Mr. and Mrs. G, French residents, want to move to Portugal to retire near their daughter. To prepare for estate transfer and protect assets, they take out unit-linked life insurance policies in France with a Luxembourg company. This allows them to keep the policies if they move to Portugal. The policies provide tax efficiency, investment options, ability to change beneficiaries, and flexibility to adapt to different legal and tax environments when moving countries. Surrender or payments are taxed differently in each country.

1. Case study
PORTABILITY OF A POLICY
FROM FRANCE TO PORTUGAL

2. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Mr and Mrs G.,
65 years old
French residents With financial assets Invested in banks in France
Overview

3. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Mrs and Mr G. have a daugh-
ter
Resident in Portugal Plan to move to Portugal
to join their daughter and
retire there.
Project

4. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Objectives of Mr and Mrs G.
Prepare for the estate
transfer to their daughter
Protect the assets Have a savings plan Entrust the management
of the financial assets to a
fund manager
Inheritance planning in a
flexible way in the event of
transfer from one country
to another

5. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
SOLUTION:
TAKE OUT A LIFE INSURANCE POLICY

6. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Mr. And Mrs. G each take out a unit-linked
life insurance policy under French law, with
a Luxembourg company
Once in Portugal, Mrs and Mr G. can
keep their life insurance policies
Need to modify the policies to comply
with Portuguese mandatory rules
Solution

7. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
BENEFITS AND TAX IMPACTS OF THE SOLUTION

8. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Invest in a diversified financial
portfolio (e.g. UCITS, ETFs, PEs).
The policyholder is free
to choose the beneficiaries
and can change them during
the term of the policy.
Ability to surrender part of the life
insurance policy during the client’s
lifetime.
Tax efficiency: there is a tax
deferral which ensures that the
policy is only taxed when it is
surrendered or paid out in the event
of an insured event.
Flexible solution which can easily
be adapted (with the appropriate
precautions and a case-by-case
analysis) to different legal and
taxation environments.
Advantages of unit-linked life insurance policies

9. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Without surrender Surrender Death
Ifthereisnosurrender,notaxisdueon
theincomeandcapitalgainsgenerated
by the insurance policy.
The capital gain realised in the event
of surrender is taxable:
∙
at a flat rate of 12.8% during the first
eight years of the policy,
∙
thereafter at the rate of 7.5% on
productsrelatingtopremiumsofless
than €150,000.
As an option, the capital gains may be
taxed on the progressive income tax
scale at the policyholder’s marginal tax
rate.
Capital gains are also subject to social
security contributions of 17.2%.
Intheeventofdeath,andgiventhatthe
policyholder is under 70 years of age
when the premiums are paid, benefi-
ciaries will be taxed in France after an
allowance of €152,500 (per beneficiary
and per contract) as follows:
∙
at a rate of 20% for the benefit re-
ceived till € 700.000
∙
at a rate of 31.25% beyond.
If the value of the contract at the time
of death is superior to the amount of
the invested premiums, this difference
will be subject to social security contri-
butions of 17.2%.
Tax implications in France

10. Case
study
PORTABILITY
OF
A
POLICY
FROM
FRANCE
TO
PORTUGAL
Payment Surrender Death
Application of a 0.048% tax on the pay-
ment of premiums and any additional
contributions (made after the trans-
fer of residence of the policyholder in
Portugal).
In the event of surrender, taxation at
the income tax rate or at the rate of
28%, applicable to :
∙
100% of the capital gain if redeemed
duringthefirstfiveyearsofthepolicy,
∙
80% of the capital gain if redeemed
between the fifth and the eighth year
of the policy,
∙
40% of the capital gain if redeemed
after the eighth year of the policy.
In the event of death, no inheritance
tax will be imposed in Portugal.
Impacts fiscaux au Portugal *
* The following taxation will be applied (whatever the tax status, whether non-habitual resident or not).

11. This document was prepared in March 2022 by Bâloise Vie Luxembourg S.A.
The contents of this document are the sole responsibility of its author. Bâloise Vie Luxembourg S.A. cannot be held directly or indirectly liable for the comments or opinions expresses in this document.
The contents of this document are for information purposes only and are not a substitute for personalised legal or tax advice.
Clients are advised to consult independent advisers for any personal tax or legal matters.