Offshore Banking and Asset Protection, Offshore Trading - futures io
futures io



Offshore Banking and Asset Protection, Offshore Trading


Discussion in Traders Hideout

Updated
      Top Posters
    1. looks_one Big Mike with 27 posts (50 thanks)
    2. looks_two artemiso with 9 posts (12 thanks)
    3. looks_3 leinster with 6 posts (2 thanks)
    4. looks_4 sgjohnson with 3 posts (1 thanks)
      Best Posters
    1. looks_one Private Banker with 8 thanks per post
    2. looks_two tigertrader with 2 thanks per post
    3. looks_3 Big Mike with 1.9 thanks per post
    4. looks_4 artemiso with 1.3 thanks per post
    1. trending_up 26,036 views
    2. thumb_up 89 thanks given
    3. group 39 followers
    1. forum 65 posts
    2. attach_file 24 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 125,000 members
  • Genuine reviews from real traders, not fake reviews from stealth vendors
  • Quality education from leading professional traders
  • We are a friendly, helpful, and positive community
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts
  • We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

(If you already have an account, login at the top of the page)

 
Search this Thread
 

Offshore Banking and Asset Protection, Offshore Trading

(login for full post details)
  #1 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

I've been doing a lot of research on offshore banking and asset protection.

I am presently looking at several options, one such option is the combination of a Nevis LLC that holds the assets, and a Cook Island Trust which holds the LLC.

These two articles offer summaries:

International Trust - Offshore Asset Protection Trust for US InvestorsPremier Offshore Investor


Premier Offshore.com
International Trust and Asset Protection Trust Structures
International Trust and Asset Protection Trust

An offshore asset protection trust or international trust is considered by many experts to be the strongest asset protection vehicle on the planet when done right and fraught with risk when done incorrectly or for the wrong reasons (ie. tax evasion).

The foundation of the asset protection trust is simple enough: assets are conveyed out of your name and in to the international trust. You designate the trustee, settlors and beneficiaries and you control the assets in the international trust for the benefit of the trust / settlors.

Only a few jurisdictions have laws that were written to support this level of international protection. These are the Cook Islands, the Isle of Man, and Belize. All three jurisdictions have international trust laws that provide very strong asset protection and are politically and economically stable. Legal experts agree that the Cook Islands has the strongest and most tested case law history, and thus is my country of choice. A very close second is Belize, where privacy is maximized and costs are much lower than the Cook Islands. Both of these countries are leaders in the creation and management of the asset protection trust.

The two major advantages of an international trust are 1) asset protection 2) while maintaining control over your assets. Investments are kept out of the reach of civil creditors because U.S. judges do not have jurisdiction over foreign citizens (your trustees or protectors), nor do they have jurisdiction over an international trust. Local judges cannot legally compel the foreign trustee or asset protection trust to release funds to someone who claims you owe them money (ie. a civil creditor). The Cook Islands, Belize, and Isle of Man do not recognize judgments that originate in a foreign country, such as the United States. Either of these options can be combined with a LLC organized in Nevis or elsewhere for maximum flexibility.

Note: This article refers to civil creditors only, and does not contemplate government creditors, such as the U.S. IRS or other agencies.

This means that a creditor would be forced to sue you in the country where you maintain your Trust in order to reach the assets. However, Nevis, Cook Islands, and Belize put up significant barriers to initiating or proving such a case, and are “defendant friendly,” a state of mind that has not existed in the United States for MANY years.

For example, in Nevis, a creditor must post a $25,000 cash deposit to bring the suit against a Nevis Corporation, or Limited Liability Company. In the Cook Islands, the suit must prove beyond any reasonable doubt that assets were transferred into the trust in order to defraud the creditor in question (also called a fraudulent conveyance). If the assets were transferred to the trust prior to the debt being created, or before the problem arose, then it will be nearly impossible to prove intent to defraud.

