Advisers sometimes present offshore Private Placement Life Insurance to non-resident clients holding Italian assets as if the wrapper eliminates the Italian tax problem. It does not. Italian-source income and gains are taxable in Italy regardless of whether those assets sit inside a PPLI or outside it. The wrapper addresses the tax position in the client’s country of residence. It does not override Italian source-country taxation.

That qualification matters a great deal, and it needs to be stated at the outset. What PPLI can do for non-residents with Italian assets is still significant — but advisers who start with an accurate picture of the limits will build better structures and avoid disappointed clients.

The fundamental distinction

Italy taxes non-residents only on Italian-source income and gains. Dividends from Italian companies, interest on Italian bonds, rental income from Italian property, and gains on Italian real estate are all taxable in Italy for non-residents, subject to applicable double tax treaties. The PPLI policy, issued by a Luxembourg or Liechtenstein carrier, sits in the policyholder’s country of residence. It has no legal effect on Italian withholding taxes, Italian rental income taxes, or Italian capital gains taxes at the source.

IVAFE — the 0.2% annual Italian tax on foreign financial assets — does not apply to non-residents. IVAFE is a charge on Italian tax residents holding foreign assets. A non-resident holding a Luxembourg PPLI policy does not owe IVAFE in Italy. The Quadro RW declaration is similarly an obligation of Italian tax residents only. Non-residents have no obligation to declare the PPLI policy to Italian authorities unless they become Italian tax residents.

So the PPLI wrapper for a non-resident changes what happens in the client’s country of residence — not what happens in Italy. For a UAE-resident holding EUR 5 million in Italian equities through a Milan brokerage account, the Italian withholding taxes on dividends are unchanged. What changes is how the after-tax proceeds accumulate: inside the PPLI wrapper, gains compound without annual taxation in the UAE (which has no personal income tax anyway) and the policy provides succession planning, professional investment management, and structural consolidation.

The single most important question for any non-resident PPLI engagement involving Italian assets is: what problem are we actually solving? If the answer is ‘eliminating Italian tax on Italian-source income’, PPLI is the wrong tool. If the answer is ‘optimising tax treatment in my country of residence, simplifying succession, and professionalising my investment management’, PPLI is well-suited.

Italian bank and brokerage accounts

A non-resident holding financial assets at an Italian bank or brokerage — equities, bonds, ETFs, mutual funds — can contribute those assets to a Luxembourg PPLI internal fund by paying a premium to the insurer, funded either by cash or in some cases by in-kind transfer of securities.

Once inside the PPLI, the assets are re-registered in the name of the Luxembourg insurer. The Italian custodian relationship ends. Income and gains on those assets then accumulate within the PPLI wrapper, subject to the tax rules of the policyholder’s country of residence rather than Italian withholding at source.

The Italian tax position at the point of contribution must be assessed carefully. An in-kind transfer of securities to an insurer is treated under Italian tax law as a disposal — any accrued Italian capital gains tax crystallises at the point of contribution, not at a later date. For assets with significant embedded gains, this creates a pre-contribution planning consideration. In some cases, it is more efficient to liquidate the Italian account, pay any applicable Italian tax, and then invest the net proceeds into the PPLI as a cash premium.

For Italian government bonds (BTPs) and other instruments that benefit from favourable Italian withholding tax rates for non-residents under treaties, advisers should confirm whether transferring those assets into a PPLI changes the withholding position. Where the treaty benefit depends on the beneficial owner being the non-resident individual, substituting the Luxembourg insurer as the registered owner may alter the applicable rate.

What actually changes for the non-resident

Italian real property

Italian real property cannot be held directly inside a PPLI internal fund. Insurance regulations in Luxembourg, Liechtenstein, and across EU PPLI jurisdictions restrict eligible assets to financial instruments. Direct real estate is excluded. A PPLI policy that purports to hold Italian real property directly would lose its insurance characterisation.

The approach for clients who want to bring Italian property into a PPLI-linked structure is to interpose a Special Purpose Vehicle — an Italian S.r.l. or a foreign holding company — between the property and the PPLI. The PPLI internal fund holds shares in the SPV, and the SPV holds the property. The policy then holds a financial instrument (shares) rather than the property itself.

This structure has genuine limitations that must be stated directly.

• Italian property taxes (IMU, the municipal property tax) apply to the property regardless of how the ownership chain is structured. The SPV pays IMU in the same way the individual would.
• Rental income from Italian property is taxable in Italy for both residents and non-residents under most treaties. The SPV does not eliminate Italian tax on rental income; it changes who pays it (the SPV at corporate rates rather than the individual at personal rates, which may or may not be advantageous depending on the applicable treaty and the SPV’s jurisdiction).
• Capital gains on Italian real estate held by a non-resident SPV are generally taxable in Italy, though the rate and treatment depend on the SPV’s jurisdiction and the applicable double tax treaty.
• Notarial and registration costs apply to transfers of Italian real estate into an SPV structure. These are real transaction costs that affect the economic analysis.

The succession and estate planning benefits of the PPLI are the primary driver for incorporating Italian property into this structure. The PPLI death benefit passes outside the estate. If the SPV shares are held within the PPLI policy, those shares — and therefore the indirect interest in the Italian property — can pass to beneficiaries via the policy rather than through Italian succession. Italian inheritance tax still applies to Italian-situs assets, but the PPLI structure can simplify the distribution mechanics and, in certain configurations, provide flexibility on timing.

PPLI is not an IMU exemption or an Italian rental tax elimination device. The value of the SPV-PPLI structure for Italian property is primarily in succession planning, compliance consolidation, and the governance framework it provides — not in eliminating Italian property-level taxes.

