Currently, life assurance offers many and various advantages in Europe and the UK.
In most cases, life assurance products are exempt from income tax and any form of capital gains tax and, under the EU treaty, a policy issued in another EU country must have the same treatment as a local one. There can be no discrimination.
In Belgium life insurance is a powerful tool for financial planning.
We will be happy to advise you how to combine your investments so as to maximise your benefits from each type of policy.
In Belgium, there are two basic types of investment policy for the private individual known as branch 21 and branch 23.
Branch 21 refers to policies where the capital and return are guaranteed, whereas branch 23 refers to policies linked to investments or funds that offer no fixed guarantee. The guaranteed return generated by a branch 21 policy is taxable when the policy matures, or is encashed, unless it has been held for more than 8 years or there has been an additional death benefit of at least 30%. Because they are guaranteed the returns are currently very low and the policies are not beneficial unless they can be structured to provide some form of tax relief.
Branch 23 policies are exempt from income tax and, after two or three years have elapsed, the net return from holding your investments in a branch 23 policy is usually higher than you will get from investing in the same shares or funds directly. This is because switching between investments inside a life policy is not subject to stock exchange transaction tax.
There are forms of hybrid policy as well, enjoying some of the features of both types.