*by Dr. Johannes Fiala, Lawyer (Munich), Mediator (Univ.), MBA Financial Services (Univ.Wales), MM (Univ.), Certified Financial and Investment Advisor (A.F.A.), EC Expert (C.I.F.E.), Lecturer in Civil and Insurance Law (Univ. of Cooperative Education), Banker (www.fiala.de)
What some people pretend to themselves, that no one imitates them so quickly. (Gerd Uhlenbrock)
Both in the company pension scheme, but also with time value account models, closed participations are gladly mediated. In this context, some providers emphasise that reinsurance has become increasingly unattractive.
Reinsurance with “commercial funds” – tax disadvantages for the GGF: Since 01.01.2007 closed participations, in particular commercial funds, closed real estate funds and ship funds are no longer tax-privileged, if they are used as reinsurance of an operational old age pension (bAV). Nevertheless, insurance brokers have observed that the tax argument was used to advertise this just before and after the turn of the year. For the intermediary, therefore, there is certain liability if he passes on incorrect information to his client, the GGF or entrepreneur.
Liability risk of closed participations: After numerous higher regional courts have questioned the suitability of closed participations for building up old-age provision “legally” anyway, brokers have a particularly hard time brokering such products “free of liability”. The advertising with the no longer given tax advantage comments the bAVUnternehmensberater and insurance broker Andreas Bosl: “This might be for some brokers, who mediate this form of the reinsurance, for the future the sure death sentence in the switching.” Kick-backs as a top risk:
In addition to this, some advisors have a share of the commission in tax matters. About it the mediator can be only pleased – then not only he is liable in the case of a back completion, however, both unfortunately without any insurance protection.
Secure Retirement Poverty:
Who back-covered its pension commitment with the closed participation, “funds” of Columbus Capital, HAT, HAG, FALK or beispiesweise medium funds, will take note that the own tax advisor can avoid the insolvency only by the fact that he writes off “to the precaution” first only few per cent of worthless participation in the balance. The total risk of default was rarely fully disclosed or advised.
bAV expert Bosl describes the information problem, in his words: “Unfortunately, we too have to be able to afford to ask independent experts if no clean examination of products can be achieved in the circle of friendly colleagues. Therefore, we are not among the unfortunate estimated 25,000 colleagues who have brokered film funds with questionable tax effects.” As is well known, one or the other of the initiators is in custody because of delicate tax issues, and experience shows that a sentence of 4-6 years is to be expected. The mediators concerned saved the short consultation of fiscal plausibility (costs: Starting from 210 euro), and are responsible now in each case the investors often in six-digit order of magnitude. As is well known, the Federal Court of Justice has ruled that the financial service provider must check the legal, tax and economic plausibility – to expect this from the initiator would be a nice dream. Only rarely do intermediaries receive the appropriate IDW S4 prospectus opinions as well as the corresponding special opinions on legal and fiscal harmlessness, especially for use in occupational pension schemes and time value accounts.
(experten.de on 20.04.2007)
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About the author
PhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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