UPDATE ON INTERNATIONAL PLANNING ISSUES ROME


The role of life insurance in cross- border planning


[ LUIGI BELLUZZO ]


LIFE INSURANCE IS A CONTRACT between a policyholder and


rome


6-8 NOVEMBER 2016 SUMMARY OF THE MEETING


Tax planning from an Italian perspective [ GUGLIELMO MAISTO ]


INTERNATIONAL ANTI-AVOIDANCE INITIATIVES are reflected in existing domestic legislation, but are generally friendlier to taxpayers. Domestic anti-abuse rules prevail over treaty provisions. Changes in the law are not required to adopt the BEPS rules. At the same time, it is government policy to encourage investment by foreigners in Italian enterprises, and a version of the UK Resident Non-Dom regime is being introduced for new residents, requiring an annual payment of €100,000 and available for a 15-year period – exempting foreign income and assets from income tax, and foreign assets from estate tax. The taxpayer may elect to pay tax on income from particular countries, so as to qualify for treaty relief. Exchange of information agreements have recently been


concluded with Switzerland and other countries, including Monaco. Personal income tax rises to 46% for employment income and 26% for investment income. There is no wealth tax but an estate tax of 4-8%. The anti-abuse rules are severe, with penalties applicable, and rules against thin capitalisation are strictly applied. The income of settlor-influenced trusts is subject to tax, and ‘self money- laundering’ is punishable. Beneficial ownership rules are on the way.


an insurer. The policy may be linked to units or other investments and can be a useful tax planning tool. Unfortunately, private placement life insurance has been marketed as a way of hiding assets. But there are uses for legitimate insurance wrappers, offshore and onshore. In France – as elsewhere – the main benefit is that of tax deferral. In Spain, a very low level of inheritance tax may be achieved. Portugal allows tax deferral and lowers the tax base after five years. In the UK, tax deferral is achievable, as it is in Italy. In Italy, it is clear that the


underlying assets are non- distrainable, but the inheritance tax position is under review. Only ‘demographic risk’ is tax exempt, and this could be the trend for other jurisdictions too. It is important to assess the tax position of private insurance policies to fine-tune the planning and, if necessary, enter a voluntary disclosure in the policyholder’s jurisdictions.


Exchange of information agreements have recently been concluded with Switzerland and other countries


THE ITPA GREEN BOOK 2018 www.itpa.org


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