Wealthy And Sunseeking

Migrating to a warm country after a long, fulfilling career might be the ultimate treat. In our research with 770 high-net-worth (HNW) individuals, we unearthed a certain profile of wealthy investors – the Sunseekers. They are typically retired and / or looking to relocate to Spain or Portugal from Denmark, Finland, France, Sweden or the UK.

Their motivations are to be in a country with a better climate, to have a comfortable retirement and to have the opportunity to get back to the hobbies and passions they love.

Find out more about the relocation journey by downloading our e-Book about the wealth manager’s role here:

International inheritance: rules and taxation

This topic, which is complex for many wealth managers, is more current today than ever. The challenges to be met – a unique family model for each of our clients (recomposed families, etc.) with an international dimension – are many.

One only has to look at recent news (such as the Jarre or Hallyday affairs) to realise how many problems these two components of a unique family model and an international dimension can cause. Not to mention the lengthy judicial proceedings initiated by the heirs to determine the law applicable to the inheritance.

Is life assurance an ideal solution for passing on an estate?

The advantage of an investment within a life assurance product from a Luxembourg insurance company is that it enables your assets to be managed and passed on totally serenely and in a highly flexible way.

Why Luxembourg?

For its international expertise and a “tailor-made” solution allying clients’ personal and financial situation.

Also for its fiscal neutrality, in particular in respect of inheritance tax.

Our experts will accompany you to enable you to draw up your inheritance solution.

Inheritance rules and practical application: how does this work?

Let us take the example of a French couple married under the regime of wholly shared assets and close to retirement with an integral attribution clause and a capital of €2 million in assets.

They wish to plan their inheritance for their three children – Jean, who lives in Sweden, Paul, who lives in Portugal, and Jeanne, who lives in Belgium.

As a Luxembourg life insurance company, the couple will be advised to take out a joint life assurance policy governed by French law to be redeemed upon the death of the second party.

After the death of the first insurance policyholder in France, the surviving spouse, who in the meantime has moved to the south of France, will regain control over the life insurance policy until their death and when the policy is redeemed each of the children will then receive equal shares of the insurance proceeds.

What tax will their children pay?

As the premiums were paid before the couple turned 70, when they die all the beneficiaries will be subject to a sui generis tax (article 990 I of the General Tax Code, GTC). They will benefit from a tax allowance that may be as high as €152,200 per beneficiary.

It should also be noted that for deaths occurring after 31 July 2011, the 20% levy will be due if:

At the time of death the beneficiary is resident for tax purposes in France within the meaning of article 4B of the GTC and that this was true for at least six of the ten years preceding death.
Or if the policyholder, at the time of their death, is resident for tax purposes in France within the meaning of the same article 4B, which is true in our case.

For Jean, who lives in Sweden and is 30 years old

According to Swedish regulations no inheritance tax applies, Jean simply has to pay the tax due in France.

For Paul who lives in Portugal and is 25 years old

According to Portuguese law, no taxation will be applied to Paul who will have to pay only the French tax.

For Jeanne who lives in Belgium and is 20 years old

According to Belgian legislation, insurance policies may or may not be liable for inheritance tax; it all depends on the construction of the policy.

For Jeanne, inheritance tax will apply, the rate of which varies depending on the region in which she lives (article 8 of the Inheritance Code).

Apart from the degree of kinship, the value of the estate and the residence for tax purposes of the deceased will also play a role.

Onelife can provide you with tailor-made solutions adapted to your personal situation and your requirements to enable you to plan for the passing on of your estate or simply manage your assets.

Article by Nora Belarbi, Legal Advisor at OneLife

HNW Travellers Who Think Ahead

Having relocated five times on average, Travellers are arguably the most adventurous profile of HNW relocators we have uncovered in our recent cross-border research! They are well-versed in the unexpected challenges that may arise during their relocation journey.

As such, 35% of them seek advice from specialist relocation agencies as well as their current or future employers (38%). However, it appears that advisors are missing from the relocation A-team.

