Is it possible for a Brazilian resident to hold a foreign life insurance contract?

In the Luxembourg insurance industry, we always face the question whether it is possible or not, from a regulatory point of view, for a Brazilian resident to hold a foreign life insurance policy. Hence, we believe it is appropriate to objectively address this query and lay out the regulatory scenario and tax consequences in this jurisdiction.

Brazilian regulatory framework

According to the general rule, individuals or entities resident or domiciled in Brazil can only contract insurance policies issued by companies duly incorporated under domestic legislation and registered with the local insurance authority (SUSEP). Hence, foreign insurance companies cannot perform, directly or indirectly, unauthorised selling or marketing activities in Brazil or issue insurance policies to policyholders resident in the Brazilian territory.

Bearing in mind the general rule, there is nothing in the Brazilian law that prohibits non-residents from contracting offshore insurance to the benefit of Brazilian residents. Given that Brazilian law adopts the principle of legality, according to which individuals or entities are allowed to enter into agreements not prohibited by law, this should be considered an agreement validly executed by two non-Brazilian entities and in full compliance with the laws of their country of residence.

In this context, there are strong arguments supporting the fact that an offshore entity, even if controlled by Brazilian residents, could contract foreign life insurance wherein Brazilian residents are insured persons or beneficiaries of the policy. This situation is not forbidden by Brazilian laws since a Brazilian resident is not contracting a foreign life insurance, but simply represents the risk covered by a foreign entity.

Attention should be paid to the fact that Brazilian authorities are currently more sensitive to transactions contracted by offshore structures for the benefit of individuals resident in Brazil and may disregard them if considered that a certain transaction has been artificially structured through offshore entities to avoid restrictions imposed by local laws and regulations on Brazilian residents.

Thus, a robust solution must be implemented in order to reduce risks that local authorities challenge the proposed structure in the future based on a substance-over-form approach. In this sense, foreign insurers should take into consideration factors such as: the pre-existence of a structure dully declared to the Brazilian authorities that was not incorporated only for the purpose of purchasing a life insurance policy; the fact that this structure is operational and/or has other types of investments; the corporate purpose of the offshore company is to serve as a holding and investment company; evidence of insurable interest by the offshore structure over the life assured; offshore company appointed as one of the beneficiaries of the policy etc.

It is important to mention that major law firms in Brazil have confirmed that, up to this moment, there are no laws, regulations or binding precedents allowing SUSEP to use the substance-over-form standard to disqualify legitimate agreements and structures governed by foreign law in territories abroad. Moreover, in their researches on administrative and judicial case law, they did not verify any decision challenging a similar structure, where a foreign legal entity or individual contracted an offshore insurance policy in which a Brazilian resident was the life assured or beneficiary.

What is necessary to qualify as a life insurance policy in Brazil?

Since a unit-linked insurance agreement is an international contract celebrated outside Brazil, it is important to compare it with the Brazilian concept of an insurance in order to determine the Brazilian tax and legal implications.

We must stress that such hybrid insurance policies traditionally offered by Luxembourg-based insurance companies are not usual in Brazil. The Brazilian life insurance business is dominated by simple term life insurance policies (which might have a one year validity term and do not accumulate cash value) or by pension products such as the VGBL (“Vida Gerador de Benefícios Livres”- which is treated as a life insurance policy for tax reasons). Therefore, it is of paramount importance to design a solution that legally qualifies as a life insurance policy in Brazil to avoid a tax requalification of proceeds as income arising from a typical foreign financial investment.

The Brazilian Civil Code provisions define an insurance agreement as one under which the insurance company, in consideration of payment of a premium, is obliged to cover the beneficiary’s interest in connection with insured risks related to persons or things. Moreover, to qualify as life insurance, the contract must guarantee an indemnification payment for future and unpredictable events, containing a significant death risk coverage that asserts the nature of a life insurance policy.

