Private banks have launched the placement of Luxembourg unit linked among their VIP clients as a vaccine against economic uncertainty and, above all, politics. From the Pablo Iglesias' famous tweet on March 29, On the occasion of the coronavirus crisis, there has been an avalanche of consultations by the high estates to their advisers, who are considering the possibility of relocating their money outside of Spain seeking greater security. Among the most recommended escape routes, The unit linked of the Grand Duchy is king for its “non-seizure”.
The largest provider of unit linked luxemburgueses in Spain confirms the increase in interest in the product. "In the first quarter, the demand for information and inquiries has more than doubled, but until June or July we will not be able to know exactly what new volume is contracted due to Covid-19. Normally, it takes a month or two to do the insurance ”, explains Enrique Barroso, exclusive agent for Spain of Lombard International Assurance. The firm foresees that a large part of the consultations will end up being translated into new hires and, for this reason, it has launched a digital system of 'onboarding' and 'easy signature' to speed up the process.
The clients who come to this firm do so both on their own initiative, the fruit of word of mouth, and through their private banker, who is the one who manages their portfolio. However, Pablo Peciña, managing partner for Spain of Estate Planning in Lombard, points out, "People are not asking to run away with money or evade, Luxembourg belongs to the European Union and money is under surveillance in the same way as in Spain."
According to a director of a Swiss private bank, “the real great fortunes, which together with their banker make a global risk study, are not only concerned with the tweet of Pablo Iglesias on duty. They are very concerned about the future of the EU, that a Europe remains at two speeds and that its heritage is in the Europe of speed B and not in the A ”.
With the Covid-19 health crisis, large investors are prioritizing security and certainty in places like Luxembourg, which has the most widely used financial passport within the EU but also lower taxes, as well as in Germany, where there is a Deposit protection scheme broader than Spanish. Unlike other previous periods, Geneva (Switzerland) is not in the center of attention, a destination that has historically used bank secrecy.
THE ONLY "INEMBARGABLE" VEHICLE
High patrimony ask about Luxembourg why It is an AAA country within the EU, economically and socially stable, without major regulatory swings and with a favorable tax regime. And, in particular, they are interested in the unit linked of the Grand Duchy because it is "the only unattachable vehicle", unless it is for the lifting of goods. The ownership of the assets passes from the natural person, the client, to the legal entity, which is the insurer.
"People are asking a lot about the Luxembourg unit linked and we have already had a few new ones on this topic", always for amounts of more than a million euros, specify a private banker.
The Diagonal Inversiones securities agency it has under delegated management a first unit linked and three more in formation, with a volume estimated at 100 million at the end of the year. Its CEO, Marc Ciria i Roig, understands that "it will increasingly be a strategic product in wealth planning for high net worth clients". Among other advantages of these life insurances, they allow the policy holder to decide at any time the transfer of their assets according to their own circumstances, which can be modulated throughout the life of the policy; allow tax deferral until the time of partial or total redemption; The gift and inheritance tax can be deferred and its investment regulations allow these policies to invest in complex assets and alternative investments. Further, even today the value of the policy of the wealth tax can be excluded, although "it is true that the Government plans the imminent change in this last point" warns this financier.
Despite the widespread consensus on this vehicle and its benefits for VIP banking customers, for now there are more queries than movements. Many expert voices from the financial sector are calling for investors to calm down and foresee that nothing will happen and there will be no confiscation of any kind to the great fortunes. But the invocation of article 128 of the Constitution by the second vice-president of the Government and secretary general of Podemos to remember that "all the wealth of the country (…) is subordinated to the general interest" it still kicks into the minds of the wealthy, who already have a plan B prepared just in case.
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