COUNTRY GUIDE TO TAX ON OLD MUTUAL INTERNATIONAL BONDS

Transcription

1 EXPAT FOCUS COUNTRY GUIDE TO TAX ON OLD MUTUAL INTERNATIONAL BONDS This guide is to help you advise individual local or expat policyholders who have invested into either an Old Mutual International Ireland dac ( OMII ) life assurance or Old Mutual International Isle of Man Limited ( OMI IoM ) life assurance or capital redemption and who are planning to move to the countries listed below. It gives a summary of the tax position in each case. For ease of reference, we have used a red, amber, green rating system to indicate how favourable the tax position is in that country. Where a type has not been listed under a country this is because we have not obtained local tax advice for it. FOR ADVISER USE ONLY

2 COUNTRY CLIENT IS MOVING TO TYPE OF OFFSHORE BOND HIGH LEVEL TAX POSITION FURTHER INFORMATION Australia After 10 years for original premiums only, gains made on surrender are free of CGT and income tax. Note, the CGT provisions are part of income tax law in Australia. A new 10 year period applies to top-ups which exceed 125% of the premiums paid in the previous policy year. No CGT or income tax on the death benefi t. Gains made on surrender or maturity will be liable to CGT. The CGT provisions are part of income tax law in Australia. A CGT discount will apply. Within the fi rst 10 years or within 10 years of a top up, gains are also liable to income tax. Anti-overlap rules apply where both taxes are payable. adviser part of our website also provides useful information on Australia. Belgium OMII OMII policies are Branche 23 policies in Belgium. Insurance Premium Tax at 2%, applies to all premiums for Branche 23 policies. Gains made on surrender and death benefi t proceeds are not subject to income tax or CGT. IHT may apply on the death of the policyholder or life assured. The Tax and other important information for Belgium document also provides useful information France OMII Gains made on surrender are liable to income tax and social contributions. After the 8th contractual year, a tax allowance can be applied to the income tax payable. Instead of the 8th contractual year tax allowance, the policyholder may opt for a fi nal fl at rate levy of 35% for surrenders before the 4th year, 15% for surrenders between the 4th and 8th year and 7.50% for surrenders after the 8th year under prélèvement forfaitaire libératoire. Death benefi t payments may be subject to a levy and social contributions. Wealth tax and IHT may apply. Gains made on surrender are liable to income tax and social contributions. The tax allowance and ability to opt for prélèvement forfaitaire libératoire is not permitted for insurers who are not established within the EU or EEA. Death benefi t payments may be subject to a levy and social contributions. Wealth tax and IHT may apply. The Vive la trusts Knowledge Direct article also provides useful information. Hong Kong Redemption Gains on surrender and death/maturity benefi t payments are not subject to income tax or CGT. There is no wealth tax. IHT and gift tax do not apply. 2

3 India Redemption Taxed as a capital asset in India. Gains made on surrender are taxed at income tax rate if short term (36 months or less) or fl at rate if long term (more than 36 months). Gift tax applies. It is not taxable in India if the individual qualifi es as a non-resident Indian or not ordinarily resident Indian and the surrender proceeds of the policy are not paid into an Indian bank account. provides useful information on India. Singapore Gains on surrender and death benefi t payments are not subject to income tax or CGT. There is no wealth tax. IHT and gift tax does not apply. South Africa Chargeable gains are taxable on an arising basis on return to South Africa. Chargeable gains on surrender and death are liable to CGT. 40% of gains are included in income. The maximum effective rate on gains is currently 18%. Estate duty and donations tax are payable in South Africa. Chargeable gains are taxable on an arising basis on return to South Africa. Chargeable gains on surrender and maturity are liable to CGT. 40% of gains are included in income. The maximum effective rate on gains is currently 18%. Estate duty and donations tax are payable in South Africa. provides useful information on South Africa. Spain OMII (Spanish Collective Investment Bond only) for other OMII s refer to OMI IoM treatment below Sweden Personal income tax applies to gains made on surrender or death benefi t proceeds rather than on an annual basis. CGT does not apply. Gift tax and IHT applies. Wealth tax applies. Subject to personal income tax and losses can be offset on an annual basis rather than deferred until surrender or when death benefi t is payable. No CGT. Gift tax and IHT applies. Wealth tax applies. OMII policies are Swedish K policies in Sweden. Gains made on surrender and death benefi t proceeds are free of tax. Net yield tax applies annually to the policy. The Trusts in Spain Knowledge Direct article also provides useful information. The Tax information for Sweden Knowledge Direct article also provides useful information. 3

4 UAE Redemption UAE is essentially a tax-free jurisdiction. There is no income tax or CGT. There is no wealth tax, gift tax or inheritance tax. The Moving to the United Arab Emirates Knowledge Direct article also provides useful information. UK Gains made on surrender and death benefi t proceeds are liable to income tax under the chargeable event rules. 5% tax deferred withdrawal allowance can be used to defer tax liabilities. Time Apportionment Relief and Top Slicing Relief can be used to reduce the tax payable. CGT only applies if the policy is sold. IHT applies. Personal Portfolio Bond taxation applies. Gains made on surrender and maturity proceeds are liable to income tax under the chargeable event rules. 5% tax deferred withdrawal allowance can be used to defer tax liabilities. Time Apportionment Relief and Top Slicing Relief can be used to reduce the tax payable. CGT only applies if the policy is sold. IHT applies. Personal Portfolio Bond taxation applies. provides useful information on the UK. The UK taxation of offshore s, part 1, part 2 and part 3 as well as Bond tax for an investor returning to the UK Knowledge Direct articles also provide useful information. USA We have only reviewed the position for individuals using an international pension with a Maltese pension provider holding a as an asset of the scheme. A double taxation agreement exists between Malta and the USA which allows gross roll up on retirement savings. USA tax is deferred until retirement. The offshore is a suitable investment solution for the international pension provider to invest into. provides useful information on the USA. 4

5 The value of investments may fall as well as rise in value and investors may not get back what they paid in. This document is based on Old Mutual International s interpretation of law and tax practice as at April We believe this interpretation to be correct, but cannot guarantee it. Tax relief and tax treatment of investment funds may change in the future. Calls may be monitored and recorded for training purposes and to avoid misunderstandings. Old Mutual International Isle of Man Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0) Fax: +44 (0) Licensed by the Isle of Man Financial Services Authority. Old Mutual International Isle of Man Limited is a member of the Association of International Life Offices. Old Mutual International is registered in the Isle of Man as a business name of Old Mutual International Isle of Man Limited. Old Mutual International is the registered business name of Old Mutual International Isle of Man Limited Singapore Branch. Old Mutual International Isle of Man Limited Singapore Branch, 50 Collyer Quay, OUE Bayfront, #05-07, Singapore, Phone: Fax: Registered in Singapore Number T08FC7158E. Authorised by the Monetary Authority of Singapore to conduct life assurance business in Singapore. Member of the Life Insurance Association of Singapore. Member of the Singapore Finance Dispute Resolution Scheme. Old Mutual International Ireland dac is regulated by the Central Bank of Ireland. Registered No Administration Centre for correspondence: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU Tel: +353(0) Fax: +353(0) Registered and Head Office Address: Hambleden House, Lower Pembroke Street, Dublin 2, Ireland. VAT number for Old Mutual International Ireland dac is S. Old Mutual International is registered in Ireland as a business name of Old Mutual International Ireland dac. PDF14006/INT /April 2018