU country.

1) If I get lump-sum money on policy maturity, do I need to pay tax on the received lumpsum?

1) In case of my death, if my family receives assured income in a lump-sum, will there be any tax implications in Belgium?

2) Does the tax implication change if the insurance money comes from Switzerland or non EU country?

katie Nov 28, 2017 11:41 Marked as helpful by the topicstarter

1) no
2) it will be added to your estate
3) switzerland, no. non eu, maybe you could hide it, but do not recommend it.

CC_R Nov 29, 2017 12:44 Marked as helpful by the topicstarter

Yes pay out of life insurance policy is subject to Belgian tax, it happen to my friend her husband died unexpectedly and quite young she was taxed on the life insurance which meant it didn't cover the mortgage which had been the expectation when the policy was commenced. That policy was taken out in Belgium,
I'm unclear why you think you would get a lump sum life insraunce is usually that pays out at death polices that pay out a lump sum aren't strictly life insurance.
As for Switzerland if you die your local account will all be frozen for a long time and it's very bureaucratic and long winded to get them unlocked from what my friend told me. If a sudden large amount of money appears the government will want to know where it came from,

anon Nov 29, 2017 14:37 Marked as helpful by the topicstarter

You should speak to an insurance broker, or your bank. There are multiple answers to your question, and some of the advice above isn't completely correct.

If the insurance is specifically linked to an outstanding amount of a mortgage on a house with an "assurance soldes restant du" type contract linked to your mortgage, there is no inheritance tax payable on the insurance payout. The insurance pays off the outstanding debt directly.

If, on the other hand, you just happen to have a life assurance policy that pays out on your death, then that money becomes part of your estate. That is a taxable amount.

That's why in Belgium if you want to insure a mortgage against death, you should always take an "assurance soldes restant du" contract. Additionally, the premiums on an "assurance soldes restant du" are partially tax deductible, just like your mortgage interest.

Also, with a wife and three children, you probably want to go and see a notaire to better understand how you can avoid inheritance tax. Although the headline rates in Belgium may seem high, very few people actually pay those sorts of rates, and anyone with any sort of wealth in Belgium can organise themselves pretty easily to pay virtually nothing.

CC_R Dec 1, 2017 18:50 Marked as helpful by the topicstarter

Hi Anon couldn't disagree more my friend is fluent in French German and Dutch she is the type of person who reads small prints carefully. She had a horrendous time after her spouse sided and being tax on insurance payment to her and her children by the Belgium government was one issue. She had been under the impression it would be sufficient to pay off her mortgage and that wasn't the case, she also ran into issues with her bank accounts frozen for a long time etc. She did work and managed to find a way to get a new account for herself and stay alive but it was like throwing petrol onto a fire sometime the way she was treated by the system here. She loves Belgium but she said her bank accounts in other countries like the UK were unfrozen with minimal fuss and her it just put salt into the wounds.
I do agree though a good place to start is a knowledgable instance person or notaire

armaan Jan 12, 2018 16:43

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