Worry not, Travellers are already thinking ahead! Thirty percent of Travellers are keen to work with wealth managers who have strong advice capabilities and expertise. Clearly there is potential for advisors to step in and add a financial perspective to the nuances involved the planning and execution of a move.

To learn more about the relocation journey and the role that advisors have to play, download our e-Book here:

Wealthy Wanderers And Their Needs

From our recent research of 770 European high-net-worth (HNW) investors, an interesting segment of clientele emerged – Travellers. Any wealthy wanderers who have relocated more than three times fall into this category, with an average of five relocations over their lifetime. They are generally younger and more financially successful than the overall sample, perhaps due to the career opportunities offered by an international lifestyle. Despite their strong aptitude to upheave their professional and personal lives, the most sought after attribute in a new wealth manager abroad is stability.

Furthermore, our insights revealed that Travellers play the relocation game a little differently to other HNW personas. One of their main motivations for relocation is to maximise their earnings in a low tax jurisdiction (23%) and surprisingly, 38% of them turn to their current or future employer for support with relocation concerns.

Grasping how best to serve these individuals should be at the top of an advisors agenda. Interested in learning more?

Click on the image below to download our e-book #Success in #Relocation!

Know Your Client: Wealthy Relocators

Increasingly, wealth managers find themselves trying to keep up with the wealthy who are enriching their lives with international travel. Whether these relocations are related to career progression, lifestyle changes or retirement, their financial needs become increasingly complex as more jurisdictions are crossed.

We recently researched 770 high-net-worth individuals to gain more understanding into the role which wealth managers can play supporting clients in this process.

Our insights reveal different profiles of wealthy relocators and their distinct needs – the Travellers, Sunseekers and Entrepreneurs have all relocated for different reasons.

Click on the Slide Share Logo to read about what they say is missing in their current wealth management relationships:

How was 2017 and what can be expected/hoped/feared in 2018 ?

January is the month of Janus, the two-faced Roman god, and it’s a good time to look both ways: how was 2017 and what can be expected/hoped/feared in 2018 ?

2017 was definitely a grand cru year for equity investing: nearly all stock markets delivered double digit returns, in local currency terms that is of course. In Euro terms, it was a little harder since the relative political tranquillity meant that the common currency was never really under pressure during the past year and thus it strengthened versus nearly all major currencies.

Fears of populist victories in countries like the Netherlands didn’t come true, and in the countries where they did progress and had an impact on government building (Germany, Austria), the market didn’t seem to care that much. The big change on the European political level turned out to be the newcomer: Emmanuel Macron not only realised a complete reshuffle of the political landscape in France, but looks set to become a major force at the European level too. He might even succeed in implementing some real economic reforms in his country, where they were more than overdue.

One country that still struggles with both politics and (lack of) real reforms seems to be Italy. Nothing catastrophic in 2017, but most observers feel that in the longer run we might encounter difficulties. Not so much the rise of the Cinque Stelle movement or even the return of phoenix Silvio Berlusconi in the upcoming elections cause undue worry, but much more so the loss of productivity compared to the rest of the Eurozone: over the last decade Italy has built a gap of over 30% versus the likes of Spain, France or Germany. Quite unsustainable in the long run, especially when combined with the largest public debt within the Union at >130% of GDP (only preceded by Greece, who is “hors categorie” in this field of course).

That brings us to an area where making profits in 2017 was slightly harder than in equities: bonds.
Even if consensus had it that rates in the Eurozone will remain « lower for longer », no one will deny that the risks for rates are now on the upside. A change in ECB leadership in 2019, inflation gradually shifting higher, unemployment substantially lower and economic growth rates reaching potential: all of these factors will eventually lead to a shift in central bank policy. Whether it will be a further gradual lowering of the monthly amounts used to buy bonds, or indeed a first minor hike in short-term rates, that remains to be seen. Either way it will mean the end of Quantative Easing as we know it and might temporarily shock markets, as did the “tapering” comments in the US a couple of years ago.

