Assurance-Vie and PEA After Aliyah: What Happens to Your French Wrappers?

What actually happens to my assurance-vie and PEA when I make aliyah?

Your contracts keep growing, but their famous tax breaks do not travel with you. The assurance-vie's reduced 7.5% rate, the annual €4,600 / €9,200 allowance after eight years, and the PEA's tax-free shelter are written into French law for French residents¹³. The day you become an Israeli tax resident, the Israel Tax Authority is not bound by any of it, it taxes by its own rules, and what truly protects these gains for your first decade in Israel is the new-immigrant 10-year exemption, not the French wrapper⁴. Almost every French oleh assumes the assurance-vie is a portable savings account; it is really a French-residence tax privilege that quietly stops working at the border.

How is assurance-vie taxed in France, and why does the deferral not survive aliyah?

In France, assurance-vie is the default savings wrapper because gains compound untouched and are taxed only when you withdraw, and lightly once the contract passes eight years³. For premiums paid since 27 September 2017, the prélèvement forfaitaire unique (PFU, the flat tax) on the gain portion of a withdrawal is 12.8% before eight years and drops to 7.5% after eight years (on contract values up to €150,000), and only the gain above the annual €4,600 (single) / €9,200 (couple) allowance is taxed¹. Social levies of 17.2% apply on top¹.

Every part of that is a creature of the French Code général des impôts. The eight-year clock, the allowance, the reduced rate, none of them are recognised once you file as an Israeli resident. Israel taxes income and gains, not French wrapper categories, so the deferral that makes assurance-vie so powerful in France (let it ride, pay almost nothing later) has no force in Israeli law. The only reason your assurance-vie gains are not taxed in Israel in your early years is the separate Israeli benefit covered below, not the contract's French status.

Does Israel tax assurance-vie gains during, and after, the 10-year window?

During the window: no, the gains are exempt; after it: yes, they can be taxable in Israel under ordinary rules. As a משרד הקליטה (Misrad HaKlita)-recognised new immigrant, you get a 10-year exemption on income and capital gains produced or accrued outside Israel, salary, interest, dividends, rent, royalties, and gains on the sale of foreign assets⁴. Your assurance-vie and PEA sit squarely inside that: foreign contracts holding foreign assets, so for roughly the first ten years from your aliyah date their growth and any withdrawal gains are outside Israeli tax⁴.

Two things change that comfortable picture. First, from 1 January 2026 the exemption is report-but-still-exempt: new immigrants who become Israeli-resident on or after that date still pay no Israeli tax on the foreign income for the decade, but must now disclose the foreign assets and income to the Israel Tax Authority, the old reporting exemption is gone⁵. Second, when the window closes around month 120 after aliyah, the assurance-vie stops being sheltered: growth and realised gains from that point are taxable in Israel like any other foreign financial asset, commonly at the 25% rate on financial gains⁴. So the French "leave it untouched and it compounds tax-free forever" logic simply does not carry past your tenth Israeli year.

Does the PEA lose its tax-free wrapper when I leave France?

Contrary to a common fear, France does not automatically close your PEA when you move abroad, but the wrapper stops doing useful work, which is the real reason to decide its fate deliberately. Since the rule changed, transferring your tax residence out of France keeps the PEA open in almost all cases; it is force-closed only if you move to a non-cooperative state or territory (ETNC), and Israel is not on that list². So a French oleh keeps the plan if they want to.

The catch is twofold. You can no longer contributeto a PEA once you are not French-resident, so it becomes a frozen pot. And because a non-resident's PEA gains fall outside the scope of French income taxanyway, the plan's headline benefit, sheltering gains from French tax after five years, becomes moot for you². Meanwhile Israel does not recognise the PEA wrapper at all: after your 10-year window, the underlying holdings are just foreign securities the Israel Tax Authority can tax on disposal. The genuine decision is therefore liquidate vs hold: realising gains while you are still French-resident locks in the French five-year tax-free treatment on a plan over five years old², whereas holding it into your Israeli years parks the gains under the Israeli exemption clock instead. Settling this before the move, or early in the exemption window, avoids being caught between two systems that each only half-help.