In another example, the Cook Islands statute of limitations law holds that the time limit for your opponent to claim fraudulent transfer is one year or two years after the underlying cause of action, depending on a number of factors. Therefore, when the lawsuit is completed in the U.S., the Cook Islands statute of limitations will usually have expired. Even if the creditor succeeded in the U.S., it is likely their claim will be barred in the Cook Islands.

See, there is a benefit to the horrifically inefficient U.S. legal system. It allowed the clock to run out of the plaintiff while your assets are safe behind an asset protection trust.

In a final example, a plaintiff in the Cook Islands must prove that your intent in creating the asset protection trust was to defraud that particular creditor, and they must prove this beyond the shadow of a doubt. This means that the issue in question is so obvious, or has been so thoroughly proven, that there can exist no doubt. “Beyond a shadow” might refer to the fact that doubt could be nowhere in the vicinity (completely expelled from the issue), or to the thoroughness of the argument (a shadow being even less substantial than a doubt itself). This is a very tough burden on the plaintiff indeed…one reserved for criminal trials in the United States.


I believe both the Cook Island Trust and Belize Trust provide the strongest and most tested foundation for an international asset protection strategy. The preeminent structure combines the Cook Island Trust or Belize Trust with a Limited Liability Company from Nevis, which allows you to maximize the benefits of both Cook Islands or Belize and Nevis, and further diversifies your international trust structure.

In this structure, assets, such as offshore bank accounts, can be held by the Nevis LLC, and the LLC can be held by the Trust. A U.S. resident (you, the Settlor) can be the manager of the Nevis LLC, while the Trustee of the Trust is an international person. The LLC manager has all legal control over the LLC and signature authority over the bank accounts. Thus, a U.S. resident settlor has control of the assets, has full access to them, and yet owns none of them.

If you, your Nevis LLC, or your Belize Trust or Cook Island Trust, come under attack, you temporarily transfer management duties of the LLC to the licensed and bonded trustee. This trustee will administer your trust and bank accounts per your wishes, which you have provided to him or her well in advance of the problem arising.

When you diversify your structure, a creditor may need to maintain a legal case in both Nevis and Cook Islands or Belize, which will prove extremely difficult and costly, and you are making the most of the benefits of both defendant friendly jurisdictions.

The benefits described above are meant to protect you against a very motivated creditor who is willing to go to the expense of pursuing your assets in to multiple international jurisdictions. These barriers to attack also mean that a more reasonable creditor plaintiff is likely to assess the costs and probability of success against your international trust and either drop the matter or settle for pennies on the dollar.

In other words, these barriers to litigation created by the asset protection trust act as deterrents to lawsuits and creditor collection action, motivate the creditor to settle, and exhaust your opponent’s determination and resources – pursuing a well-constructed asset protection trust is expensive and disheartening for the creditor.

Now that you have an idea of what an international trust can do for you, let’s talk about what offshore asset protection is and is not.

A properly constructed asset protection plan places a portion of your net worth behind multiple barriers…the more barriers, the greater the protection. It allows you to level the litigation playing field and move out of the creditor friendly United States and in to a defendant creditor friendly jurisdiction, such as Belize or Cook Islands. An asset protection trust makes you a hard target, which may eliminate the case altogether or put you in a better bargaining position.

Asset protection does not:

1. help you escape your current or reasonably foreseeable future creditors. You should not transfer assets out of the United States or in to an international trust to avoid a current creditor as this may be a fraudulent conveyance.

2. reduce or eliminate your U.S. tax obligations. You (the U.S. citizen and settlor of the trust) must report your international trust, your international bank accounts, and pay taxes on the gains in your asset protection trust, to the U.S. IRS. U.S. citizens are taxed on their worldwide income, including income earned inside an international trusts.

3. allow you to hide assets. Asset protection is not based on secrecy; it is focused on putting up barriers to collection. Even if your creditor had a detailed road map of your structure, they should not be able to reach the underlying assets.

