For many investors this has been the big dilemma since the European periphery began to collapse financially. When the insolvency of Spanish banks came through the door, the more prudent investors naturally jumped out of the window... and mostly in the direction of Luxembourg. The fact is that this small Duchy has been the Wall Street of the Eurozone for several decades now. London and its City remain a gigantic pseudo-European financial centre, but for the purposes of fiscal transparency, affinity with Brussels and its single currency, Luxembourg has become much more “Eurozone friendly“.
But what are the advantages of investing from banks in Luxembourg? Let us mention some of them: Perhaps the most obvious is to avoid the so-called country risk, by depositing our assets in a more solvent banking system (hypothetical corralitos, blockades, etc.). Our money will be further away from possible peripheral economic collapse and will enjoy greater legal security, since the financial heart of the Eurozone is a valuable treasure that Brussels will protect tooth and nail.
Luxembourg has another qualitative advantage that very few third party investors and investment managers appreciate, and that is the access to access any investment fund, from any investment fund, to any investment fund, from any investment fund, to any investment fund, from any investment fund, to any investment fund. private equity and real estate of the world. As we said in “Investment funds and the mother that bore them...“Only 10% of the world's investment funds are registered for marketing in Spain. In other words, purely statistically, Spanish investors who are reluctant to make the leap to Europe cannot access the 90% of funds existing worldwide. Logically, among this 90% we find some of the world's leading names in fund management, with results that have been proven over decades and that shine light years ahead of the mediocrity of the vast majority of funds marketed by Spanish banks. This alone more than justifies the geographical leap in our portfolios, but there is more.
As Luxembourg is a “Eurozone friendly”We are obviously talking about fully declared and regularised assets. And in order to properly defer the taxation of capital gains on portfolios, in which most funds are neither transferable nor registered with the CNMV for marketing in Spain, we must include them in Luxembourg vehicles. These investment vehicles can be very diverse and must be chosen according to the circumstances of each investor. These vehicles, in an absolutely legal and transparent manner, achieve this tax deferral as if they were any portfolio of transferable funds deposited in a bank on the corner of any Spanish city. Not only that, but they are also exclusive to each investor family.
Obviously, depending on the ownership (company or individual), volume and complexity of the Family owning the assets, the Luxembourg vehicle in question will be one or the other, as there is a diversity of options that only a specialist will know how to select optimally for each specific case. But even the holder of €250,000′- can access a Luxembourg vehicle that allows him to invest in any fund in the world, efficiently and transparently deferring his taxation, at a price of less than 0.7% per annum. Therefore, the moderate cost is also another reason to make the investment leap from Spain to Luxembourg, but not the last one.
Some of these investment vehicles also avoid taxation of wealth tax. This means that all or part of the financial assets exceeding the tax-exempt amount can be included under these vehicles. In this alone, the tax savings can exceed 2.5% per annum, depending on the size of each investor's assets. In other words, vehicles with a cost of less than 0.7%, which efficiently and transparently defer Capital Gains, which allow savings in Wealth Tax (multiplied by 2, 3 or even more), which allow access to investing in the best investment fund managers on the planet instead of just 10% of them, and with the banking and legal security of a first class financial centre in the heart of the Eurozone. That is nothing, in these times of uncertainty, insolvency and disguised risks.
For those who see the remoteness of having their money in Europe as a handicap, I would like to remind you that, in addition to being able to manage it conveniently, swiftly and closely through Spanish advisors and professionals, having a Luxembourg investment vehicle is not exclusive. In other words, most investors combine a (more or less majority) part of their assets in Luxembourg with a part held in banks in Spain, as a temporarily invested treasury, which will be consumed or used over the coming quarters, semesters or even years.
And this migration of Spanish investors to Luxembourg is not a question of greater or lesser patriotism. It is the predictable and natural consequence of the combination of the shamelessness and ineptitude of our governments and their regulators, together with the insolvency, mediocrity and dishonesty of our banks. Both have practised the bread for today in this crisis, and tomorrow's famine has already reached the periphery as a whole.