Growth in Luxembourg’s life assurance sector is increasingly driven by the practice of establishing life contracts using a Luxembourg legal entity.
Luxembourg life-assurance products offer a unique level of protection to the investor, a high degree of flexibility with regard to contract design and asset management, complete tax neutrality and confidentiality guaranteed by law. These advantages make the Luxembourg life insurance contract one of the best tools available for asset management and succession planning for wealthy European and international clients.
The applicable tax rate for both subscribers and beneficiaries is that of their country of residence and life assurance enjoys favourable tax treatment in most European countries. Luxembourg charges no tax on premiums, nor on capital gains made at the time of the contract’s purchase or expiry nor on death benefits. Luxembourg life assurance contracts are designed to respect the legal and tax requirements of the subscriber’s country of residence.
With regard to the distribution of life assurance products, banks account for a very significant proportion of sales, whereas the use of brokers is negligible.
Luxembourg’s legal and regulatory framework gives life assurance companies substantial investment flexibility, allowing them to offer their clients a wide range of sophisticated products.