Therefore, if the contract is designed taking into account the above-mentioned requirements, proceeds received by Brazilian beneficiaries should qualify as an insurance indemnity under Brazilian Law.

Brazilian tax consequences

After qualifying as a life insurance policy, it is necessary to address eventual tax consequences that could be triggered in Brazil.

In case of death proceeds, the Brazilian Civil Code foresees that those are not considered part of the deceased’s estate. For this reason, Brazilian beneficiaries should be able to receive the referred proceeds shortly after the life assured’s death, without setting off an inheritance procedure. The settlement period should not exceed one month from the date of receipt by the insurance company of all the documents necessary for payment.

From a tax perspective, such proceeds would not be subject to inheritance/gift tax as the triggering event for such is the transfer of property or right resulting of succession or donation but not life insurance indemnification. Moreover, the Brazilian Income Tax Code sets out that the stipulated capital of a life insurance policy paid to a Brazilian resident as beneficiary is exempt from income tax. Furthermore, the Brazilian tax authorities have already recognised through a ruling that such exemption also covers life insurance policies contracted abroad, as long as the Brazilian insurance mandatory characteristics are dully observed. Hence, if properly designed, death benefits paid to Brazilian beneficiaries should not be subject to inheritance/gift tax and are exempt from income tax.

In case of proceeds arising from surrenders or maturity claims, since Brazil does not impose CFC rules on individuals, taxation would only be triggered once dividends are distributed to the shareholder or when a capital reduction/liquidation of the offshore structure takes place. In the first scenario, income tax would be levied at 27.5%. In the second scenario, individuals should assess the capital gain obtained and subject it to a progressive taxation ranging from 15% to 22.5%.

Given foreign exchange control rules in Brazil, remittances made in and out of the territory would trigger IOF exchange taxation. Usually, clients instruct insurance companies to deposit proceeds at their offshore bank accounts. If individuals wish to repatriate those amounts to Brazil, they would need to close a foreign exchange agreement at a Brazilian bank to return the financial availability from abroad (“retorno de disponibilidade”), which would trigger 0.38% IOF exchange taxation.

Brazilian tax developments

It must be stressed that Brazil is a jurisdiction that neither imposes CFC rules on individuals nor has properly regulated a substance-over-form doctrine. In this sense, there are plenty of tax planning opportunities to be explored and most Brazilians do structure their wealth through private investment companies located in tax havens. Despite the lack of political will to approve the necessary legislation, the Brazilian tax authorities have increasingly targeted offshore structures. Therefore, it is important to look at how the local administrative and judicial courts have been interpreting and admitting tax planning solutions.

Until recently, the limits of tax planning were based on the legality principle (negative limits of conduct). Nevertheless, the tax authorities have started to demand the existence of additional constraints related to business purpose (positive limits of conduct) in order to fill legal loopholes. Thus, they start to distance themselves from an analysis exclusively based upon the formality required by law towards the substance-over-form doctrine, under which the legal form of a transaction is levied according to its economic substance. So, if a transaction is arguably carried out with a certain degree of artificiality in a tax avoidance context, this transaction could have grounds to be challenged by the local tax authorities.

In order to prepare for this change of paradigm, we strongly advise our clients to take into consideration the relevance of business purpose and substance when designing long-term wealth structuring solutions.

Do not hesitate to contact us in case you need help with yours.

Taïza Ferreira

Sales Navigator from LinkedIn – what better way to source new business?

OneLife likes to use a combination of traditional and digital marketing to source new business. LinkedIn is a particularly powerful tool that facilitates the sourcing of quality leads that can then be qualified by our Sales teams internally to help build new business relationships for the future.

The new way to sell is social! The OneLife Company Succeeds at Sourcing Leads with LinkedIn Sales Navigator

Did you know? In 2017, 30% of new premiums in OneLife policies were collected using this methodology. That’s almost a third of new business sourced directly – and digitally – from LinkedIn! It’s a cost- and time-efficient way to work.