But so far, so good: despite rates having a rising tendency, even euro area government bonds turned in a modest positive total return over the calendar year 2017. It is not certain that this will be the case in 2018…

In the US there seems to be a large consensus around a continued gradual rise in short-term rates (2, 3 or 4 hikes for 2018 ?), but the effects on long-term rates remain uncertain. Over the full year, that was not sufficient to unnerve markets or result in negative 2017 returns. Only very recently did markets seem to get a bit nervous around the 2.60% mark. Somewhat amazing, since a scenario with 3 or 4 hikes on the short end for the next 12 months will inevitably see long rates go well above 2.50%.

Unless the market prices in an inversed yield curve? That might give more reason for concern, since it has historically often announced the beginning of a recession. And frankly, after having witnessed a bull market soon headed into its 10^th year (remember the post-global financial crisis trough was in March 2009), one shouldn’t be surprised to see some signs of fatigue or even fear popping up.

Which brings us to the 2018 part of the two-faced look on markets. There seems to be a large consensus that equities are still the place to be for decent returns in the new year. Expectations are high for European markets, that might be entitled to a catch-up with US markets since they did lose some 3 years in the post-financial crisis rebound process due to the Eurozone worries in 2011-2013.
Emerging markets are clear favourites as well. Even if the market at times seems nervous about rising US rates, these countries today look a lot better equipped to withstand the traditional downturn we saw when they had mainly debts in USD, rather than today’s sometimes enviable FX reserves.

And even Japan is on the radar for quite some observers as an attractive destination for international equity investors. Not only does the Yen really look like it should go up from here, but on top of that Abenomics are now supported by a shift in corporate governance that should benefit shareholders.

The US has fewer fans today: it’s true the markets have had quite an impressive run with new all-time highs nearly every week, which creates some fear of heights. And despite the expected (and sometimes feared) rise in interest rates just about everybody warns on USD weakness in 2018. A factor that might be detrimental for returns for non-USD based investors, especially with FX hedging becoming more expensive with the rising interest rate differential.

Maybe this should be pointed out as the major risk for 2018: consensus seems so big on a large number of assets and markets that the danger might be hidden there. What happens to all those crowded trades if all of a sudden market sentiment turns around? Maybe due to the inevitable moments of surprise and nervousness around themes like Brexit discussions, North Korea aggression, or the unknown unknowns we might encounter in 2018. Until then, the phrase that in our view best describes the attitude of most market participants is probably “rational exuberance”…

Ruben De Roover

What you should expect for 2018 regarding Flat Tax, IFI, CSG ?

After a rocky legislative process, Emmanuel Macron’s campaign promise comes with a series of reforms affecting the taxation of movable assets. This is an overview of the new tax landscape in France, including the life assurance regime:

Objectives and legislative path

Tabled on 27 September 2017 the Finance bill for 2018 presents the far-reaching reforms required by the new president Emmanuel Macron to:

boost the French economy,
direct savings towards the financing of the real economy
simplify and make the tax regime for moveable assets more readable

The bill was discussed at the National Assembly from 17 October to 21 November 2017, and finally adopted at first reading on 21 November 2017. The amended text was submitted to the Senate. As OneLife announced in its article on the subject dated 15 November 2017, the text was met withthe strong opposition of the Senate and was largely amended then submitted to a Joint Commission consisting of National Assembly and Senate members.

Faced with wide dissension within the Joint Committee, the text went back and forth between both chambers. It finally went to the National Assembly, which has the last word for this type of text and which adopted it on 21 December 2017 (subject to the approval of the Constitutional Council after right- and left-wing deputies and senators referred the matte).

The Constitutional Council finally rendered a decision approving the text, which was thus definitively adopted on 28 December 2017 and published in the Official Journal of 30 December 2017.

