My parents reside in Italy and own half a million invested in stocks and bonds.
Capital gain is taxed at 26% in Italy.
I live in Switzerland where capital gain is tax free.
Is there a legal/contractual instrument for me to “own” and manage their money, so that any capital gain is tax free (I live in Switzerland)?
They should retain the right to get their money back, for example to automatically get them back at any time when they need.
Any ideas/experience is welcome.
Frank
Short answer : No
Long answer : They could sell their investments. Pay their tax now. Loan you the money at a low interest rate. Then you would invest. There is multiple problems. First, they would not be entilted to any profits, except the interest rate, else it would create fiscal problems. Second, you would have to sell (some of) the investments at a loss to reimbourse them if they ask at a bad moment. Third, that could be problematic if you have brothers and/or sisters…
Legally without needing 3 lawyers I am afraid not (and needing a bit more capital than that),
As long as the capital is under their name, they will have to pay taxes on it according to Italian tax laws and relevant DTAs
They only thing I can think off, is the gift you the money, and you can gift it back. Beware though since there are often limits where it gets taxed (to avoid tax evasion of inheritance tax)
Given you usually have to declare those gifts, it’s definitely not going to look like tax avoidance and trigger an audit when you gift that money back 
And it will be taxed! Rules of the parents place of residence would apply one way, your canton’s rules would apply the other way.
What you’re asking is essentially how to avoid taxes that are due because your parents live in Italy. Make them move 
We have looked for my father in law about similar options.
Unfortunately, there are little / no clean ways to do what you want to do.
There are some alternative as Ed was mentioning such as relocation if they are no longer working. They could officially relocate here (and unofficially spend time in Italy). There is a special tax treatment for retirees. However, they would need to pay health insurance and potentially a place to rent unless you prove you have enough space in your house / flat. However, this option may be financially unattractive for just half mil.
Other options is a trust fund but we didn’t look more in details as with French nationality, the French authorities would chase him a long way.
Other option is straight donation if you don’t have siblings but formally capital would be yours…
This is what I meant.
As far as I know, the limit in CH is 50k CHF. To be checked of course. No clue about the Italian limit
In canton of Bern it‘s 12k taxfree every 5 years. Otherwise gift taxes apply depending on your canton:
https://www.sv.fin.be.ch/sv_fin/de/index/navi/index/steuersituationen/erbschaft_und_schenkung.html
Different tax rates apply based on relation. In canton of Bern 500k inheritance from the parents comes with a 42k tax bill.
A Familienstiftung in Liechtenstein. 
Is this an actual thing for normal mortals? 
According to google minimum is 30k CHF which surprises me.
According to Wikipedia, minimum tax is CHF 1800/year.
Also, I wouldn’t be surprised if the local representatives charged at least a couple hundreds.