The OneLife Team involved in the case study came from across a number of OneLife’s markets: Nadine Baltus, Cécile Portes, Arnaud Mezergues, Bastien Perrine, Tarja Valkeinen and André Piovezan, led and coached by Christophe Regnault, OneLife Digital Marketing Manager. Using LinkedIn’s network and process, Sales Navigator made a real difference in shortening the sales cycle and creating real business opportunities.

What did we achieve ? For this, we are pleased to say that OneLife is the first wealth management company globally to part of LinkedIn Global’s « Hall of Fame » which ranks best-in-class companies when it comes to modern selling techniques. OneLife is now recognised by LinkedIn as an expert in social selling and lead generation and sits in the prestigious company of the likes of Microsoft, Paypal, SAP ….

How did we get there ? The project was initiated in March 2017 by Christophe Regnault as part of his keynote speech at the L’Apéro des Marketers event in Luxembourg. The seal of approval from LinkedIn is indeed strong recognition that the actions put in place with the Sales Navigator tool delivered real results for OneLife. The combination of LinkedIn’s network, clear KPIs and a motivated team of people is a winning formula!

See => here for the Link to the OneLife Case Study.

Antonio Corpas, Chief Executive Officer OneLife : “We have seen the advantage first-hand at OneLife of adding the modern social selling dimension to more traditional selling techniques. The success of LinkedIn sales solutions is the ability to target contacts who have a real interest in our service offering so responding quickly and in a cost effective way to help satisfy their needs”.

Christophe Regnault, Digital Marketing Manager OneLife : “If you thought that modern selling couldn’t be applied to wealth management and life assurance, then just think again! 30% of OneLife’s assets within Europe have come from leads sourced via Sales Navigator. If this is applied to the rest of our territories, you can see that it has quite an impact!”

What’s next? With these strong foundations, OneLife is now ready to further build and expand this dynamic towards all the front-end teams @OneLife and also towards its stakeholders.

This means two main actions:

Keep on increasing the number of participants internally so as to progressively expand the brand reach on OneLife’s key differentiators;
Further Integrate our stakeholders, by organising external workshops with our partners to get a multiplier effect and alignment in terms of relay of the brand reach but also to generate value out of our leads.

OneLife will keep up its modern selling work and would like to congratulate all those involved in this experience!

Our vision of tomorrow’s Customer Services

Keeping the customer experience at the forefront of its concerns, the company has launched several initiatives in recent years to improve its services and meet the evolving needs of its partners and customers. And there are many projects still to come! Firmly geared towards digitalisation, OneLife is seeking to make new technologies available to all of its partners and customers, while offering qualitative, human-based exchanges.

With 40 employees, OneLife’s Customer Service handles 22,000 phone calls, 30,000 transactions and 40,000 emails every year.

Offering a multi-channel customer relationship

In the digital era, OneLife seeks to offer communication channels that are tailored to everyone: technophobes, social media addicts, loyal customers, volatile and independent customers who prefer total autonomy, customers looking for support… A customer relationship with potentially many different touchpoints!

Letters, emails and phone calls are currently the most common communication channels. However, at the same time, our secure websites (youroffice for our partners and yourassets for customers), as well as our OneLife OneApp mobile application, already give our customers the ability to stay connected with us 24/7. These digital channels enable them to obtain information about our services, products, market and company news, as well as to perform certain transactions and consult their portfolios or the status of pending transactions.

=> Download “OneLife OneApp”!

Available on Google Store or Apple Store.

In the future, OneLife will offer even more opportunities by providing online (paperless) documents, and gradually implementing electronic and online signatures. With these new tools, the company is aiming to support its partners for whom the administrative complexity of particular files, partly caused by increasing regulations (MiFID, CRS, PRIIPS, etc.), can hinder the implementation of our solutions.

We are also considering implementing a conversational agent to enable all our partners and customers to very quickly obtain the information they need on specific issues relating to new regulations, our administrative practices or our online process, at any time and without even having to pick up the phone.