Main provisions

The law of 30 December 2017 on the Finance Law for 2018 includes three provisions of particular interest to savers:

An increase of the CSG rate by 1.7% resulting in an overall increase in social contributions from 15.5% to 17.2%
The introduction of a 30% flat tax (or PFU – Prélèvement Forfaitaire Unique – in France) on savings income (including social security contributions)
Replacement of the Solidarity Tax on Wealth (ISF) by the Tax on Real Estate Assets (IFI)

The PFU: a cure-all for the saver?

PFU is the French term for what is widely known in Great Britain and the United States as a “flat tax”. In France, the PFU is an innovative taxation method by which a uniform rate is applied to a broad category of different situations and sources of income.

The French system usually customises taxation to the individual situation and according to the type of income. This is, therefore, a significant change in the tax approach in Emmanuel Macron’s presidential programme.

The basic idea is to simplify the taxation of the capital of French residents by applying a single rate applicable to a full range of savings accounts, investments and income:

by applying a single rate to all financial income
to avoid the complicated application of the income tax for different categories of financial income (life assurance income, interest, dividends, capital gains…)

This apparent simplification actually makes the taxation of financial income more complex, especially as concerns life assurance.

a. Affected policies

The PFU applies to all financial investments held by French residents as at 1 January 2018 and, for life assurance, retroactively from 27 September 2017.

This includes fixed-income investment products, bond coupons and dividends which now see the 40% tax allowance removed unless one opts for dividend taxation by the progressive scale of the French Income Tax (IR).

However, the PFU does not affect:

Regulated savings accounts (Livret A, Livret de Développement Durable et Solidaire) as well as savings products exempt from income tax (company savings scheme, retirement savings scheme…)
Investments heavily weighted towards equities such as the equity savings plan (PEA). An exception consistent with one of the government’s goals of promoting investment in the real economy
Property income, which is nevertheless affected by the proposed wealth tax reform as a real estate tax

Thus, neither life assurance nor bank savings accounts (including the Home Savings Scheme [Plan Epargne Logement] and the Home Savings Account [Compte Epargne Logement], but only those opened as from 1 January 2018) are exempt from the PFU.

b. PFU or the fixed-fee scale of the IR?

The PFU rate is set at 30%, i.e.:

2% of social contributions and
8% of income tax

In principle, therefore, savings income will be taxed at the rate of 30%, but the investor may want to consider the option of having the progressive scale of the French income tax applied instead!

The option must then be chosen in writing, and the choice is irrevocable and general, i.e. it covers all the income from movable assets of the investor for one year.

As from 1 January 2018, the Prélèvement Forfaitaire Obligatoire (a fixed levy at source equivalent to the rates the PFU, i.e. 17.2% of social contributions and 12.8% of income tax) isdebited from all income from movable assets received by investors. This deduction does not entail full discharge.

If the option to apply the IR scale is not available, the PFO will entail full discharge. In other words, PFO = PFU.
If the investor chooses to apply the IR scale, the PFO will be credited to the amount of IR to be paid, with the investor being entitled to a refund in the event there is a surplus.

Low-income individuals in France may want to opt for the application of the IR scale.

PFU and life assurance

Is the PFU more advantageous than the old applicable taxation anyway?

The government’s initial intention was to limit the application of the PFU to policies taken out on or after 27 September 2017, and to policies taken out before that date but with premiums over €150,000 and €300,000 for a couple, and only for the premiums paid as at 27 September 2017.

Analysts logically deduced that the new regime would be less advantageous than the old one for policies over 8 years old. An amendment has corrected this issue:

The PFU (30%) applies to all products attached to premiums paid as from 27 September 2017 for policies under 8 years;
For policies of more than 8 years,
- the rate of 24.7% remains applicable if the amount of the premiums paid on the policyholder’s life assurance policies do not exceed €150,000.
- If the amount of the premiums paid on the policyholder’s life assurance policies exceeds €150,000,
  - the rate of the PFU is applicable for the products corresponding to the portion of premiums paid after 27 September 2017,
  - The rate of 24.7% is applicable for products corresponding to the portion of premiums paid before 27 September 2017

This share is determined according to the following calculation: Sum of products * ((150,000 – premiums paid before 27 September 2017) / (premium paid as from 27 September 2017)).