For French-American dual olim: why is the assurance-vie the worst case?

Because the IRS can hit one assurance-vie with three separate punitive regimes at once. A fund-linked (unit-linked) assurance-vie is, in US eyes, an investment held through a foreign structure, and that triggers, layered on top of each other:

• PFIC. The pooled investment funds inside the contract are קרן נאמנות (keren ne'emanot)-type foreign funds, Passive Foreign Investment Companies. A foreign fund is a PFIC if 75% or more of its gross income is passive or 50% of its assets produce passive income, which a securities fund always meets⁶. Under the default §1291 excess-distribution regime, gains and excess distributions are taxed at the highest ordinary income rate in force, plus an interest charge for the years the income was deferred, reported each year on Form 8621⁶.
• Foreign grantor trust. Many practitioners treat an assurance-vie as a foreign trust of which the US holder is the grantor/owner. A US owner of a foreign trust must file Form 3520 and ensure the trust's Form 3520-A is filed annually, forms with steep failure-to-file penalties⁷.
• FBAR + Form 8938.The contract's cash value is a foreign financial account/asset. As a US citizen you already file a worldwide-income return for life, and an FBAR once your foreign accounts together exceed $10,000 at any point in the year⁸.

Crucially, the Israeli 10-year exemption does nothing for any of this. It is an Israeli benefit; it does not touch US obligations. So a French-American oleh can owe the IRS punitive PFIC tax and a stack of information returns on an assurance-vie that produces zero Israeli tax during the same decade, the worst of three regimes precisely when Israel is asking for nothing. Many cross-border advisers regard a fund-linked assurance-vie as a vehicle a US person should not hold, and unwinding it has its own French and US tax consequences worth modelling before you act⁶.

Should I liquidate before aliyah or keep the wrappers?

There is no single answer, it turns on your passports and the contracts' ages, but the framing is clear. If you are French-only, holding is often fine: France keeps the plans open², and the Israeli 10-year exemption protects the gains for a decade⁴; the question is whether to sell inside France first (locking the assurance-vie's 8-year 7.5% treatment or the PEA's 5-year tax-free status while you are still resident¹³) or ride the Israeli window. If you are French-American, the calculus flips: the PFIC and foreign-trust drag on a fund-linked assurance-vie often argues for restructuring or unwinding it, but unwinding has its own US and French tax cost, so it is a modelled decision, not a reflex⁶. Either way, the moment before you become Israeli tax-resident is the cleanest point to act, because it is the last time French resident rules fully apply to you.

Your French assurance-vie and PEA keep growing after aliyah, but their tax breaks do not travel with you. The reduced 7.5% rate, the 4,600 euro / 9,200 euro allowance, and the PEA's tax-free shelter are written into French law for French residents, and the Israel Tax Authority is not bound by any of it once you are an Israeli tax resident. What actually shields these gains for your first decade in Israel is the new-immigrant 10-year exemption on foreign income and gains, not the French wrapper. From 1 January 2026 that exemption is report-but-still-exempt: tax-free, but you must now disclose the foreign assets and income. After the 10-year window closes (around month 120), growth and realised gains can be taxable in Israel under ordinary rules, commonly 25% on financial gains. France keeps the PEA open after you move (it is force-closed only on a move to a blacklisted ETNC, which Israel is not), but you can no longer contribute and a non-resident's gains fall outside French income tax anyway. For French-American dual olim the fund-linked assurance-vie is the worst case: the IRS treats it as a PFIC (Form 8621, punitive section 1291), often as a foreign grantor trust (Form 3520 / 3520-A), plus FBAR and Form 8938, and the Israeli exemption relieves none of it. Liquidate-vs-hold is a real decision best settled before you become Israeli tax-resident.