4. work well with U.S. real estate. The an international trust is best suited for offshore bank and brokerage accounts and other assets outside of the United States. U.S. courts have jurisdiction over U.S. real estate and can simply ignore the asset protection trust and demand seizure the property. While it is possible to hold titles to domestic real estate in a Belize Trust or Nevis LLC, this is not recommended because it provides limited asset protection and will result in significant tax consequences.

5. a total solution to estate planning. An international trust will facilitate transfer of international assets upon death, but should be used with a complete estate plan that is compliant with your home countries estate and tax codes.


Diversification through international investments, which are held in an international trust, can reduce portfolio volatility while maintaining returns. Effective diversification requires investing in non-correlated assets. At any given time, various regions of the world are experiencing unique economic, political, and environmental events.

Accordingly, markets in those countries will reflect local conditions and will not be highly correlated with the markets in your home country. In other words, just because times are tough in the U.S., and banks are paying minimal interest, does not mean there are not deals to be found in other countries. This important concept is essential to international estate planning and wealth management.

In addition to providing portfolio diversification, offshore investments held in an international trust provide a high degree of choice and flexibility. A large percentage of the over 80,000 funds traded worldwide are located offshore. Investing in these funds must often be accomplished through an offshore entity due to regulations in the investor’s home country. The removal of domestic restrictions allows fund managers to alter positions quickly and easily thereby increasing the ability to accumulate substantially greater gains for fund investors. Moreover, international funds may be denominated in any major currency.

Not only does international investing provide additional choice and flexibility, it provides an excellent level of privacy to financial transactions thereby removing an investor’s potential exposure to frivolous litigation. Offshore investments are efficient not only because of the asset protection and privacy they offer, but also because fund managers can use risk hedging techniques which are not available in some domestic markets.

With this in mind, an international trust may be the only vehicle that a non-U.S. investment manager or brokerage will accept when dealing with a U.S. citizen. The advisor will want to be representing an entity, such as a trust or LLC, rather than directly working for a U.S. citizen or resident.

Contempt of Court:

A U.S. court can exercise jurisdiction and control over people and assets in the United States. When a defendant is in the country, but his or her assets are outside of the reach of the court, the judge may attempt to force the defendant to return those assets to their authority.

If a defendant refuses to return the assets, a judge may hold him or her in contempt of court. This means that the court will impose sanctions for failing to comply with the judge’s order. A defendant might be held in jail, fined, or both, until the assets are returned.

If the transfer of assets to the international trust is deemed to be fraudulent, it is likely a U.S. judge will order those assets returned.The only way an asset protection trust can be breached by a U.S. judge, and contempt of court ordered, is in the case of a fraudulent transfer or conveyance.

Legal Cites: Morris v. Morris, Case No. 502005CA006191XXXMB (Circuit Court, 15th Judicial District, Palm Beach County, Florida, 2006), Bowen v. Bowen, 471 So. 2d 1274, 1277 (Fla. 1985), Federal Trade Commissioner v. Affordable Media, LLC (Anderson), 179 F3d 1228 (9th Cir. 1999), and In re Lawrence, 238 B.R. 498 (Bankr. S.D. Fla. 1998).

Fraudulent Conveyance:

A transfer to an asset protection trust will generally be respected if it is done well before a debt is incurred or a creditor files a claim against the settlor (trust founder). If a transfer is made to the international trust after a debt is incurred, or after a creditor’s claim can reasonably anticipated, it may be considered fraudulent.

For example, if you create and fund an international trust on January 15, and on January 20 you injure someone with your car, the transfer of assets to the trust should be respected. This means that it is unlikely the injured party will be able to breach your asset protection trust.

If the dates are reversed, you injure someone on January 15, and fund an asset protection trust on January 20; the transfer is going to be considered fraudulent. A judge will order you to return the assets to pay the claim and, if you refuse, may hold you in contempt of court.

This is a simple example for illustrative purposes. Each State has their own rules, and there are Federal statues at work. The bottom line is this: Form and fund your asset protection trust as early as possible, well in advance of any claim arising or legal proceedings.

