Selling a business is a once-in-a-lifetime event for an entrepreneur. After years of hard work, the owner finds themselves with substantial capital in their bank account and a dizzying question: how to make it grow while generating replacement income? Philippe's case illustrates how a 55-year-old business owner can deploy 1.2 million euros across several tax wrappers to generate supplementary income, prepare for retirement, and organise wealth transfer to his children -- capturing over 50,000 euros in tax savings through the PER (Plan d'Epargne Retraite, France's individual retirement savings plan with tax-deductible contributions) in the process.
Philippe's Profile: Life After Selling His Company
Philippe is 55. A trained engineer, he founded his IT consulting and systems integration company 20 years ago in Grenoble. The company, which employed 35 people and generated 4 million euros in turnover, was acquired by a national technology group. After applying the enhanced retirement allowance for departing business owners (a 500,000 euro fixed allowance on capital gains under article 150-0 D ter of the CGI -- France's tax code) and paying the 30% flat tax on the remaining gain, Philippe nets 1,200,000 euros in his bank account.
Married to Catherine, 52, a local government executive earning 3,200 euros net per month, Philippe is now without professional activity. The couple has two children: Thomas, 22, an engineering school student, and Camille, 19, a first-year law student.
His Assets Before Reinvestment
- Net sale proceeds: 1,200,000 euros (in Philippe's bank account)
- Primary residence in Grenoble: 450,000 euros (mortgage fully repaid)
- Catherine's assurance vie at Linxea Avenir 2 (opened 2014): 45,000 euros
- Catherine's company savings plan (PEE): 28,000 euros
- Regulated savings accounts: 30,000 euros
His Priority Objectives
- Generate 2,500 euros net per month in supplementary income immediately, since Philippe no longer has a salary
- Prepare a comfortable retirement in 7 to 10 years
- Optimise taxation on capital income, particularly in the year of the sale when income is exceptionally high
- Transfer part of his wealth to his children in a tax-efficient manner
The Deployment Strategy Across 5 Wrappers
| Wrapper | Amount Invested | Primary Objective | Time Horizon |
|---|---|---|---|
| Assurance vie Linxea Spirit 2 (diversified) | 500,000 euros | Income + estate transfer | Long term |
| Assurance vie Lucya Cardif (SCPI) | 200,000 euros | Regular capitalised returns | Long term |
| PER Linxea Spirit PER | 150,000 euros | Tax deduction + retirement | 7-10 years |
| SCPI (direct) | 200,000 euros | Immediate rental income | Long term |
| Secure cash reserve | 100,000 euros | Liquidity and safety | Immediate |
| Gift to children | 50,000 euros | Early wealth transfer | Immediate |
Step 1: Assurance Vie as the Central Pillar (700,000 euros)
Contract 1 at Linxea Spirit 2: 500,000 euros with diversified allocation
Philippe opens an assurance vie (France's tax-advantaged life insurance savings wrapper) at Linxea Spirit 2, which charges 0% entry fees and only 0.50% annual management fees on unit-linked funds. The allocation is structured for both growth and regular income:
- 40% fonds euros Spirica (200,000 euros): 2024 return of 3.13% net, secure foundation
- 30% bond and diversified ETFs (150,000 euros): estimated return 4%
- 20% global equity ETFs (100,000 euros): historical return of 7%
- 10% flexible funds (50,000 euros): active management for opportunities
Estimated overall return: 4.2% net of management fees.
Contract 2 at Lucya Cardif: 200,000 euros in SCPI within assurance vie
Philippe invests 200,000 euros in SCPI (Societes Civiles de Placement Immobilier -- French real estate investment funds similar to REITs) held within a Lucya Cardif assurance vie contract. The weighted average return is approximately 6% gross, or about 5% after contract fees.
Advantage of SCPI within assurance vie vs. direct SCPI
Holding SCPI within an assurance vie offers several decisive advantages: income is capitalised within the wrapper without being taxed annually (unlike direct SCPI where rental income is taxed at income tax rates plus 17.2% social contributions), subscription fees are reduced (often 0% in online contracts vs. 8-12% for direct purchases), and estate transfer benefits from the 152,500 euro allowance per beneficiary. The trade-off is that the contract's annual management fees (0.50-0.75%) are added to the SCPI's fees, and liquidity depends on the insurer.