=> Are you a OneLife partner?

Consult your clients’ portfolios in real time 24/7 thanks to our secured online portal your office!

=> Click on the icon below.

Automating volume processing in order to dedicate time to human aspects

Our Customer Service employees spend a great deal of time interacting with the various IT applications. To achieve their mission, they very often have to perform various re-entries or copy-paste data from one window to another, or have to compare and verify information from multiple applications. This can cause errors and prevent them from dedicating time to their key objectives, such as providing support to our partners and customers, or undergoing ongoing training to increase the skillset of each employee and so provide a better service.

“In a few years, many volume-based processes will be automated. Serving as a single point of contact for our partners and customers, we will be able to devote more time to our relationship with them, to providing support and follow-up on files, especially for complex cases which are becoming increasingly common. In this context, our added value lies in our knowledge and our know-how.” Thomas Sainz, Customer Services Department Manager.

Therefore, OneLife has recently begun using robotic automation for certain repetitive volume-based tasks which have little added value. This initiative involves developing and implementing “software robots” to perform the process between the various systems, instead of employees, in order to save time and free up employees to focus on key transactions for our partners and customers.

= > Are you a OneLife customer?

Find out the various features of our secure portal ‘yourassets’!

=> Click on the icon below.

Continuous training of our employees

The life insurance sector is very broad. To deliver a quality service, our employees not only have to stay abreast of the latest regulations in Luxembourg, but also those at European level and in all markets where we operate.

Moreover, these activities require technical and financial knowledge that must be kept constantly up to date.

“Constant changes in regulation on a national, European and international basis, combined with the increasingly sophisticated needs of wealthy clients who are becoming more mobile, require real expertise from cross-border life assurance specialists such as OneLife.
The knowledge and understanding of our teams as well as a truly pragmatic approach to digital are the key elements of a successful all-round client experience, based on the two priorities which we value most – quality and trust.” Eric Lippert, Chief Operations Officer.

To achieve this, OneLife regularly organises trainings to ensure that its employees’ knowledge is as complete and up-to-date as possible.

Contact our Customer Services

For all new transaction requests (new contracts, additional payment, arbitration, redemption, etc.) and any administrative changes to a contract (change of beneficiary, address, etc.), click => here;

For all questions and information requests, click => here.

All you need to know about GDPR

Why am I always being asked to stay in touch?

As of 25 May 2018, the GDPR comes into force and new obligations will apply to the collection, processing and retention of personal data

How many emails have you received in the last few months asking you to renew your consent to all sorts of newsletters? Unless you don’t have an email address and live in a cave, you should have received quite a few. Your banker, your insurance company, your financial advisor all seem to have passed on the word! Where does this sudden renewed interest in your opinion come from?

The answer is four letters: GDPR (the General Data Protection Regulation).

What’s the GDPR about?

This new European regulation comes into force on 25 May 2018. It aims to unify the way consumers’ data across the European Union is collected and processed, while reinforcing their rights, complete with dissuasive penalties in the event of non-compliance (4% of the business’ overall turnover or a Euro 20 million fine in the worst cases). It applies to all businesses that process personal data, from bankers to mechanics, sport clubs to Telecom giants.

Why GDPR?

In recent years, the digitalisation of our society has brought about major changes in the way we interact on the web and the online economy is largely fuelled by the personal data we put out there without too much thought. You’ve probably wondered why you receive emails from companies you have never contacted? Until today, companies’ privacy policies remained quite vague on how they would use the data they request from you, which enabled unscrupulous companies to use it for one or more purposes and transfer or even sell it to third parties without any particular regard for the consent of the persons concerned.

Today, with the entry into force of GDPR, citizens will gain various rights, such as:

The right to transparency as to the purposes of the processing of their personal data
The right to access their personal data and rectify it
The right to request that the data be deleted or that its processing be limited, for example if the person withdraws consent to the processing, if the processing is illegitimate or if the data is not necessary for the purpose of the processing.
The right to transfer their data to other operators

Companies will be required to facilitate the exercise of these rights by appointing a Data Protection Officer (DPO), who will be their single point of contact for any request relating to personal data protection.