This proportional calculation has not, unfortunately, been drafted in the simplest terms for investors. Similarly, while the original bill provided that the threshold to be used was €150,000 for a single person and €300,000 for a couple, the threshold of €300,000 finally disappeared from the law as it was passed.

The €150,000 threshold must, therefore, be taken into account at an individual level only.

However, and fortunately, the allowances of €4,800 and €9,200 for a couple have been preserved for policies held for more than 8 years. Similarly, the option for IR taxation at the progressive rate has been maintained.

The situation has, therefore, become infinitely more complex and less clear for investors and insurers. This can be summarised as follows:

Click on the table to enlarge it

The IFI – a gift for the rich?

As from 1 January 2018, the Solidarity Tax on Wealth (ISF) has been transformed into a Tax on Real Estate Assets (IFI).

a. The principle

The ISF traditionally taxed assets of more than €1.3 million by a progressive rate linked to wealth. The principle of the IFI is the same as that of the ISF with the (major) difference that the IFI only taxes real estate assets. Simplification or hoax?

For French residents, the IFI applies to all real estate assets or rights, units or shares of real estate companies held in France and abroad by the persons making up the tax household.

For foreign residents with real estate assets in France, the taxable base for the IFI is as follows:

The value of real estate assets or rights in held in France by the tax household residing abroad (secondary residence for example)
Units or shares of real estate companies holding real estate in France
Units or shares of real estate companies holding real estate in France and abroad, for the respective share of the value of real estate located in France

b. Scope of application

In fact, if your assets are solely composed of real estate assets (principal residence, secondary residence, OPCIs, investment properties, rentals…) and the value of your assets exceeds the €1.3m threshold, the reform will change nothing in your case.

On the other hand, if you hold diversified assets, the IFI will force you to make scholarly calculations between assets within and without the scope. Below is a non-exhaustive list of assets and rights within the IFI scope:

value of principal residence (however, the 30% allowance has been kept)
value of secondary residence(s)
buildings under construction
undeveloped property (such as land and farmland)
buildings and fractions of buildings represented by shares of real estate condominium companies
The usufruct of real estate assets and rights for the total value of the real estate asset or right (except in case of succession, where both the usufructuary and the bare owner may be taxed up to their respective share)
Shares in companies holding real estate in France, for their value representing the properties held in France directly or indirectly by the company.

It is also possible, in case of doubt about the value of a property, to use the “Patrim” online service made available by the Ministry of Finance: [https://cfspart.impots.gouv.fr/LoginMDP]

Certain real estate assets and rights are not included in the definition of the IFI’s taxable wealth base, and partial or total deductions are available for:

buildings used for professional activity,
woods and forests set aside for exploitation or professional use,
rural properties leased for the long term or for professional use (farmland, buildings and farm equipment),
furnished housing rented under the loueur en meublé professionnel (professional landlord for furnished accommodation) tax regime.
the bare ownership of a property that is totally exempt

For foreign residents, the law has also removed the notion of société à prépondérance immobilière française (a predominantly French real estate company) to avoid artificial adaptations (and thus all real estate assets, regardless of how they are held, are included in the tax base of the IFI).

c. Deductions

The IFI is applied to the net taxable assets, i.e. assets net of existing debt as at 1 January of the tax year.

Regrettably, however, many ISF-specific deductions have been done away with (such as family loans and housing tax), and legislators have eliminated the possibility of reducing the tax base via debt.

At least the 30% allowance on the principal residence is still there.

The following expenses, among others, are deductible, provided that one produces the receipts:

expenses for the acquisition of real estate assets or rights,
improvement, construction or expansion expenses,
expenses for the acquisition of units or shares in proportion to the value of real estate assets and rights,
taxes due on the property concerned (such as property tax).

d. Conclusion

Overall, this tax reform is a step in the right direction as it simplifies, for the future, the applicable rules.

