Bank account e forced withdrawal, almost two synonyms of a single fear fueled by the crisis Covid-19. Center of gravity of the system, the Cash. How to defend our assets from government measures as energetic and almost inevitable as one patrimonial who could hit our checking accounts?
The simplest and most immediate legal solution seems to be the Cash kept in a safe place, protected from any traceability and intervention by theRevenue Agency.
Unfortunately it is also the only one able to guarantee one total protection from any invasion in our checking accounts, albeit with some disadvantages and difficulties. All the other options, always in legality, are compromised between what we could have lost in the event of a forced withdrawal and what we could lose by escaping the same withdrawal. Or they require specific investment knowledge.
Current account: will there be a forced withdrawal?
The property is a tax which affects the whole of the taxpayer’s assets accumulated over time, and not the flow of his income. Among its various insidious aspects, the forced withdrawal of a small percentage of the capital deposited on a current account, is the one that triggers greater anxieties and concerns in the citizen.
How likely is it that the current government will implement such a measure? Few, surely. The Prime Minister has ensured that there is no property tax in sight, even if the recent straits on the use of cash for payments, envisaged by the Budget Law 2020, could be interpreted in the opposite direction. In addition to supporting the fight against tax evasion, the preparatory stages for a future forced withdrawal could very well be, with the specific intent to discourage the movement of cash money in the citizen.
On the other hand, a forced withdrawal on all current accounts would bring a relatively low figure to the state coffers. There Bank of Italy estimates, in 2019, around 1400 billion euros deposited in current accounts. A forced withdrawal e.g. 0.6%, like that of Amato government of 1992, would withdraw about 9 billion euros from Italian inventories, succeeding in breaking down just over half a point of public debt. A modest result that would modify the public debt to a minimal extent, however generating strong discontent among citizens.
Forced withdrawal is a extreme provision that any government will always adopt reluctantly managing to tear consensus between the oppositions with great effort. Such choices are highly unpopular and are capable of heavily modifying public opinion and its electoral choices. It is equally difficult, however, to believe that sooner or later a forced withdrawal will not hit our current accounts.
Current account: defend it from forced withdrawal
Much has been said about this last point. Maybe too much. Only one thing is certain: the our checking account is not safe from the balance sheet, and there are no ways to protect our money from tax except by withdrawing it and keeping it in our hands or by investing it in assets that cannot be attacked by the assets.
In reality, a forced withdrawal on our accounts already exists and we think about it almost exclusively when we read it as a fact on the bank statement or history of movements. The June 30th every year is the date on which the Government, for fifty years, has asked credit institutions to act as a substitute for tax and to withdraw directly from our accounts and postbooks thestamp duty. 34.20 euros on accounts held by individuals and 100 euros on accounts of legal entities. Only holders of accounts with an average annual deposit of less than 5,000 euros, with ISEE less than 7,500 euros, prepaid cards and PayPal accounts are exempt from this forced withdrawal.
The great discussion in these days of forced withdrawal on a current account, in reality should not surprise us as if it were a novelty, but should annoy us as a confirmation and an aggravation of an event already consolidated in its occurrence.
Current account: investments in securities
If the forced withdrawal occurs on the availability present in the current account, we could then think of demobilizing this availability, placing it in financial instruments which due to their structure cannot be liquidated to directly meet a possible tax, as can cash.
So let’s think of products such as funds, bonds, asset management, deposit accounts, etc. We certainly cannot exclude that the government can devise a system to tax this form of investment with a new balance sheet, perhaps by withdrawing the amounts at the time of coupon detachment or at the time of liquidation. Same talk with i Postal vouchers: Nothing prevents us from thinking about new stamps or increased taxation on earnings.
In addition, any type of investment must be implemented with attention and care, perhaps by contacting a professional. The variable risk it is an element that should not be underestimated. We could, in fact, find ourselves in a short time with an invested value much lower than the purchase value and regret not having paid the balance sheet and no longer having any thoughts.
Current account: bring money abroad
Bring cash abroad? Italian law does not provide for prohibitions in this sense: if the money comes from legal activities, the proceeds of which are regularly reported to the tax authorities, we are free to bring our money where we believe best. As long as we remain in the EU area our financial activities will be subject to forced withdrawals or in any case subject to intervention by the Italian State. As subjects fiscally resident in Italy we are required to complete the quadro RW of the tax declaration, in which all financial assets held in foreign countries are reported. All our movement would still be tracked and the interbank system would do the rest to determine what we are doing with our money.