OneLife has appointed a DPO who you can contact at: dpo@onelife.com .

Challenges for insurers and their partners

The different actors of the financial market will not only have to implement the various principles that underpin any processing of personal data, such as the principle of lawful processing, transparency and access to the data, but they must also be able to skilfully balance the collection of data needed to fulfil their various regulatory obligations with the principle of data minimisation and retention.

Because of regulations such as the Insurance Distribution Directive (IDD), which will apply to insurance intermediaries from October 2018, as well as the law of 13 February 2018 on the fight against money laundering and the financing of terrorism, a large amount of personal data must be collected, for clear and legitimate purposes, to obtain the required knowledge on the investor.

However, this data collection will follow the principles of GDPR, including:

data minimisation: it will be the broker or insurer’s responsibility to carefully establish where the need to collect this information ends so as not to gather more data than necessary
limiting the processing of the data collected to the sole purposes set out by these regulations. In other words, the data cannot be used for commercial purposes without the investor’s consent
retention of information, requiring that personal information is not kept for longer than necessary
data processing with the greatest care by applying robust security rules so that it is not subject to any breaches

OneLife stands by its partners to accompany and guide them through the implementation of these new obligations, and by its customers to meet their needs and promote their rights.

The complementary combination of human and digital

After a 2017 which saw growth and development of its in-house talent, the OneLife teams are starting 2018 in the best of ways, with a fresh impetus, innovative projects and exclusive partnerships. Wim Dieryck, Chief Commercial Officer, comments on the digital ambitions of the Luxembourg life assurance company by announcing, in particular, a partnership with a 100% digital fintech company, redefining life assurance standards.

Following the launch of the OneLife mobile application at the end of 2016, data exchange through aggregation, 2017 was highlighted in particular by “social selling”. “With an SSI – Social Selling Index – of more than 50%, we are progressing faster than the life assurance industry in the Grand Duchy. Then, when you see that 30% of the commercial business originates through social media, we owe it to ourselves to invest in these new ways of selling” the CCO explains, specifying that social selling need not be in opposition to other ways of working. “On the contrary, they must all be knitted together and integrated to go in one and the same direction. At OneLife, digital gives everyone new marketing and prospecting possibilities”. More traditional events like roadshows, which aim to promote OneLife’s differentiating products on the Spanish, Portuguese and Latin American markets, will therefore also be in the diaries of Wim Dieryck’s teams..

By combining all these activities and with the arrival of new digital tools, the idea is to offer end customers and partners this opportunity to choose their favourite communication and interaction channel, thus making “human-digital-human” interchangeability possible. For the Chief Commercial Officer, “many topics still require human contact, a meeting, but digital provides real added value and enables the various customer and partner needs to be met.”

New digital announcements

Over the next few weeks a digital sign-up test phase, incorporating an electronic signature and providing the opportunity to carry out operations on clients’ life assurance policies, will be launched in Belgium. “Market demand is strong: everyone – end customers and partners – is looking to make their life easier and to use tools via a smartphone” Wim Dieryck explains.

In line with this initiative, the life assurance company is announcing its partnership with Advize, an online savings management platform. “OneLife’s “Ma Sentinelle Lux “will thus be the first Luxembourg product distributed on the French market via a 100% digital channel. Advize proposes distribution through several partners, making a totally integrated tool available” the CCO explains. As soon as it is launched, which is scheduled for the first quarter of 2018, several configurations will be available: the definition of the customer’s profile with an investment in a combination of limited funds based on ETFs, or the definition of the client’s project, based on the timeframe and amount. As for the selection of the funds, it is combined with a robo-advisor. As Mr. Dieryck underlines “We are thus aligning ourselves with developments in ETF trackers with much more innovative management – a highly attractive combination”.

