Investing internationally can be an incredible tool for diversifying your portfolio. Diversifying your portfolio is one of the most well-known and reliable risk management strategies. By having multiple different sources, you can rest easy when one of your investments falls through. Choosing international investments, such as stocks, real estate, or investing directly into a company can combat market volatility and allow investors to tap into markets that aren’t available in their local jurisdictions. The problem, however, is that every country taxes investment income differently. We help our clients structure their investments to get the most out of their wealth. Many investors don’t realize their portfolio is subject to unwanted tax or that tax changes could impact their current tax plan. In this article, we cover where you may be losing money to unwanted taxation, how to combat change, and how Alpen Partners can examine your portfolio to optimize your tax savings.

Why should you optimize your taxes?

While there are jurisdictions that favor wealthy investors and provide tax incentives for those looking to invest or set up a company, others are not this way. The United States is an excellent example of a country that makes it increasingly harder to save on taxes with unpredictable tax changes. We have clients who are either located in the US or hold investments like real estate in the country and are at risk of unfavorable tax treatment, such as capital gains tax and estate tax. Sweden and Portugal are two other countries that tax investors at a high rate.

To lower tax responsibility, high net worth investors work with skilled advisors to optimize their taxes. Tax optimization involves bringing your financial plans to life through staying mindful of tax-efficient investments and decisions. Strategies include choosing the correct timing of income and purchases, types of investments, retirement plans, and the process of filing their taxes. There are so many different ways to optimize your taxes, depending on whether it is an individual or a business, how the income is made and the tax laws of your country. Like most financial planning, there is no single tax optimization strategy that will work for everyone, but there are services that we can offer that can guide you through the process. For example, we can look at your current portfolio and enhance your savings to ensure you aren’t paying unnecessary taxes just because it’s not structured correctly.

Reassessing Your Tax Responsibility

Depending on your goals and your current portfolio, there are several ways to combat tax treatment and optimize your savings. Next, we will examine some of the ways our clients can plan well and save in the future. For your unique tax optimization plan, contact the experts of Alpen Partners to assess your portfolio with the guidance of professionals.

Making Tax-Favored Investments

The Alpen Partners’ objective is to protect and grow our clients’ assets and strive to legally reduce the taxes that our clients pay. One way is to make tax-favored investments that are treated favorably by federal governments.

Trusts

There are many benefits to opening a trust, especially for our clients in the United States. A trust can be utilized to combat any adverse taxation and lower some taxes like estate tax. Not only does a trust offer tax advantages if a wealthy investor is looking for asset protection, but it is also advised the investor to seek offshore trust options, some that favor the creditor less. Additionally, a trust can hold foreign assets.

Expatriation

If you are not reliant on a job to earn your wealth and have grown your wealth through investment, you may be in the wrong place. Investors can save a lot of money on taxes by relocating their lives completely. By changing which countries you are obligated to pay taxes to, you may be able to take advantage of significant tax breaks, especially if your home country taxes on income earned from a different country, like the United States. If all, or most, of your income, is not earned from your home country, or you have skills that allow you to find a job abroad, earning residency or citizenship somewhere else may be an easy move. Alpen Partners does not only offer tax optimization services. We offer a range of financial and life planning, including expatriation. If you think this can be an option for you, we will gladly offer guidance.

401(k) and IRAs

By contributing to a 401(k), one can save pre-tax money into a retirement account. There, it will grow without tax. Money is set aside before federal and state income taxes are withheld. This lowers your taxable income. You are, however, taxed when you begin to withdraw from the account. In most cases, taxes are lower after you retire, so the tax rate is lowered. Therefore, you are paying less in the long run.

Also known as an individual retirement account, an IRA is a tax-favored investment account that helps individuals save for retirement. The money can be invested in any way the IRA holder wishes. There will most likely be a healthy range of stocks and other kinds of equities to choose from. In the world of taxes, contributing to an IRA can be deductible. Investments in an IRA grow tax-deferred.

Restructure with Alpen Partners

There are so many ways investors are protecting themselves from potential tax changes and offer strong asset protection. If you don’t realize you are overpaying, there is no way to know what you can save. You can legally transfer assets out of reach of future creditors, put them in an impenetrable place, and save a lot on estate and inheritance taxes through trusts or other techniques. It takes years to build a portfolio that works to meet your needs. Don’t lose out on the wealth you have worked hard for. Determine if a tax optimization right for you with the guidance of Alpen Partners.