Swedish IT Entrepreneurs’ Smart Exit Planning from a Holding Company

Sofia and Peter’s IT company was acquired by a major US firm for SEK 128,000,000. Prior to the acquisition, they transferred ownership to a newly established holding company, Holding AB, which they own equally.

Sofia will continue as Head of Sweden for the original company for at least three years and may start a new IT venture afterward. Peter will work as a consultant for three years before moving abroad with his wife to Italy, where he plans to reduce his workload and work independently.

Their requirements are:

1. Flexibility
   • Appoint multiple asset managers and change them as needed.
   • Withdraw funds when necessary.
   • Add multiple lives assured.
2. Control
   • Decide who manages the capital.
   • Determine when to withdraw assets.
   • Ensure the insurance can outlive the company.
3. Future Private Ownership Structure
   • Transfer the insurance to themselves as a distribution in kind.
   • Establish a structure for future generations.
   • Maintain the policy in case of relocation abroad.

After discussing with their financial adviser, they opted for a unit-linked life insurance solution for Holding AB using a Swedish Executive Portfolio (SEP) with Utmost Wealth Solutions.

In accordance with Swedish holding company rules, and to ensure easy and smooth accounting of transactions with a yield tax instead of corporate tax, the capital they received will be invested into the SEP and managed in the holding company on a discretionary basis.

Investing the proceeds into a SEP via a holding company offers several advantages:

• Custodian Bank Flexibility: They can appoint up to three different custodian banks and change custodian if needed.
• Withdrawal Flexibility: They can withdraw money from the policy at any time or cancel it if their plans change.
• Tax Efficiency: Yield tax instead of corporate tax.
• Segmentation for Exit Planning: The policy can be split into 12-999 segments, allowing them to assign segments to split the ownership and as dividend instead of cash.
• Portability: The policy is portable within Europe, with possible adaptations for new countries.

Sofia has resigned to work independently in Sweden, and has transferred her ownership to a new holding company Holding II AB.

Peter and his wife have been living in the Italian Alps for two years.

Peter and Sofia have decided to liquidate Holding AB and assign segments to split the ownership as a dividend instead of cash. For that reason, they requested a bond split and a bond transfer of the existing policy.

After the bond split, half of the policy, with segments 1-50 and 50% of the assets, is transferred to Sofia´s new company Holding II AB.

The remainder of the policy, with segments 51-100 and 50% of the assets, is transferred to Peter in his own name. His wife and children become beneficiaries, and the policy is adapted to Italian rules. If they return to Sweden, the policy can continue under Swedish rules without needing a new policy.