OneLife is thus proving its ability to digitalise many of its processes, possible thanks to the commitment of staff and their desire to take an active part in the (digital) transformation of the life assurance sector.

“We are investing hugely in the training of our people. And if we are now delivering on these topics, it’s because we have set the entire organisation on the path to digitalisation. E-learning, for example, is contributing to the success of these strategic developments and is bringing a new dynamic with it. I’m convinced of one thing: #Digital, it’s ALL about people!” the Chief Commercial Officer adds.

≠Success in ≠Relocation: great expectations of a HNW relocator

Did you know that HNWs under 35 are those most likely to expect Life Assurance to be available through an international wealth management proposition?

Life assurance is one of the core services European investors expect to be available through an international wealth management proposition.

Online banking tops the wish list for relocators wanting to manage their wealth from multiple locations tax advice is also important to internationally mobile HNWs who may find themselves subject to confusing and often conflicting tax requirements in different locations. Wealth managers must offer advice which reconciles jurisdictional differences and their clients’ tax priorities.

Click through to find out more: here.

≠Success in ≠Relocation: the road to relocation reality

The road to relocation reality can be a long and bumpy ride but future relocators often feel prepared ahead of their cross-border adventures.

Their expectations are evenly matched to the actual experience of their predecessors whom have already experienced the relocation journey.

Forty-nine percent of future relocators expect that they would learn about different cultures and in fact, 45% of relocators confirm that their move has indeed opened their eyes to a new realm of cultural experiences!

The harmony between the expectations and reality of HNWIs who have moved illustrates that the relocation journey can be particularly rewarding for personal development and overall quality of life.

To read more about how HNWs are faring on their relocation journey (or how they think they will fare!), click here to get the relocation e-book.

≠Success in ≠Relocation: out with the old and in with the new

The modern wealth manager must provide more than just a strong relationship with their clients. To retain their relocator clients, wealth advisers will need to have the right knowledge to satisfy their client’s international requirements and objectives.

Notably, we discovered that high-net-worth individuals under 35 are the most likely to change their wealth manager following a move abroad.

Disloyal? Unattached?

Not necessarily – many of these millennial magnates simply feel their home-based primary adviser would not be able to fully grasp the complex nature of their international aims. Interestingly, 65% of relocator Baby Boomers are not likely to change their wealth manager. They worry initiating a new relationship abroad will never match the relationship they currently have.

Find out more in our recent thought leadership report: “≠Success in ≠Relocation: The Relocation Journey.”

Marc Stevens and Wim Dieryck, respectively CEO and CCO of OneLife, discussed the question of the future of distribution for life assurance at a conference organised by Wolters Kluwer.

OneLife was sponsor of the 5th edition of the BIC (Belgian Insurance Conference) organised by Wolters Kluwer at the Aula Magna in Louvain-la-Neuve, Belgium, on 21 November with almost 500 participants.

Marc Stevens and Wim Dieryck, respectively Chief Executive Officer and Chief Commercial Officer of OneLife, also presented on the subject of « Digitalisation and personal advice, the future of distribution for life assurance ».

The speakers’ biographies, the full programme as well as the photos of the event are available on https://belgianden -insurance-conference.wolterskluwer.be

≠Success in ≠Relocation: the playbook of international wealth

European HNWs know what they want – especially when it comes to their wealth management. Trust, security and stability are indispensable. And these attributes become even more important for HNWs living in new countries with different tax laws.

To understand their preferences further, we asked relocators and non-relocator European HNWs which capabilities they believe are or would be necessary as part of a wealth management proposition. Quality of service came out on top for both these groups as the most important factor when working with a wealth firm.

Interestingly, the wealthy wanderers of the world also tend to seek out digital offerings much more than their peers who decide to continue living in their country of origin. In contrast, non-relocators seek to work with firms who provide high quality investment performance monitoring services.

Delve into the data even further by clicking: here.