The private investor is exposed to high taxes and uncertainty, with payroll taxes that can evolve, and the unknown rates taxes in Europe to cover huge public deficits. While bank secrecy is still in force in Switzerland and Luxembourg, the clouds are gathering for the exchange of information targeted under the OECD rules, and financial confidentiality will lower. The UBS case with the U.S. tax authorities is an example of misbehavior in finance and private investors have to target legal solutions to avoid troubles.

In a context of fiscal uncertainty, the investor has the option of outsourcing financial assets together with the use of a life insurance contract. When the jurisdiction of the life insurance company is located in Luxembourg, there is a legal protection of assets and profits benefit of a tax relief related to the creation of a dedicated fund under the law. The assets are moved in a private bank in Geneva or in Luxembourg, as the choice of jurisdiction does not impact the tax optimization process.

The dedicated fund created under Luxembourg law (Law of 6 December 1991 on the insurance industry) is controlled by the investor with management's mandate through a financial advisor. The investment is in custody in a private bank in Geneva or Luxembourg, to take advantage of the sophisticated techniques of wealth management. Taxation on financial income is zero, subject to a minimum of 8 years custody. Nevertheless, it is possible to obtain cash without tax penalties by obtaining a Lombard loan on assets held (Margin loan) with the insurance company assets as collateral. This is a win-win process for the private investor.

This tax planning solution is the entry point of such kind of services, available from EUR250,000. It is applicable to many juridisctions without any limit of amounts. The interest lies in the use of wealth management services in any jurisdictions with the use of private bank, acting like custodian, such as Geneva, and the association with a dedicated fund. Starting from an outsourcing solution that is legal but without tax credit, this process allows a zero taxation during the duration of the life insurance policy. Other advantages such as the inheritance process apply to this tax optimization scheme.