The Client
Marc is a French entrepreneur with a €40 million estate and three children. He plans to remain in France for another five years before moving to Italy for the following five.
His wealth comprises:
- €30 million liquid investment portfolio
- €5 million legacy private equity
- €5 million Italian property
The challenge is simple: how does Marc structure his wealth today without having to start again when he moves to Italy?
The Solution
Marc places his €30 million liquid portfolio into a French-compliant unit-linked life insurance policy.
For the next five years, it operates within the French tax framework. When Marc moves to Italy, the same policy can be adapted for his new residence.
His €5 million legacy private-equity portfolio remains outside the policy because of his historic management role and personal connection to the funds.
The structure changes with Marc. The investments do not have to.
Years 1–5: France
Inside the policy, income and gains can be reinvested without annual taxation at Marc’s level.
Based on the assumptions in the model shown in the table below, after five years the policy has created a €2.13 million advantage compared with holding the same investments directly.
More importantly, that additional value remains invested and continues to compound.
Five years in, the benefit is already €2.13 million. Then Marc moves.
Years 6–10: Italy
Marc now has a choice.
He can keep his existing policy and adapt it to the Italian framework. Or he can surrender it and invest directly in Italy.
Surrendering is not cost-free. At the point Marc moves, the policy is worth approximately €39.68 million, including €9.68 million of gains. On the assumptions used, surrendering produces an illustrative Italian tax charge of approximately €2.52 million, before taking account of the potential interaction with the Italian lump-sum regime.
Keeping the policy avoids having to dismantle a structure that has already spent five years building value.
Under the ordinary Italian treatment modelled, Marc can instead retain the policy, continue benefiting from tax deferral and pay tax when benefits are taken.
What if Marc needs €500,000?
Portability should not mean locking wealth away.
During the Italian period, Marc needs €500,000.
He takes it from the policy and, after the withdrawal, approximately €51.98 million remains invested. The remaining policy continues to benefit from tax deferral.
Under the modelled alternatives, the equivalent remaining directly held portfolios are approximately €46.97 million under the Italian flat-tax scenario and €46.10 million under the ordinary Italian regime, before any additional tax on unrealised gains triggered by disposals in the latter case.
Marc can access his wealth without dismantling the structure around it.
The 10-Year Result
After 10 years, including the €500,000 cash requirement, the model produces continuing estate values of approximately:
- €68.72 million retaining the policy
- €63.81 million surrendering and moving to direct investment under the Italian flat-tax regime
- €62.84 million surrendering and investing directly under the ordinary Italian regime, before any additional tax arising on disposal
On these assumptions, keeping the policy leaves Marc’s estate approximately €4.91 million larger than the flat-tax alternative.
That advantage did not appear overnight.
It started with tax-efficient compounding in France, continued by avoiding the need to surrender the policy when Marc moved and was strengthened by a structure capable of operating through his change of residence.
France to Italy. Ten years. One underlying structure. Approximately €4.91 million difference.