Jones Clause:

This is a clause placed in the international trust to protect you against Fraudulent Conveyances. It tells the trustee to pay any claim that comes in from a certain creditor.

For example, just about any transfer, regardless of timing, that prevents the IRS (see: United States of America v. Raymond and Arline Grant, Case No. 00-08986-Civ-Jordan (S.D. FL 2005)) or State taxing authority from collecting, is going to be considered fraudulent. Thus, I always include a section instructing the trustee to pay the IRS or State Franchise Tax Board. This protects both the drafter (me) and the settlor (you).

In the car accident example above, you could create and fund an international trust after the accident, so long as you added a Jones Clause instructing the trustee to pay the injured party.

Letter of Wishes:

A Letter of Wishes is an informal and confidential letter from the settlor to the trustee telling him how to administer the international trust. Because a Letter of Wishes is not part of the trust, it is confidential, is revocable (most offshore trusts are irrevocable), and can be easily amended.

Transfer Clause:

An international trust can be formed in a number of jurisdictions. For example, a client may prefer Cayman Islands because of the large number of banks and investment advisors available. However, when that trust is attacked by a creditor, Cayman may no longer look so good.

If the trust has a transfer clause, it may choose to move to a more advantageous jurisdiction when it comes under attack, such as Belize or the Cook Islands. In other words, if a creditor seems to be making headway in Cayman, the trust may move to Belize, and the battle will begin anew.

The transfer may be automatic or conditioned on a certain event (such as a claim being filed in Cayman), or the trustee may be given the power to move the trust.



Reminder of the Benefits of an Asset Protection Trust
I would like to close by reminding you of the benefits of an asset protection trust formed in Belize or the Cook Islands with a Nevis LLC.

It is possible for you to protect your assets and maintain control over bank accounts and investments.
There are firm time limits for actions against trust assets.
Intent to defraud must be proven to a criminal standard in allegations of fraud.
Cook Islands and Belize courts will not recognize or give effect to certain judgments of foreign courts in relation to International Trusts
There is no bankruptcy law in the Cook Islands or Belie, and therefore no claw back provisions. A creditor must rely on common law fraud to void a disposition to a trust.
Barriers to claims for fraudulent transfer being brought in a Cook Islands or Belize Is court include strict time limits, requirement of proof of fraud beyond a reasonable doubt (criminal standard), and no bankruptcy law.
Procedural law prevents ‘fishing expeditions’ by creditors, restricting the use of interrogatories (discovery, etc).
Impediments to litigation in Nevis: To file a case in Nevis, the plaintiff must put up a $25,000 cash deposit and hire a local attorney.
Assets may be moved between the international trust (Belize or Cook Islands) and the LLC (Nevis).
A Cook Islands or Belize offshore asset protection trust with a Nevis LLC provides the highest level of security for personal assets. Those who most benefit from these international trust structures are persons in high-risk occupations (such as physicians and lawyers), those looking to diversify their investment portfolios, business vendors (particularly those close to retirement), and almost anyone who has saved a significant nest egg and considering moving themselves and/or their assets outside of the United States.

The bottom line is that a properly drafted and maintained international trust formed in Belize or the Cook Islands will tilt the legal scales in your favor by providing the ultimate in asset protection.

The Formidable Foreign LLC Asset Protection Attorney | The Presser Law Firm, P.A.


Asset Protection Attorneys.com
The Formidable Foreign LLC

The international trust has been the traditional protective entity. Now it is only one of several that you can use. For example, we frequently use a foreign LLC to protect our international clients. However, the international trust is still useful for clients who need international estate planning, or want to avoid the tax problems from transferring appreciated assets to other international entities. We also use it in other special circumstances. Oftentimes, we use both the international trust and a foreign LLC as its subsidiary.

The Nevis LLC is a powerful wealth protector. It may give you more protection than the OAPT — and at less cost.

