Frequently asked questions.
Below you find some of the most commonly asked questions about capital insurance wrapper. As always, please feel free to reach out at any time if you have any questions about capital insurance wrappers.
A Capital Insurance Wrapper, also called “endownment trust” and “kapitalförsäkring” in Swedish works in a similar way to ISK (investeringsparkonto). The investor pays an annual fee/tax based on the market value of the underlying asset but does not pay any capital gain taxes when divesting the asset or taxes on dividends and the investor does not need to include these assets in their annual tax return.
A Capital Insurance Wrapper is a long-term insurance policy, issued by an insurance company which is “wrapped around” the policyholder’s selected assets. The investor can change the assets inside the Capital Insurance Wrapper without triggering capital gains/losses.
A Capital Insurance Wrapper and ISK are similar as they both charge an annual fee/tax based on the market value of the assets and there are no capital gain taxes, no taxes on dividends nor is there a need to include these assets in the annual tax returns. One main difference is that ISK focuses on assets such as listed shares and daily traded funds, whereas a Capital Insurance Wrapper may include assets with low liquidity such as unlisted shares, warrants [Sw. teckningsoptioner och personaloptioner], investments in PE/VC funds as well as listed shares and mutual funds.
N.B. the assets placed in a Capital Insurance Wrapper need to be unqualified, meaning that the investor typically fills out a K10 form in the annual tax return.
Yes, this is not a problem after the underlying company being accepted by LT Partner’s bank partner.
Yes, Nordic unlisted shares generally qualify for a Capital Insurance Wrapper. Shares in other jurisdictions can also be accepted on a case by case basis.
Yes, your contractual counterpart is one of the largest Nordic banks.
Yes, you can transfer existing unlisted shares and warrants into the Capital Insurance Wrapper after the underlying company being accepted by LT Partner’s bank partner.
The transfer is a taxable event that has to be included in your tax return.
Qualified shares (i.e. shares that you typically file for on a K-10 form in the annual tax return) cannot be included in a Capital Insurance Wrapper.
There is no quick answer to this, it depends on the circumstances. Please contact LT Partner for a quick review of the situation.