Cryptocurrency held by Italian non-residents

DAC8 — the EU directive requiring crypto-asset service providers to report transaction data to tax authorities — entered into force on 1 January 2026. Italian residents with crypto are the primary reporting focus. Non-residents are not required to file Italian Quadro RW declarations or pay Italian IVAFE on crypto held abroad.

However, for a non-resident who holds crypto on an exchange that is registered or operating in the EU, DAC8 reporting may still result in data being exchanged with the tax authority of the policyholder’s country of residence — not Italy. The reporting obligation runs from the EU-based CASP to the relevant member state’s tax authority, then onward via automatic exchange to the policyholder’s home jurisdiction.

For non-resident clients with crypto assets who are considering Italian residency in the future, PPLI structuring before establishing Italian residency is worth considering. Once Italian residency is established, IVAFE and Quadro RW obligations apply to the policy, and the 26% substitute tax becomes the applicable exit charge. Structuring before the Italian residency clock starts allows the client to establish the PPLI in their current (potentially zero or low-tax) jurisdiction and then elect the NTR regime on arrival in Italy, with the PPLI already in place.

Non-residents considering Italian residency: the pre-arrival window

The most important planning insight for non-resident clients with Italian assets is not what PPLI does for them today. It is what pre-arrival structuring achieves if they are contemplating Italian tax residency in the future.

A non-resident who establishes a Luxembourg PPLI and elects the NTR regime on arrival in Italy gains the following:

• All foreign-source income and gains, including PPLI gains of any size, are covered by the EUR 200,000 annual flat tax (grandfathered at EUR 100,000 for transfers before 10 August 2024).
• No IVAFE on the foreign PPLI policy during the NTR period.
• No Quadro RW reporting obligation for foreign assets during the NTR period.
• The NTR period runs for up to 15 years, providing a long planning horizon for compounding inside the wrapper.

The pre-arrival structuring window matters because establishing the PPLI before Italian residency avoids any Italian characterisation of the premium payment as an Italian-source transaction. Once Italian residency is established, all financial activity is subject to Italian scrutiny. The PPLI, if established in the client’s prior jurisdiction, enters Italy with an established cost basis and a clear non-Italian source.

Italian-situs assets — real property, Italian bank accounts — remain subject to Italian rules regardless of the NTR election. The NTR regime does not exempt Italian-situs assets from Italian tax. Advisers should not conflate the NTR exemption on foreign assets with a general Italian tax holiday. The Italian property is still subject to IMU; the Italian bank account income is still subject to Italian withholding.

Succession: Italian forced heirship and the non-resident’s position

Italian forced heirship rules apply to Italian-situs assets regardless of the deceased’s domicile. A non-resident who owns Italian real estate or Italian-sited financial assets will have those assets subject to Italian forced heirship on death, with mandatory shares for spouse, children, and in some cases parents.

EU Succession Regulation 650/2012 allows an individual to elect the law of their nationality to govern their succession. An Italian national who dies while non-resident in Italy can elect Italian succession law (accepting forced heirship) or — if the criteria are met — the law of their country of habitual residence, which may have different or no forced heirship rules.

The PPLI death benefit, however, falls outside the estate under Article 1920 of the Italian Civil Code regardless of the deceased’s residency. Named beneficiaries receive the death benefit directly, without going through succession proceedings, and without being subject to forced heirship claims on that amount. Italian inheritance tax still applies to Italian-situs assets in the estate at the standard rates — 4%, 6%, or 8% depending on the beneficiary relationship.

For non-resident clients with significant Italian property and beneficiaries across multiple jurisdictions, the PPLI addresses the investment portfolio succession cleanly. The Italian property requires separate planning — whether through an SPV structure, a testamentary election under Brussels IV, or coordination with an Italian estate planning lawyer.

Who this structure fits — and where it doesn’t

PPLI for non-residents with Italian assets is appropriate for:

• Non-residents in PPLI-efficient jurisdictions (UAE, Singapore, Switzerland) who hold Italian financial assets and want to consolidate them into a single investment structure with succession planning and tax deferral in their country of residence.
• Non-residents holding Italian assets who plan to become Italian tax residents in the future and want to pre-position their structure before the NTR clock starts.
• Families with Italian property who want to bring the SPV shareholding into a PPLI for succession purposes, provided the Italian property-level taxes are understood and accepted as a separate matter.
• Italian-origin clients who have emigrated but retain Italian assets and beneficiaries, and need a compliant, disclosed structure that works across jurisdictions.

PPLI is not appropriate as a mechanism for:

• Eliminating Italian withholding taxes on Italian-source dividends or interest — these apply at the source regardless of the wrapper.
• Avoiding Italian capital gains tax on Italian real estate held for less than five years — the SPV structure may change the form of the charge but does not eliminate Italian taxing rights.
• Concealing Italian assets from the Agenzia delle Entrate — CRS reporting by the Luxembourg carrier means the Italian tax authority receives annual information on the policy.

Our approach

PPLI.Solutions works with non-resident clients holding Italian assets across a range of jurisdictions: UAE, UK, Singapore, Switzerland, Israel, and elsewhere. We do not provide Italian tax advice. Each engagement involving Italian-situs assets is coordinated with qualified Italian tax counsel — including specialists in Quadro RW compliance, Italian property taxation, and cross-border succession.

Where a client is considering future Italian residency, we work with them and their advisers to plan the PPLI structure in the current jurisdiction before the Italian residency clock starts, and to ensure the NTR regime election is correctly timed and documented.

If you are a non-resident with Italian assets — or an adviser working with such a client — and want to assess whether PPLI adds value in the specific circumstances, contact us directly