The Commission has confirmed the delay in transposition to 1 July 2018.
However, the application date remains unchanged: 1 October 2018.
Given that the European Parliament and the Council are not expected to adopt the Amending Directive before March 2018, the delay will apply retroactively from 23 February 2018.
To know more, get a grasp of this directive, and see how OneLife has been preparing for the changes in collaboration with its partners, watch this video!
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!
As international relocation becomes a lifestyle for high-net-worth individuals, wealth managers must adjust to the needs of these global jet-setters. Our most recent research involving 770 wealthy individuals found that only 8% of relocators felt their wealth managers were helpful in the process.
As a result, 41% of millennials would have no reservations about changing to a new wealth firm following a move. The main reasons being the perception that their current wealth manager would not understand their international financial needs and that the digital services on offer would not enable them to manage wealth remotely.
By understanding the needs of various client demographics such as Sunseekers, Entrepreneurs and Travellers, the products and services offered can be expanded to meet their essential international requirements.
Read more by clicking on the Slide Share logo:
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:
On 28 November 2017, the Spanish Supreme Court passed a judgement relating to the concept of fiscal residence in Spain for individuals.
In this judgement, the Supreme Court reiterates that true residence outside of Spain that is recognised by the Spanish Tax Agency and exceeds 183 days during the calendar year, which corresponds with the tax year, is an objective fact that should prevail over elements that are subjective in nature and whose interpretation is left to the Tax Agency to decide. In fact, the Supreme Court also confirms that a subjective element such as that of future intention to reside in another jurisdiction is difficult to demonstrate in practice in advance, especially in the current context where there is a high level of geographical mobility of people.
This information is relevant for clients with an international profile and high geographical mobility whose fiscal residence (or non-residence) in Spain is difficult to determine according to the current criteria set by the Tax Agency in practice. In fact, in our opinion, this new judgement clarifies that the time criterion of residence based on physical presence in Spain (i.e. an objective criterion determined by the “183 day” rule) should prevail over other elements that are subjective and intentional in nature, upon which the Tax Agency may act with a certain degree of discretion.
Therefore, in conclusion, we believe this constitutes a jurisprudential position that enhances legal certainty for those clients that might have this problem.
Finally, we would like to remind you that we offer this type of client, with high geographical mobility and significant net worth, tailored solutions that can be “portable” and also avoid the “Exit Tax” (“Impuesto de salida”), where applicable, in multiple jurisdictions – including Spain.
We of course remain entirely at your disposal to clarify any doubts you may have regarding the possible implications of this judgement by the Supreme Court or any other element relating to estate planning through “unit-linked” insurance policies for your clients resident in Spain or abroad with the intention of relocating to Spain.
Author: 
José Manuel Tara, Regional Director Iberia & Latam, at OneLife
Should you need additional information in relation to unit-linked products for Spanish resident investors, do not hesitate to contact our Sales representatives:
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
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 10th 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”…
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.
The current demand of our partners for non-traditional investments has enabled them to revitalise their portfolio, with growing interest in internal dedicated funds (IDF) or Specialised Insurance Funds (SIF).
The Luxembourg insurance regulator [Commissariat Aux Assurances] allows a very competitive and flexible range of options in terms of the types of underlying investments within a contract, while providing a protective framework for policyholders.
Putting financial market developments in perspective, together with the significant demand for regulated or unregulated non-traditional investments, require new keys skills for OneLife, which has chosen to surround itself with top-level experts.
According to Wim Dieryck, Chief Commercial Officer at OneLife:
“These experts are highly appreciated by our partners (asset managers, Family Offices, brokers, international private banks, etc.) who are able to receive specific and technical answers to all their questions. The ultimate goal is to best serve their clients’ needs”.
According to Anthony Lorrain, Director Unquoted & Traditional Assets at OneLife:
“It is essential to be surrounded by these new key skills from specific areas to represent the industries of private equity, real estate or securitisation. Each customer is different, so we aim to meet their needs in the best way possible by forming a team of specialists who support our sales representatives throughout the life cycle of the contract (wealth engineers specialising in taxation and local contract law, experts in smart investments, etc.)”. He went on to add: “For example, OneLife is a member of the LPEA (Luxembourg Private Equity Association) and wishes to show its commitment to other sectors of business that are complementary to the world of life insurance.”
OneLife is an innovator in life insurance and offers its clients sophisticated, tailor-made solutions. Against a backdrop of low – or even negative – interest rates, non-traditional assets are proving to be a strategic element that insurers must now be able to offer their customers within a controlled and secure framework for all parties.
Non-traditional assets are a real trend in wealth management. As a partner of wealth managers, we have decided to invest – voluntarily and strategically – in our abilities to provide qualitative support in these areas. The world of non-traditional assets is too specialised not to bring in expert services in the field.
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:
Tabled on 27 September 2017 the Finance bill for 2018 presents the far-reaching reforms required by the new president Emmanuel Macron to:
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.
The law of 30 December 2017 on the Finance Law for 2018 includes three provisions of particular interest to savers:
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:
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:
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.:
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.
Low-income individuals in France may want to opt for the application of the IR scale.
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:
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
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:
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:
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:
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:
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
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.
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.
The main components of a unit-linked insurance contract are the following:
The main advantages of unit-linked insurance policies issued by Luxembourg insurers are the following:
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.
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