One solution that could be a viable alternative to cash kept at home, are the lenders in countries outside the Eurozone, where the Italian state cannot intervene on our investments. In this case, even more than in others, hold the money divided into accounts on different banks is the password. Whatever may happen on a deposit, we will always (hopefully) have more availability.
Cyprus, Malta and Bulgaria seem to be the countries with the greatest appeal. There Switzerlandinstead, it lost its tax haven status following bilateral agreements with Italy which oblige it to communicate the names of current account holders with tax residence in Italy to the Revenue Agency.
However, this solution opens many questions: which or which countries? Are countries at risk default? Which banks? How to recognize a scam? Is it better to do it yourself or to rely on a professional? Also in this case the risk is an essential element and it is necessary to carefully evaluate the presupposed advantages of a similar operation put in place to avoid the forced withdrawal.
Forced withdrawal: investing in valuable goods
There are some precautions to avoid the forced withdrawal that rely on valuable goods. Demobilize liquidity to buy oro, even in the form of coins without a numismatic value, diamonds, watches e artwork it would protect us from interventions of a forced nature by the state. They are bearer assets that do not require a report, are not taxed and do not provide for an obligation to report succession. The disadvantage of this form of alternative investment is the necessary knowledge of the sector in which it is decided to operate, which must necessarily lead to the purchase of an asset capable of maintaining its value and assessing itself over time.
The fraud in many cases it is around the corner, and improvising connoisseurs of works of art or valuables without possessing the skills is certainly not a wise idea. There would be a risk of counting losses greater than what we would have suffered with the forced withdrawal. In addition, costs related to commissions, in some really high cases, or the poor transparency of pricing mechanisms.
The same goes for vintage car, with the only difference that being not bearer property, the Revenue Agency is aware of the property. Increase in stamps and various taxes can be budgeted on equity occasions, however, even here, spot-on purchases could resolve the issue of forced withdrawal, while wrong purchases could make us regret not having suffered it.
Current account: cash withdrawal limits
We start from a basic assumption: the money is ours and we dispose of it as we see fit.
It is so. But to a certain extent. There is no limit to withdrawing from our account, however amounts in excess of 12.500 Euros must be handled through an intermediary (bank), as required by the anti-money laundering legislation. It is therefore not recommended to make withdrawals higher than this figure. But still, the withdrawals over 10.000 Euros in the same month provide for a mandatory reporting to the Financial Intelligence Unit (UIF), this time not for tax reasons but for a check on suspicious activities. Exceeding these amounts could lead to requests for clarification from the Public Prosecutor’s Office. In any case, cash withdrawals of important amounts can lead to investigations by the competent authorities on the reasons why we withdraw.
The safest and most daring solution is not to be in a hurry. Subsequent withdrawals distributed over a sufficiently long period of time, always remaining below the thresholds just seen to avoid arousing attention.
The withdrawal of cash is the only safe way to avoid the aggression of an asset. It is a safe method, it requires neither accessory costs nor skills of any kind. The purchasing power of money in our hands will decrease over time, but certainly not to a greater extent than it would if it were simply deposited into a checking account.
The downside evident of this system is the conservation of cash: home or safe? The first solution presents the theft issue, the second is more secure, but let’s not forget that the Inland Revenue could relate the presence of a safe and our repeated withdrawals, asking us for clarification on the contents of the same.
Current account: self-defense from forced withdrawal
The safest defense against forced withdrawal is undoubtedly the progressive disinvestment from the current account through the simple withdrawal of cash. But we cannot exclude other forms of capital reinvestment, also with a view to diversification, in valuable assets or credit institutions on which the Italian tax authorities cannot act.
Whichever option you choose, it is critical to locate a favorable compromise between what is being avoided and the risks that the new financial structure entails. It would not make sense to reinvest the capital removed from a forced withdrawal into assets or other financial assets, without having a good chance that the risks associated with these are able to justify the demobilization from our current account. A wrong investment or an off-market purchase, a consequence of lack of familiarity in the field, which takes years to recover the initial real value, could be a worse evil than what is being avoided: the forced withdrawal from the current account.
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