Planning succession is an intimate and necessary for every family: like a tailor-made suit, asset planning is more efficient if it is tailored on individual needs and realized in correct times. Plus, besides asset benefits, there are many advantages in terms of correct tax planning to pass wealth to future generations in a way that is fiscally efficient and free from risks.
There are plenty of legal and fiscal tools that can be implemented for effective asset protection: these means aims at containing asset liability and protect asset of individuals and families from third parties aggression.
It is a common opinion that asset planning to future generations and fiscal optimisation strategies are reserved to those with remarkable patrimony (so called High Net Worth Individuals) but this is deeply wrong: asset planning and protection tools are accessible to vast majority of individuals that require legal and tax tools to protect their wealth and transfer it to future generations in a fiscally effective way.
Tools of asset planning and protection are indeed extremely heterogeneous: from small initiatives (such as an insurance) to various legal instruments and commercial entities in local jurisdiction or abroad.
Besides domestic tools, that vary according to own Country of residency, there are several international tools.
The use of international planning and asset protection instruments could offer greater protection than domestic instruments as they allow, in certain cases, to adhere to civil and tax regimes different from domestic ones (e.g. governance rules, legitimate quotas, revocation action, etc.).
However, it is essential that the transaction complies with domestic civil and tax regulations, especially where the assets are located in Italy. Otherwise, there is a risk that the solutions adopted may be disregarded from a civil and fiscal point of view.
Specifically, three international planning tools will be analysed below.
By residence planning we mean that conscious decision taken by an individual, for himself and eventually his family, to move the center of his affections and economic interests from the country of origin to a country of destination.
From a fiscal point of view, it implies the subjection to the tax system of the country of destination and the abandonment of the tax system of the country of origin, limited to the income produced there.
The main taxation regimes of natural persons are as follows
The factors that influence the choice of residency are many, and different for each individual. For example, the goals of individual and family, the socio-political conditions of their country of residence or the particularly advantageous tax regimes of some countries, are among the main criteria for choosing a foreign residence.
At the same time, legislative obligations (e.g. minimum residence requirements for obtaining and maintaining resident status), the possibility of extending residence to dependent family members and the reputation of the chosen country in absolute terms and in relation to its economic and financial interests may limit the choice to specific countries.
There are many advantages in residency planning:
Among the main jurisdictions that offer particularly attractive tax regimes, Fidinam & Partners, part of the Fidinam Group, has selected some of them within the Residency Program Overview document.
These are investment companies set up in countries other than their own’s which mainly carry out financial activities. To qualify as an investment company under foreign law, there are several requirements to be met:
The advantages of these companies can be seen in terms of planning and protection of assets:
There are many particularly efficient jurisdictions for the establishment and administration of investment companies
The Trust is an institution through which the settlor transfers assets and rights to the trustee, who assumes the obligation to administer them in the interest of one or more beneficiaries and/or for a specific purpose. It is a compulsory legal relationship whereby the ownership of certain assets is transferred to the trustee. The trustee administers the assets in accordance with the powers set out in the Trust's instrument of incorporation and, where available, by calling upon the wishes expressed by the settlor in the Letter of Wishes.
It may be structured to look like this:
The Fidinam Group has a long experience in setting up and administering trusts with its Trustee Companies in New Zealand (since 2007) and Hong Kong (since 2018).
At the heart of every planning and asset protection project for the purposes of succession and tax optimization is always an assessment of the initial financial and family situation and the objectives that you want to set: it is essential in these cases to seek professional and expert advice.
Our consultants in Switzerland, Italy, Monte Carlo, the Middle East and Asia are at your disposal for targeted advice and to provide you with the necessary support for the proper planning and protection of your assets.