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Offshore Banking and Asset Protection, Offshore Trading
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Offshore Banking and Asset Protection, Offshore Trading

  #11 (permalink)
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Big Mike View Post
I may one day renounce citizenship so I don't want to create more US based entities.

In addition, I would like to discourage idiotic lawsuits which waste both time and money even though I ultimately win them. My current understanding is a Nevis LLC would help in this regard.

I believe there are also possible tax advantages in terms of foreign or IBC companies with regards to capital gains taxes for traders. I am only a layman on this and am still researching.

I am speaking with several attorneys and accountants. But they all have their preferred structure, I need to make the ultimate decision on how to direct them. Some want to use existing relationships with banks or brokerages, whereas I am more comfortable selecting my own based on my own research.

Things are further complicated with my residency in Ecuador but citizenship in USA. I will be an Ecuadorian citizen one day but the complicated tax and reporting requirements are on the US side. I need asset protection, tax consideration, but also reporting requirements/annual fees in the decision.

Sent from my phone

not that i would try to avoid my obligation to pay taxes to the u.s. but,

i would look into uruguay and saxo bank,

and i would probably use someone like this

http://ihidem.com/

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  #12 (permalink)
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tigertrader View Post
not that i would try to avoid my obligation to pay taxes to the u.s. but,

i would look into uruguay and saxo bank

No one trying to evade taxes. But it's stupid to not try to minimize them legally. I've noted that it seems a majority of hedge funds are setup as offshore businesses, based on what I've been reading.

As a US citizen not living in the US, of particular note is the tax policy that requires me to pay income tax on money regardless of where I live but only with regard to where I was born.

Mike

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  #13 (permalink)
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Big Mike View Post
No one trying to evade taxes. But it's stupid to not try to minimize them legally. I've noted that it seems a majority of hedge funds are setup as offshore businesses, based on what I've been reading.

As a US citizen not living in the US, of particular note is the tax policy that requires me to pay income tax on money regardless of where I live but only with regard to where I was born.

Mike

i've referred quite a few people to bill ensing who can be reached at the website i provided.

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  #14 (permalink)
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Big Mike View Post

Is there any issue with brokers like InteractiveBrokers opening accounts for Nevis LLC's?

Mike

Honestly I don't know if the list is for individual or corporate clients. But St. Kitts and Nevis are listed as countries from which it's possible to open an IB account

https://www.interactivebrokers.com/en/accounts/open_account_country_list.php

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  #15 (permalink)
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Regarding hedge funds setup as offshore trading businesses:

Source: Hedge Fund Fundamentals Structuring Offshore Hedge Funds - Hedge Fund Fundamentals

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Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
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2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
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Offshore Banking and Asset Protection, Offshore Trading-hff_structuring_offshore_hedgefunds_02-2014-1-.pdf  
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  #16 (permalink)
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LUPUS View Post
Honestly I don't know if the list is for individual or corporate clients. But St. Kitts and Nevis are listed as countries from which it's possible to open an IB account

https://www.interactivebrokers.com/en/accounts/open_account_country_list.php

Thanks, I tried to find that on Google but didn't see it.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #17 (permalink)
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Ocra put some trust case studies on their website. Even if any of the shown solutions meet your needs 100% it may give a brief overview.


Case Studies - Using Companies and Trusts - OCRA Worldwide

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  #18 (permalink)
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Income


Big Mike View Post
No one trying to evade taxes. But it's stupid to not try to minimize them legally. I've noted that it seems a majority of hedge funds are setup as offshore businesses, based on what I've been reading.

As a US citizen not living in the US, of particular note is the tax policy that requires me to pay income tax on money regardless of where I live but only with regard to where I was born.

Mike

Any income no matter where you reside as a U.S. Citizen is deemed Taxable in both Countries.....the one you reside in, as well as the U.S.
In other words you pay Tax to the U.S. even if that money was made elsewhere.
Only 2 Countries i know of does this to their Citizens.

