Incoming cash, best country to save in

Taxes
1

My friend will be coming into some money (about a half million) in Italy, because the government is expropriating some land. She is both an Italian citizen and a Swiss citizen, and she is currently resident in Switzerland.

I’m wondering what some of the issues might be to consider about receiving and investing that money for retirement, specifically in relation to which country she should choose to keep that money.

I realize she’ll need to get professionals involved, but I welcome the group’s brainstorming.

I think the general reputation of Switzerland is that it’s tax friendly, although I realize that Italy is also a very wealthy country – of course it’s “engineered” so that Italian public finances always seem on the bring of collapse. So given this is not employment income, I wouldn’t be surprised to find out there are some Italian investment structure alternatives that might be competitive with Swiss ones.

2

I think cash location is not relevant. Your wife domicile is relevant for tax purpose.

Could you please share the amount? Best option might change if this 1 million or 10k…

3

If it’s due to expropriation sounds like real estate, so taxation is usually more complex.

(But then expropriation doesn’t sound like income, unless there’s a massive capital gain which anyway would only be taxed on the gain)

I guess the property had been declared in previous tax filing (if not that’s going to be a lot more complex as it also requires amending previous filings).

6

You raise a relevant point – if tax domicile is the most important aspect, then perhaps moving the funds to Switzerland isn’t so important e.g. leaving it growing in an Italian investment account for example might offer even more (or fewer?) choices in terms of investment strategy.

Perhaps Italy has better access to low fee passive index tracking than Switzerland?

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7

I would be very surprised if that’s the case :slight_smile:

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8

Also, broker and fund access are typically constrained by residence. It doesn’t matter whether the money originates from an Italian bank account or not (except possibly for money laundering questions).

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9

I’m fairly certain that broker KYC requirements and access are independent from tax domicile. She already has investments with a broker in Italy.

Heck, I myself have already satisfied broker KYC requirements in 3 previous countries I’ve lived in, so could choose to invest through accounts in any of those countries I chose.

10

You’re required to inform your broker of changes in (tax) domicile. Not all foreign brokers accept Swiss residents. I.e. they might close or lock your account.

E.g. US ETF access restrictions apply only to EU residents. And US WHT rate depends on your tax domicile (DTA). I.e. your domicile definitely matters in certain cases.

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11

You’re right, the US is radioactive in these cases. But not relevant here.