Money

Money in international Settings

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Scope of this Page

When moving internationally, funds need to be transferred across borders. This guide focuses primarily on people moving away from the United States but also covers general principles applicable worldwide.

General Warning

• U.S. citizens must file for federal income tax in the U.S., no matter where they reside [1], unless they have residency in, and are filing taxes on all their income in, a country with a reciprocal tax treaty. The specifics of this vary by country, so professional advice is recommended.
• Moving large sums of money often triggers money laundering protection mechanisms. The limit is generally in the ballpark of 10.000US$, but technically, all digital transactions are monitored and can trigger further inquiries even at much lower amounts if other risk factors or triggers are present. Banks routinely request additional information about recipients or residency when moving large amounts; this should be handled carefully and promptly.
• In the EU, anti-money laundering protection laws prohibit cash payments above 10.000€ [2] [3], even for invoiced and reported business transactions.
• Navigating this is complicated, and mistakes can have severe implications with the IRS. We strongly suggest you get professional help to ensure everything is taken care of. The information here is not definitive and is purely a starting point for research and self-education.

Considerations

Before deciding on a method for moving funds, several important factors should be evaluated:

Costs

• Transfer fees vary widely depending on the provider and method chosen.
• Some transfers involve intermediary banks, which may impose additional hidden charges, delays, or intervention risks. There can be a lot of fine print.
• Foreign transaction fees may apply, depending on the sending and receiving financial institutions.

Exchange Rates and Fees

• Exchange rates fluctuate and can significantly impact the amount received in the destination currency.
• Some providers offer better exchange rates than traditional banks, and/or lower fees, and/or faster "clearance".
• It is often helpful to compare the amount received after fees, since "low" or "no" fee options often come at a worse exchange rate or hide fees.

Tax Implications and Official Surveillance

• Moving large sums of money internationally may trigger tax reporting requirements in both the origin and destination countries.
• The U.S. has strict regulations on foreign bank accounts (FBAR reporting) and FATCA compliance. Any account whose balance exceeds 10.000US$ at any moment in the year needs to be reported to stay in compliance. The total amount of ALL foreign assets (including stock and real estate) can incur taxes or penalties, particularly if unreported. [4]
• Some countries impose exit taxes or require declarations for significant fund transfers into and/or out of their borders, independent of residency.

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Options for Transferring Funds Internationally

Classical Bank Transfer (Wire Transfer)

Overview

A wire transfer via a traditional bank the standard method for moving large sums internationally. How easy and how expensive this is depends highly on the cooperation and local regulations in both countries.

Advantages

• Secure and globally recognized.
• Suitable for large transactions.
• Some banks offer direct international wire services with preferential rates for account holders.

Disadvantages

• Completely relying on the laws of the countries, so it will be easily detected from either government.
• Typically involves high fees from both sending and receiving banks.
• Exchange rates often bad.
• Processing times can vary, sometimes taking several business days.

Crossing Borders

• No particular restrictions when crossing the border, the bank takes care of declarations if needed

Wise (formerly TransferWise)

What is Wise?

Wise is a company that specializes in low-cost international money transfers. It is using local bank accounts in multiple countries and has low exchange rates, especially for lower amounts, because it doesn't charge a base fee.

What Can You Do with Wise?

• Send money internationally at mid-market exchange rates with low, transparent fees.
• Hold and convert multiple currencies in a Wise multi-currency account.
• Obtain a Wise debit card for global spending.
• Receive payments in different currencies as if you had local bank accounts in those countries.

Limitations of Wise

• It is a legally operating money service, transfers will show up on the records.
• Transfers may take longer if sent from or to banks with additional security procedures.
• Not all currencies or countries are supported.
• Large transfers may require additional identity verification or documentation.
• It is not a real bank account, the money is not secured - in case of a bankruptcy everything might be gone.

Crossing Borders

• No particular restrictions when crossing the border.

Cash

Advantages

• Readily available

Disadvantages

• Can easily be stolen, including by officials.
• Raises suspicion.

Crossing Borders

• Depending on the country, the total value of all cash and other "financial instruments" (including traveler's checks, gold, etc) above a certain threshold needs to be declared. For the US this is 10.000U$
• Undeclared cash can be seized.

Valuables (Gold, Jewelry etc.)

Advantages

• Can hold value over time.
• May be easier to transport discreetly than large sums of cash.

Disadvantages

• Value can fluctuate.
• Difficult to convert quickly to cash in some locations.
• May attract unwanted attention or theft.
• Requires appraisal to determine value accurately.

Crossing Borders

• Many countries require declaration of valuable items above a certain value.
• Failure to declare can result in seizure and penalties.

Money transfer services

Overview

Companies like MoneyGram, Western Union, Xoom, WorldRemit, and OFX. These services often offer faster transfers than traditional banks, with various payment and delivery options.

Advantages

• Transfers can be very quick, even within minutes.
• Many providers have extensive networks of agents for cash pick-up.
• Various payment methods, including bank transfers, debit/credit cards, and cash.

Disadvantages

• Fees can be high, especially for smaller amounts or urgent transfers.
• Exchange rates may not be as favorable as mid-market rates.
• Transfer limits may apply.
• Fees and exchange rate markups may not always be fully transparent.

Crossing Borders

• Generally, the money transfer service handles the reporting requirements. However, it's wise to keep records of the transaction.

Digital wallets

Overview

Platforms like PayPal, Skrill, etc., allow international money transfers.

Advantages

• Easy to use for those already familiar with the platforms.
• Transfers can be fast.

Disadvantages

• Fees can be high, especially for cross-border transfers.
• Exchange rates often not be competitive.
• Geographical restrictions and account limitations often apply.
• Risk of hacking or account compromise.

Crossing Borders

• No physical border crossing is involved, but the transfers are recorded.