Policy Selection, which runs traded life settlement fund Assured Fund, has completed a eurozone tax structure in order to ring-fence investor returns from impending US tax legislation affe
Policy Selection, which runs traded life settlement fund Assured Fund, has completed a eurozone tax structure in order to ring-fence investor returns from impending US tax legislation affecting traded life settlements.
The new initiative will see the company move its administration from its incumbent offshore Cayman base to Brussels, Belgium, in order to use dual taxation treaties between Belgium and the US.
It is understood that American IRS (Internal Revenue Service) Withholding Tax legislation will apply to all policies purchased after 26 August 2009.
PSL finance director Andrew Walters says: ‘To date, scarce detail has emerged as to how the rules are to be enforced, but one thing is for sure – a 30 per cent tax on life settlement profits would severely limit any return and indeed, on policies where the life insured is living longer than expected, may leave the buyer out of pocket.
‘Bear in mind we have anticipated that the IRS could have implemented this ruling for several years now and not wishing to expose the investors to any risks with regard to this we have put together a watertight euro-zone structure which will effectively ensure that WHT will not impact on returns paid to Assured Fund investors.’
Under the terms of a double tax treaty the US tax authorities will remit the gross face value of the policy offshore with the understanding that the gains will be subject to the tax law of the counterparty’s jurisdiction. Assured Fund will, therefore, transfer beneficial ownership of the policies to a Belgium company, which is a subsidiary of Assured.
There will be no change operationally to the fund from an investor’s perspective and there will be no loss of control over the fund’s assets. The share price of Assured will still reflect the underlying value of the portfolio of life policies.