Step 2: The PER to Offset Tax in the Year of Sale (150,000 euros)
In the year of the sale, Philippe's income is exceptionally high. This is the ideal time to maximise PER contributions. Philippe opens a PER at Linxea Spirit PER and deploys his contributions over 3 years to use all available allowances:
Worked example: PER tax savings over 3 years
- Year 1: 50,000 euros x 41% TMI = 20,500 euros in tax savings
- Year 2: 50,000 euros x 30% TMI = 15,000 euros in tax savings
- Year 3: 50,000 euros x 30% TMI = 15,000 euros in tax savings
- Total tax savings over 3 years: 50,500 euros
These 50,500 euros in savings are reinvested in the assurance vie, generating their own returns. This is the "snowball effect" of tax optimisation: tax saved funds savings, which generates gains, which themselves compound.
Step 3: Direct SCPI for Immediate Income (200,000 euros)
Philippe invests 200,000 euros directly in diversified SCPI selected for yield: Corum Origin (6.06%), Pierval Sante (5.10%), and Epargne Pierre (5.28%). The weighted average return is approximately 5.5%, or 11,000 euros gross per year (about 917 euros/month). After income tax at the 30% bracket and social contributions (17.2%), the net income is approximately 5,800 euros per year, or about 483 euros net per month.
Step 4: Scheduled Withdrawals from Assurance Vie
To complement the SCPI income and reach his target of 2,500 euros net per month, Philippe sets up scheduled withdrawals of 2,000 euros per month from his Linxea Spirit 2 contract (24,000 euros per year). Since the contract is newly opened, the gains portion of each withdrawal is very small in the early years, making the tax impact negligible even at the 30% flat tax rate. After 8 years, taxation becomes even more favourable with the 9,200 euro annual allowance for a married couple.
Step 5: Gift to Children (50,000 euros)
Philippe and Catherine give 25,000 euros to each of their two children. Each child opens an assurance vie, starting the 8-year fiscal clock at an age where time works strongly in their favour. These gifts are well within the 100,000 euro allowance per parent per child (article 779 of the CGI), triggering zero gift tax.
Reconstructed Monthly Income
| Income Source | Gross Monthly | Net Monthly | Taxation |
|---|---|---|---|
| Assurance vie withdrawals (Linxea Spirit 2) | 2,000 euros | ~1,960 euros | 30% flat tax on gains (minimal) |
| Direct SCPI income | 917 euros | ~483 euros | Income tax 30% + 17.2% social contributions |
| Catherine's salary | 3,200 euros | 3,200 euros | Withheld at source |
| Household total | 6,117 euros | 5,643 euros |
Philippe meets and exceeds his target of 2,500 euros in net supplementary income (1,960 + 483 = 2,443 euros), plus Catherine's 3,200 euros, for a total of 5,643 euros net monthly.
10-Year Projection: Philippe at 65
Despite cumulative withdrawals of 240,000 euros over 10 years and spending from savings accounts, the overall financial assets grow by 74,000 euros thanks to investment returns. The total estate moves from 1,150,000 euros to 1,224,000 euros. This is the power of a well-invested large capital: returns more than compensate for withdrawals.
At retirement (age 65), Philippe can reduce withdrawals from the assurance vie (which will have 10 years of fiscal seniority and full benefit of the 9,200 euro annual allowance), progressively draw from the PER in fractional capital at a much lower TMI (11% or 30% instead of 41%), and continue receiving SCPI income to complement pensions.
Estate Planning
Philippe and Catherine draft dismembered beneficiary clauses on their assurance vie contracts: usufruct (life interest) to the surviving spouse, bare ownership to the two children in equal shares. On the death of the first spouse, the survivor retains use of the capital while the children receive bare ownership tax-free (152,500 euro allowance per beneficiary per insured person).
Warning: the 500,000 euro departing director allowance has strict conditions
The fixed 500,000 euro allowance under article 150-0 D ter of the CGI is only available to directors who retire within 2 years of (or before) the sale, who have held a management position for at least 5 years, and who held at least 25% of voting rights. Philippe meets all conditions, but verification with a tax lawyer beforehand is essential to secure the arrangement.
Key Takeaways
- Diversification across 5 wrappers (2 assurance vie, PER, SCPI, cash reserve) reduces overall risk and optimises taxation at every stage
- The PER recovers 50,500 euros in tax over the 3 years following the sale
- Assurance vie provides both immediate income via scheduled withdrawals and optimised estate transfer via dismembered beneficiary clauses
- Despite 2,500 euros in monthly supplementary income, the overall estate continues to grow over 10 years
- The year of the business sale is a unique fiscal optimisation window that must not be missed
This article is published for informational purposes only and does not constitute personalised investment advice. Past performance is not indicative of future results. Business sale taxation is complex and requires guidance from a specialist tax lawyer and accountant. Before making any investment decision, consult a qualified financial adviser.