Nevis, a small Caribbean British Commonwealth nation in the Leeward Islands, gained its international reputation for financial privacy and asset protection because of its progressive and debtor-friendly laws. The Nevis LLC demonstrates this tiny jurisdiction's innovation for wealth protection.

The U.S. and other foreign jurisdictions have limited liability companies, but the Nevis LLC is particularly good for protection because it has features that you won't find with other LLCs. The Nevis LLC uniquely combines the most protective features of the international trust, limited partnership, and Nevada corporation into one remarkably protective entity.

A Nevis LLC can be either member-directed or managed by a foreign director. For asset protection your LLC should be controlled by a foreign (Nevis) managing director. You contribute your assets to the LLC and become the LLC member. Your rights then compare to the rights of a member of a domestic LLC, corporate stockholder, or limited partner of a limited partnership. As a member you own, but do not manage, the LLC. Management rests with the director. This transfer of control protects the LLC assets from U.S. court orders.

As an LLC member you no longer directly own the contributed assets. These assets are instead owned by the LLC. A U.S. court cannot order you, as the LLC member, to repatriate the LLC assets because the manager, not you, controls the LLC assets. Moreover, a foreign managing director would be beyond U.S. court jurisdiction. Your creditor would be limited to a charging order against your LLC interest. This would give your creditor only the right to claim profits or liquidation distributions due you from the LLC. Your creditor cannot seize your membership interest. Nor can your creditor vote or exercise your other membership rights, such as the right to inspect books and records. Thus, the Nevis LLC compares to a U.S. limited partnership or LLC. A U.S. court order to transfer or seize your LLC interest would be ignored by the managing director who, under Nevis law, need only recognize a creditor's charging order which can only be obtained through the Nevis courts.

If you are a debtor-member who owns a substantial interest in the Nevis LLC. Your managing director would withhold profit distribution that could be seized by your charging order creditor. If you own a minority interest, and if withholding distributions would conflict with the interests of the other debtor-members, you can title your LLC interest to another self-owned Nevis LLC. This would then safely receive your distributed profits. As you have seen with an American LLC or LP, a debtor-member of a Nevis LLC can access funds other than distributions of profits. The charging order would not apply to salaries (e.g. as investment advisor), loans, etc. made to you from the Nevis LLC.

Under certain circumstances, Nevis law and IRS regulations impose U.S. income tax liability on a charging order creditor for LLC profits attributable to the debtor-member. Your charging order creditor can incur a tax liability even if your creditor recovered no distribution. You have seen this same poison pill feature with the U.S. limited partnerships and LLCs (but not other international entities). This is another protective feature of the Nevis LLC.

Your Nevis LLC would delegate important powers to your managing director who would ignore U.S. court repatriation orders. If your LLC has multiple members, (which we recommend), your operating agreement should require a unanimous vote to change the managing director. This would overcome a U.S. court order to compel a single debtor-member to replace the manager with a manager appointed by the court to repatriate the LLC assets. The Nevis LLC can be structured with similar protective duress provisions that you would find with the international trust − except that the debtor-member of an LLC retains a membership interest in the LLC and, derivatively, its assets.

A Nevis LLC is significantly more protective than the international trust if you now have creditors because a transfer of assets to your trust would be a fraudulent conveyance contestable in the trust jurisdiction.

If a Nevis LLC member has an existing creditor, the Nevis LLC ordinances allow the member to transfer his or her assets to the LLC without it constituting a fraudulent conveyance − if the debtor-member's interest is proportionate to the capital contributed. This transfer is then a fair value exchange and expressly exempt from the Nevis fraudulent transfer statutes. Interestingly, under Nevis law a mere promise of a future investment by an existing or future incoming LLC member can be used to measure this proportionality. A debtor-member can then own a small interest in the LLC subject to the charging order, although this member contributed all or most of the LLC's assets. This dilution strategy lets you further discourage a creditor from obtaining a charging order. This is one of several features unique to the Nevis LLC.