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  #19 (permalink)
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sandptrader View Post
Any income no matter where you reside as a U.S. Citizen is deemed Taxable in both Countries.....the one you reside in, as well as the U.S.
In other words you pay Tax to the U.S. even if that money was made elsewhere.
Only 2 Countries i know of does this to their Citizens.

Which is why I may renounce one day.

Sent from my phone

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #20 (permalink)
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I'm not a lawyer so this should not be construed as legal advice.


Quoting 
I've noted that it seems a majority of hedge funds are setup as offshore businesses, based on what I've been reading.

1. The reason why hedge funds often have an offshore element is to get around UBIT for your U.S. tax-exempt and non-U.S. investors, while commingling their assets with those of U.S. taxable investors. The emphasis is on the bolded part. If you are a standalone U.S. tax-exempt investor or standalone U.S. taxable investor, you have virtually no benefit in setting up a complex keiretsu because your U.S. tax liability is probably already at a minimum.


Quoting 
take a look at hong Kong

2. Entity in zero tax offshore jurisidiction =/= zero U.S. tax liability
Especially with new FATCA withholding rules, if you have an offshore entity having a trade or business in the U.S. or have U.S.-source income, you would likely find yourself subject to significant U.S. withholding tax, unless reduced by treaty, and U.S. tax reporting requirements anyway. In fact you're probably doing yourself a disfavor by starting out from HK given that the U.S. tax treaty with China explicitly excludes Macau and HK.


Quoting 
i would look into uruguay and saxo bank,

3. Why Nevis, Cook Islands, Belize or Uruguay?
Cayman Islands, British Virgin Islands and Bermuda are the most common domiciles for funds.

This part from the slides that you've posted is especially important and I would reiterate: "The popular offshore jurisdictions have robust anti-money laundering regimes and cooperate with international regulatory authorities". Your counterparties and service providers (e.g. Interactive Brokers, lawyers etc.) will almost certainly have their KYC/AML compliance requirements and you're probably better off with a jurisdiction that your accounting/legal/brokerage firms are familiar with.

4. Offshore entity =/= offshore banking
Most of the offshore funds that you're thinking of actually have their bank accounts in the largest financial hubs - in tax-heavy jurisdictions, especially London. There's no need to set up a bank account in a zero tax country, because you can (and probably will) have zero business, trade or income deriving from the tax-heavy country where your bank account is set up.


Quoting 
I guess the question would be, why go through all the trouble? Usually a Delaware or Wyoming based LLC is good enough

5. Cost-benefit analysis
I concur with PB's view as quoted above. Offshore entities are generally costly to set up. Registered agents in these jurisdictions are only interested in courting the business of customers who will incorporate more than 1-2 entities and the sweet spot for pricing their services is generally $300-$1,500/year. Authorities in these jurisdictions make a significant portion of their income from this and have the demand to price the annual fees at another $300-$3,000/year. Lawyers or CPAs who are familiar with these tax strategies often starting billing from $500/h. I generally find the the legal fees dominate all of the above - a good law firm that will set up the boilerplate LLC agreements etc. will probably charge you in excess of $10,000 for 1-2 entities. I'm sure you can find cheap services online that claim to do this for much less, but given that you're going up against the IRS, it's likely not worth saving that money.



Quoting 
I would like to discourage idiotic lawsuits which waste both time and money even though I ultimately win them

there are also possible tax advantages in terms of foreign or IBC companies with regards to capital gains taxes for traders.

Edit -> It seems that these 2 are your main concerns, which can be solved very easily without incorporating a single offshore company:

(1) Get insured. Pays for your lawsuits.

(2) Once you renounce your U.S. citizenship, you simply supply a Form W-8BEN to certify tax status - then you are not subject to U.S. capital gains tax, and you pay whatever personal tax on capital gains in your country of origin (presumably Ecuador and presumably zero in that case).

My suggestion certainly doesn't sound as sexy as your original plan, but I'll wager you that any CPA worth his salt will probably reach a similar conclusion.


Last edited by artemiso; December 22nd, 2014 at 03:04 AM.
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