Here we take a closer look at SEB and the key features of their Portfolio Bond:
For those that are not familiar with SEB Life international or their Spanish Portfolio Bond, they are part of one of the largest Banking and Life Assurance Groups in northern Europe. SEB Life International are situated at their administrative office in Dublin, Ireland, however the international nature of their business gives them a presence in 20 countries throughout the world and the SEB Group have been providing financial services to its clients for more than 150 years.
The SEB Spanish Portfolio Bond is a unit-linked whole of life assurance policy available to residents of Spain, as well as to companies and trusts. The Spanish Portfolio Bond allows you and your financial adviser to create an investment portfolio that has been tailored to your own specific needs; this may involve a spread of investments designed to provide you with a regular income, capital growth from your savings, or perhaps a combination of both. The minimum initial investment is set at only €30,000 (or currency equivalent) making it an accessible choice for most clients, however as there is no upper limit, it is equally as popular, as a premier choice to house larger portfolios in excess of €1,000,000.
SEB Life International offer a range of unit-linked funds at reduced cost and in addition you and your professional adviser will be free to choose from an extremely wide range of external funds from collective investment institutions including: Undertakings of Collective Investments in Transferable Securities (UCITS), Open-Ended Investment Companies (OEICs), Société d’Investissement à Capital Variable (SICAVs) and other available collective investments which have been approved under Spanish and EU Law. Furthermore, it is also possible to hold investments in a wide range of underlying currencies and the policy itself, can be denominated in GBP, EUROS or USD.
The SEB Portfolio Bond does not have a set term, however it does offer a choice of charging structures over 5 or 8 year periods, after which the entire investment is available for withdrawal without penalties, and the management costs also reduce to a significantly lower level. Although a full encashment of monies during the 5 or 8 year period would attract an Early Encashment Charge, investors are given a generous amount of flexibility in that they can access up to 75% of their initial investment at any time -plus any growth – without being subject to such a charge. The policy will also allow you to make additional investments at any time providing they meet the minimum additional premium value of €7,000.
The SEB Spanish Portfolio Bond is a qualifying unit-linked life assurance contract written under Spanish Law. Although the plan is situated overseas, it has been specifically registered for sale to Spanish residents and SEB have an appointed Fiscal representative in Spain. As a result the policy is already reported to the Hacienda (the Spanish tax authorities) annually, and because of this they do not need to be included when completing the modelo 720 form (the requirement to declare foreign assets where the value is €50,000 or more).
Perhaps the key selling point for investors choosing the SEB Spanish Portfolio Bond is that as well as being a tax compliant product that offers useful flexibility and access to a broad range of top performing asset managers; it also provides investors with optimum tax efficiency for their assets in Spain.
This can be best illustrated with a few simple examples. Let us assume our client invests a sum of €100,000 at the outset. Five year later and the value of the fund has now grown to €150,000 and our client would like to withdraw an amount of €30,000 to cover some home improvements and pay for a luxury cruise for him and his wife.
When calculating the tax on the withdrawal, the policy is now considered 2/3 original capital (€100,000) and 1/3 investment gain (€50,000). This means that the €30,000 withdrawn is also considered on the same basis (€20,000 original capital and €10,000 investment gain). As a result SEB will only withhold tax of 20% on the €10,000 that is deemed to be investment gain (as to the €30,000 that has been withdrawn). SEB Life International will withhold €2,000 and pay this directly to the Hacienda. The client will receive €28,000, and the effective rate of tax is 6.66%*
*possible small amount of extra tax due when filing annual return. Throughout 2015, capital gains and investment income is taxed at 20% up to €6,000, 22% from €6,000 to €50,000 and 24% on savings income over €50,000.
The SEB Spanish Portfolio Bond is also very commonly used by clients wanting to receive a regular income from their money. This can be paid monthly, quarterly, semi-annually or annually and the tax withheld will be calculated on the same basis as the above example.
Whilst many expats will have best made plans to remain in Spain, often to enjoy their retirement/later years in this beautiful country, the reality is that we can never be certain what the future holds for us; working expats on the other hand, will often be all be to familiar with having to relocate to new countries due to the transient nature of their careers.
As such, the portability of any investment has to be a key consideration for the expatriate investor. SEB Life International provide tax compliant portfolio bonds in Spain, France, United Kingdom, Belgium, Italy, Cyprus, Malta, Finland and Sweden and should you find yourself relocating to one of the above countries in the future, the policy can be restructured to fit into the local tax regime of your new country without you having to surrender the policy. Should you find yourself in a country where SEB Life do not provide a regulated insurance based investment product then this is no problem either; SEB Life will no longer act as a fiscal representative for the policy and the policyholder will simply be responsible for declaring and paying any taxes that may now fall due in the new jurisdiction.
If you would like to discuss whether an SEB Life Portfolio Bond would be a good choice for your savings, or if you simply have any questions or require further information; please complete our contact form and a adviser will be in touch shortly to discuss your requirements.