U.S. limited partnership and LLC laws remain unsettled on the question of whether your present creditor can recover assets that you transfer to a limited partnership or LLC, even when you receive in exchange for your contributed assets, a proportionate share in the limited partnership or LLC. (Some courts have ruled that impairing a creditor is sufficient for a transfer to be fraudulent.) However, you have no ambiguity or uncertainty under Nevis law. Whatever money you invest in your Nevis LLC will not be a fraudulent transfer, nor challengeable by an existing creditor.

For that reason, we suggest the Nevis LLC is more protective than a foreign trust or domestic limited partnership or LLC. You can legally and ethically invest in the Nevis LLC — regardless of your financial situation.

The Nevis LLC is also a more attractive option for the attorney whose clients have existing creditors and where the attorney or professional advisor has concerns about their own professional liability from a fraudulent transfer. And, as mentioned, in more serious cases, we can maximize your protection by establishing a Nevis LLC as a subsidiary to an international trust. Layered protection combines the strength of both type entities.

The Nevis LLC has several other benefits:

- The Nevis LLC has minimal IRS reporting requirements. You are not subject to U.S. foreign trust reporting requirements. If you are a U.S. member who owns 10% or more of an LLC interest, you must follow the IRS' foreign corporation ownership reporting requirements.

- The Nevis LLC is tax neutral. You can elect to have it taxed as a partnership or C corporation.

- Nevis imposes no taxes on their LLC's.

- You can structure your Nevis LLC so that its profits flow to its members in whatever proportions you specify in its operating agreement. This can differ from the actual ownership interest.

- You can appoint a protector to oversee the managing director, as you can with an OAPT.

- Your LLC agreement can include the same anti-creditor poison pills which you can adopt with a domestic LLC. For example, a member's interests can be assessed by the managing director — these same assessment rights would apply against a charging order creditor.

- Your LLC operating agreement can include a flight or Cuba clause so that your manager can expatriate threatened LLC assets to another protective entity in another IFC.

- The managing directors and members of the Nevis LLC are immune from company liabilities.

- Nevis LLCs do not require minute books, annual director or member meetings, or compliance with other customary corporate formalities.

- Your Nevis LLC can be owned by an international trust or combined with domestic entities − FLPs, LLCs, and irrevocable trusts. These multi-entity arrangements strengthen and coordinate your domestic and international estate planning and liability protection.

- A Nevis LLC is less costly to organize and maintain than an international asset protection trust.

While the Nevis LLC is rapidly gaining popularity, the international trust is still useful for select international wealth protection purposes such as estate planning, forced heirship avoidance, and other special purposes that can only be achieved with a trust. Unquestionably, the Nevis LLC is more protective than a foreign international business corporation (IBC). The IBC gives you considerably less safety and no corresponding advantages. The Cook Islands LLC is relatively new and is also one we are now using.

Other IFC's are developing new protective entities. For example, the Bahamas limited partnership parallels the Nevis LLC. Liechtenstein's and Panama's private foundations compare to the international trust. St. Vincent and the Isle of Man hybrid companies are often substituted for an international trust or Nevis LLC. Asset protection IFC's are always developing that better mousetrap.



Image source: premieroffshore.com

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 7 users say Thank You to Big Mike for this post:

Journal Challenge April 2021 results (now extended!):
Competing for $1800 in prizes from Jigsaw
looks_oneMaking a Living with the Microsby sstheo
(206 thanks from 24 posts)
looks_twoSalao's Journalby Salao
(53 thanks from 11 posts)
looks_3Deetee’s DAX Trading Journal (time based)by Deetee
(38 thanks from 18 posts)
looks_4Learning to Profit - A journey in algorithms and optionsby Syntax
(36 thanks from 15 posts)
looks_5Maybe a little bit different journalby Malykubo
(14 thanks from 16 posts)
 
Best Threads (Most Thanked)
in the last 7 days on futures io
Big Mike in Ecuador
76 thanks
The Crude Dude Oil Trading System
73 thanks
Help improve the FIO community
38 thanks
The New Micro Contract - MICRO BITCOIN coming May 2021
29 thanks
futures io site changelog and issues/problem reporting
27 thanks
 
(login for full post details)
  #3 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


Does anyone here have experience with such a structure?

