VSow does this tool for investment, development and transfer of financial assets work? Is there a tax advantage? Does it offer great freedom in the choice of beneficiaries? Here are the details of this contract and its particularities for expatriates in this article.
How does expatriate life insurance work?
Luxembourg life insurance for French expatriates is a top-of-the-range contract that has several specificities. You should know that this investment is renowned for its wide and efficient financial offer. Moreover, it is a safe investment, not subject to the Sapin Law and for which the subscriber is a first-ranking creditor, unlike in France. You can find out about the details of this contract on the assurancevieluxembourg.fr website. Here are the main ones.
By subscribing to Luxembourg life insurance, you benefit from numerous guarantees, including that of your financial assets. Indeed, during a Luxembourg contract, as savers, you are recognized as first-ranking creditors. You then integrate the super privilege: this is the absolute guarantee, which French savers cannot benefit from. Clearly, if the insurer is in financial difficulty, the saver is the first to be reimbursed; then come the shareholders, the employees, the State, etc. In France, this order of creditors is unfortunately reversed and the saver goes to the end.
Add to that the safety triangle: the protection of policyholders goes through the legal requirement that all of the assets linked to Luxembourg life insurance be housed in an independent custodian bank. The latter must be approved by the supervisory authority for insurance companies in Luxembourg and by the Commissariat aux Assurances. Thus, the insurer, the bank and the CAA form the famous security triangle.
Moreover, to further secure your assets, Luxembourg is ideal because it obtains the “AAA” rating from the rating organizations. A good way to place with confidence. Luxembourg does not provide for ceilings with regard to investments, unlike France which sets a maximum height of €100,000.
More advantageous types of life insurance contracts
Subscribing to a Luxembourg life insurance contract offers you many advantages and different management options. Among the latter, there are in particular: the creation of a dedicated FID with management companies recognized in France, let us quote for example Lazard Frères Gestion, Financière de l’Echiquier or DNCA, multi-currency management, managed management , the performance of the units of account.
Another major point offered by life insurance in Luxembourg is the ease of integration of Private Equity funds (unlisted shares) with funds from Ardian, Capza, or Bridgepoint for example,…
To assist you in your choice of contract, it is generally recommended to use a broker specializing in Luxembourg life insurance contracts, such as WSI Conseil in Paris, the leader in France on the subject. They will be able to direct you towards the best solution according to your assets and your needs. In order to choose the right broker, go to ORIAS (Single register of insurance, banking and finance intermediaries) where you will find the insurance brokers listed. Moreover, if your broker is also a financial investment adviser (CIF), it is even better.
As far as taxation is concerned, Luxembourg is neutral. Indeed, for a Luxembourg life insurance contract, the applicable taxation is that of the country of tax residence of the subscriber. As a result, in the event of expatriation, the administrative procedures are extremely simple. No need to get into the game of the international convention and sometimes associated tax credits. Thus, the taxation applied, in the event of withdrawal, will be that of the country of residence, if there is one…
In addition, a contract taken out by a French tax resident will be slightly taxed on capital gains: quite simply because it is the usual French taxation of a life insurance contract that will apply.
An ideal life insurance
To invest your assets in a secure way, Luxembourg life insurance is probably the ideal insurance in the current landscape. Indeed, this investment allows an elaborate and more efficient management, lower costs than in France, increased security while being perfectly adapted to international mobility.
It is generally a demanding and wealthy clientele that is interested in this type of investment. The entry ticket to Luxembourg is often around €250,000.
The legality of Luxembourg life insurance
Subscribing to life insurance in Luxembourg is completely legal. You should know that this contract is offered in France in the same way as other types of life insurance contracts under French law.
Your only obligation will be to remember to declare the opening of this contract in Luxembourg during your annual declaration. This declaration has become mandatory for all French tax residents. However, it is not necessary to mention the amount invested in your Luxembourg life insurance contract.
The best contract
In order to find the most interesting life insurance contract for you according to your assets but also your habits and your needs, it is advisable to call on experts in this field such as brokers. They will be able to guide you towards the most suitable contract for you.
The criteria to take into account to choose your contract in Luxembourg are for example: the expertise of the financial adviser on the subject, the choice of the insurance company, the access to Private Equity, the management possibilities or the costs.
Focus on eligible assets in Luxembourg
Unlike French contracts which are more limited, contracts in Luxembourg give access to a wide range of assets. Here is in more detail a non-exhaustive list of the type of financial assets that you can invest: SICAV, FCP, monetary investments, flexible funds, alternative funds or even non-IFI real estate funds.
In addition, it is possible to integrate Private Equity funds which offer higher returns over time than the listed equity market with much lower volatility. The choice of these funds is not made alone and it is better to call on a specialist.
For 5 years, WSI Conseil has been offering a combined Private Equity & Luxembourg Life Insurance offer, adapted to clients who wish to grow their assets without the yoyos of the stock market.
Depending on the insurance company chosen and the type of investment, it may be necessary to open an FID (Dedicated Internal Fund) or a FAS (Specialized Insurance Fund).