In the short term, however, the new rules add a layer of complexity to the taxation of movable assets by stacking the applicable norms, especially regarding the taxation of dividends and life assurance.

These adjustments render Luxembourg life assurance an even more attractive choice for French residents, and OneLife stands with its clients and partners to guide them through these changes.

Author: Jean-Nicolas Grandhaye

Unit-linked life insurance as a wealth planning solution for Peruvian investors

What is a unit-linked insurance contract?

A “unit-linked” product is an insurance contract under which the policyholder bears the full investment risk of the underlying financial assets of the policy. Therefore, under “unit-linked” products, the performance of the investments is not guaranteed by the insurance company in the short-, medium- or long-term.

What are the relevant components of a unit-linked insurance contract?

The main components of a unit-linked insurance contract are the following:

Policyholder(s): investor who subscribes, signs and pays the insurance premium. Could be an individual or a company.
Insured person(s): risk element covered under the insurance contract. Could be one or several persons.
Beneficiary(ies): person or entity that will receive the insurance indemnity upon the occurrence of the insured event.
Asset manager: professional entity duly licenced in its home jurisdiction to perform portfolio management activities. The asset manager may be entrusted by the insurer to manage the financial assets on a discretionary basis under the insurance contract based on the investment strategy chosen by the policyholder at inception.
Custodian bank: financial institution which provides custodial services in relation to the financial assets held under the policy(ies).

What are the main benefits of subscribing a unit-linked product with a Luxembourg insurer?

The main advantages of unit-linked insurance policies issued by Luxembourg insurers are the following:

Asset protection: The Luxembourg authorities, and more specifically the Luxembourg Insurance Regulator, the CAA (Commissariat aux Assurances), have designed a unique scheme under which the assets of the policyholders are segregated off-balance sheet from the insurer’s and custodian bank’s balance sheet. As a result, in case of insolvency or bankruptcy of the insurer or the custodian bank, the assets of the policyholder remain fully protected from any ordinary creditors’ claims.
Confidentiality: Luxembourg insurers and its professionals are fully bound by strict professional secrecy rules which ensure full confidentiality for the policyholders and any possible beneficiaries.
Investment flexibility: Luxembourg investment rules allow for great flexibility as to the type of financial assets in which the premium contributed by the policyholder can be invested. It is not uncommon to observe how investment managers invest in alternative or hedge funds and private equity through Luxembourg life insurance policies in order to obtain higher yields.

What is the tax treatment of unit-linked products for Peruvian investors?

At inception, income tax applies to an effective rate of 2,1% on the risk premiums when the latter are paid to cover risks located within the Peruvian territory, are referred to Peruvian residents at the time the contract is signed or, are referred to goods or real estate located in Peru.

In case of partial or total surrender, any capital gain derived from the policy is currently exempted from Income Tax in Peru.

There is no Wealth or Equity Tax in Peru, thus, the value of the policy will not be taxed as such if held directly by a Peruvian tax resident.

In relation to life proceeds paid to a Peruvian resident beneficiary, please note that, in principle, insurance benefits triggered as a consequence of the death of the insured, shall be tax exempt. Should the beneficiary be resident outside of Peru, please note that different taxations may apply on the receipt of the insurance indemnity depending on the jurisdiction.

Other points to consider?

Yes, in order to avoid any requalification risk in Peru, it is highly recommended to embed substantial death cover in the product.

