Foreign insurers are preparing to expand operations in France after the country was found guilty of ...
Foreign insurers are preparing to expand operations in France after the country was found guilty of tax discrimination.
Following the 4 March judgement, the European Court of Justice has ordered the French government to apply the same procedure to European life assurance contracts distributed under the freedom of services as it does to French contracts.
John Stone, chairman of Lombard International, which was recently acquired by Friends Provident, said that at present policyholders pay a higher rate of tax on exit from a non-French EU contract. The French authorities have not yet implemented the directive but Stone said it is likely to happen in the New Year.
Even after the tax treatment is equalised, Stone said foreign insurers will have to appoint a fiscal representative in France for the collection of taxes.
Despite all these issues, Lombard is looking to expand its operation in France by marketing its product range and services to private banks and selected financial advisers.
"We do not mind appointing a fiscal representative because all we wanted was a level playing field with French insurers," said Stone.
Lombard has also identified opportunities in Mexico following a change in the law that has made trusts less attractive to wealthy investors.
"Mexicans have used trusts to mitigate tax and to keep assets outside the country because of the fear of kidnapping. But they are no longer tax efficient as the authorities can now look through them."
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