‘Apex Portugal’ is a product from Utmost PanEurope designed for expats in Portugal to invest into a policy of life assurance. It was designed for those who are seeking a tax efficient flexible investment to meet their changing needs who are tax resident in Portugal.
Apex Portugal is a unit-linked life assurance policy which provides a compliant solution clients, if you are looking to preserve or grow your capital and are seeking a sophisticated investment solution with a wide range of investment options for the medium to long term. You have to have a low probability of needing to withdraw money, as the recommended holding period is 5 years or more.
WHAT ARE THE BENEFITS OF APEX PORTUGAL, THE PORTUGUESE UNIT LINKED LIFE ASSURANCE POLICY?
Tax Efficiency – benefits from the favourable tax treatment of life policies in Portugal.
Wide Investment Options – Ability to select external funds or appoint a Platform Adviser or Discretionary Fund Manager to manage investments.
Succession Planning – Ability to pass on wealth in a tax efficient manner through the nomination beneficiaries.
TAX EFFICIENCY
As long as the policy is not surrendered, there is no taxation on capital gains and losses are offset internally within the policy portfolio which is a significant advantage compared to direct portfolio management of other financial products for Portuguese taxpayers.
If a total or partial surrender is made, the proportional capital gain is subject to PIT, with the following reductions (provided that premiums paid in the course of the first half of the policy term are at least 35% of total premiums):
Life insurance premiums are excluded from Portuguese Stamp Duty and VAT.
No VAT is applied on portfolio management or custody fees as the insurance company is based in Ireland.
Death payments to beneficiaries of insurance policies are out of scope of Portuguese Stamp Tax (Imposto do Selo) even for distant or non-existent degrees of kinship.
SUCCESSION PLANNING
In Portugal:
Revocable and/or Irrevocable beneficiaries can be appointed to meet client’s succession planning needs. Payments to beneficiaries of insurance policies are out of the scope of Portuguese stamp duty (Imposto do Selo) even for distant or non-existent degrees of kinship.
On return to the UK:
Revocable beneficiary nominations can be revoked on return to the UK without requiring an endorsement to comply with UK tax law. Segmentation can be an effective way to mitigate tax if the client moves back to the UK. For example – If the recipient and the policyholder are both in the UK, the policyholder can assign individual segments to a spouse or adult child prior to surrender.
MOVING BACK TO THE UK
For any product to be portable to the UK, it is important to ensure that certain features have to be adapted (or endorsed) before the policyholder’s return to the UK.
Apex Portugal has a life cover optionality from inception to ensure this can be activated on a return to the UK without requiring an endorsement to comply with UK tax law.
Apex Portugal is designed to ensure revocable beneficiary nominations can be removed on a return to the UK without requiring an endorsement to comply with UK tax law.
The investment options must be endorsed to comply with UK tax laws but as this is the only feature being endorsed, there should be no risk of triggering a fundamental reconstruction on return to the UK.
ADVANTAGES OF THE PRODUCT
Insurance is set up in a quick and simple way, compared to the complexity, timing and costs of other bespoke cross-border vehicles, such as SIFs, SICAVs, SPFs or trusts.
It can easily grow through additional premiums and offers total liquidity through surrenders.
Insurance policies can be pledged to obtain liquidity if for any reason the client does not want to surrender it.
Detailed tax reporting of each interest, dividend or capital gain realised is not required as the whole investment portfolio is wrapped in a fund with gross roll-up of gains for tax purposes
PRODUCT FEATURES
› Minimum initial premium of €100,000 (or currency equivalent)
› Available on a first death or last death basis
› Choice of currency: Euro, Sterling, US Dollar or Swiss Franc
› A wide range of funds to choose from that cater for different risk investment strategies
› Ease of administration. All underlying investments are valued in the denominated currency of the life insurance policy
› Compatible with most trust arrangements if the policyholder moves to the UK
› Ability to appoint a Discretionary Fund Manager or Investment Platform arrangement to manage investments
› The option to choose to have the life insurance policy set up with up to 9,999 individual policies for added flexibility and future tax planning on relocation to the UK
› Portable to the UK if the Policyholder wishes to relocate at a future date (depending on the law in force at the time).
CAN I TAKE AN ‘INCOME’?
Yes, you can take regular withdrawals (by way or regular partial surrenders) from the life insurance policy as an ‘income’, provided the balance does not fall below a surrender value equivalent to €15,000 (or currency equivalent or an amount equal to all outstanding charges, whichever is higher). If it falls below this level, withdrawals cannot continue and your ‘income’ will cease. The surrender value is the amount that would be left in your life insurance policy once all outstanding charges have been taken into account. There may be tax consequences depending on the level of ‘income’ you take.
Regular withdrawals can only be made in the currency of the life insurance policy and taken either at the end of every month, three month, six month or twelve month period. The amount of the withdrawal is charged to the dealing account.