Should you need additional information in relation to unit-linked products for Peruvian resident investors, do not hesitate to contact our Sales representatives:

José Manuel Tara, Regional Director Iberia & Latam, at OneLife

Luis De La Infiesta, Regional Sales Director Iberia & Latam, at OneLife at OneLife

Gonzalo Garcia-Perez, Wealth Planner Manager for Iberia and Latam markets, at OneLife

Author: Gonzalo Garcia-Perez

Unit-linked life insurance as a wealth planning solution for Spanish investors

The “unit-linked” product allows policyholders to combine in an efficient manner, financial, succession and tax planning in a single contract which complies by default with the tax and legal framework of the jurisdiction in which the policyholder is resident in order to avoid any legal or tax requalification risk.In the case of Spain, “unit-linked” products are mainly regulated by Spanish Insurance Law 50/1980 and, from a tax perspective, by Spanish Tax regulations such as Spanish Personal Income, Wealth and Inheritance and Gift Tax laws.

What are the relevant components of a unit-linked insurance contract?

The main components of a Spanish unit-linked insurance contract are the following:

Policyholder(s): investor who subscribes, signs and pays the insurance premium. Could be an individual or a company.
Insured person(s): risk element covered under the insurance contract. Could be one or several persons.
Beneficiary(ies): person or entity that will receive the insurance indemnity upon the occurrence of the insured event.
Asset manager: professional entity duly licenced in its home jurisdiction to perform portfolio management activities. The asset manager may be entrusted by the insurer to manage the financial assets on a discretionary basis under the insurance contract based on the investment strategy chosen by the policyholder at inception.
Custodian bank: financial institution which provides custodial services in relation to the financial assets held under the policy(ies).

What are the main benefits of subscribing a unit-linked product with a Luxembourg insurer?

The main advantages of unit-linked insurance policies issued by Luxembourg insurers are the following:

Asset protection: The Luxembourg authorities, and more specifically the Luxembourg Insurance Regulator, the CAA (Commissariat aux Assurances), have designed a unique scheme under which the assets of the policyholders are segregated off-balance sheet from the insurer’s and custodian bank’s balance sheet. As a result, in case of insolvency or bankruptcy of the insurer or the custodian bank, the assets of the policyholder remain fully protected from any ordinary creditors’ claims.
Confidentiality: Luxembourg insurers and its professionals are fully bound by strict professional secrecy rules which ensure full confidentiality for the policyholders and any possible beneficiaries.
Investment flexibility: Luxembourg investment rules allow for great flexibility as to the type of financial assets in which the premium contributed by the policyholder can be invested. It is not uncommon to observe how investment managers invest in alternative or hedge funds and private equity through Luxembourg life insurance policies in order to obtain higher yields.

What is the tax treatment of unit-linked products for Spanish investors?

For income tax purposes, Spanish resident policyholders are subject to Spanish Income Tax (i.e. Savings Income Tax at a marginal rate of 23%) on any gains realised in case of partial or total surrender of the policy. Only the gain element (if any) will be taxable, not the full surrender amount.

For Wealth Tax purposes, the Spanish resident policyholder has to pay Spanish Wealth Tax on the surrender value of his/her policy as of year-end. It is worth bearing in mind that the final tax liability could vary significantly depending on the region of Spain where the policyholder is resident. Indeed, some regions do apply significant tax exemptions and deductions for Wealth Tax purposes. For those investors willing to optimise Wealth Tax, it is important to mention that “unit-linked” insurance policies may offer different compliant solutions to reach this objective.

In relation to Inheritance and Gift tax, the Spanish panorama is rather complex as each Spanish region has a broad remit to exercise legislative powers in this field. That being said and broadly speaking, unit-linked insurance policies will not be subject to particular Inheritance and Gift tax rates in comparison with other financial products or assets. However, the flexibility of insurance policies as a succession planning tool allows, if correctly implemented, to plan or postpone the tax liability in full compliance with Spanish tax regulations.

Should you need additional information in relation to unit-linked products for Spanish resident investors, do not hesitate to contact our Sales representatives:

José Manuel Tara, Regional Director Iberia & Latam, at OneLife

Luis De La Infiesta, Regional Sales Director Iberia & Latam, at OneLife at OneLife

Gonzalo Garcia-Perez, Wealth Planner Manager for Iberia and Latam markets, at OneLife

≠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.