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

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
 
(login for full post details)
  #4 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

Another consideration is an offshore brokerage. This might have tax advantages in some situations. I don't want to post too much about this because I am not an accountant nor an attorney. But if anyone is operating under this structure, I would like to hear from you.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #5 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

https://www.apintertrust.com/offshore_company/nevis_tax_haven.htm


Quoting 
Nevis LLC's are exempt from local capital gains taxes and income taxes based upon income or assets originating outside of Nevis or in connection with other activities outside of Nevis.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #6 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

For the moment, I've excluded Panama from consideration, primarily because of this:

Panama loses its tax haven status for 24 hours


Quoting 
Is Panama a tax haven? At the moment, we could still can consider it as such … But for how long? We have already got used to Governments just changing laws overnight.” We saw it in Cyprus, where during a bank holiday in a hurry the Government passed a law to skim deposits at the country’s two largest banks in order to bail them out from its disastrous financial situation. The latest “Government outrage,” however, happened in Panama.

On December 30th, 2013, the whole offshore industry of this well-known tax haven got shacked up by the So-called Law 120, which was published in the Official Gazette of the country without any prior notice, just before the New Year’s Eve. The new law, more or less abolished the existing territorial taxation system which had existed in Panama since decades. Individuals and companies domiciled in Panama would from this day forwards be taxed on their worldwide profits and not only for income from local source. In other words, the new law would mean the end of Panama as a tax haven and also for the whole offshore industry of the country that employs around 30,000 people. The announcement caused such an outcry within the financial community throughout the country, that it was no surprise to read on the Presidency’s website the next day:

” The Director of the National Revenue Authority, Luis Cucalón accepted having been wrong by proposing to the Members of the National Assembly, the inclusion of Articles 2 and 3 of the law 120 of 2013, concerning the territoriality of the foreign income earned by Panamanian natural and legal persons .” “Although incorrect things were said about the scope of this law, I must admit that I was wrong in thinking that Panama was ready for this step,” he said.

And indeed, as most experts predicted, on January 2cnd, 2014, the Panamanian Government Council passed a resolution repealing sections 2 and 3 of Act 120, which provided for the payment of taxes on income earned outside Panama. With this, everything was back to normal.

However, this episode has seriously eroded the image of Panama and the seriousness of its Government. Firstly, because a measure of such significance, that changes the whole tax structure of a country, cannot just be passed overnight, without discussion, through a backdoor on the Eve of a main bank holiday. Such an approach not only denotes improvisation, but also a total lack of respect for the professionals working in the financial and corporate services industry, as well as for the thousands of investors who hold the ownership of companies or bank accounts in Panama. It also provides important clues about the intentions of the Panamanian Government in the future, in respect to its status as a tax haven. It is expected that Panama will follow the footsteps of other jurisdictions such as Gibraltar or Andorra and seek to abolish the offshore sector and territorial tax system, becoming a conventional low-tax country. The Government of President Martinelli has shown a clear commitment and intention to promote other income streams for Panama, dropping the offshore sector, may it be little by little (as supposed until now) or once and for all. The question is: will Panama be able to offset all the income, deposits and jobs generated thanks to its current status as an offshore jurisdiction? May a loss of confidence in the country trigger a massive flight of capital that even could compromise the traditionally high solvency ratio of its financial system? The latter is hard to guess, but what seems clear is that Panama will no longer be perceived as a stable and safe place in the eyes of the international investment community, who does not like surprises or instabilities. Thus, the decline of Panama as a tax haven seems inevitable…

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
 
(login for full post details)
  #7 (permalink)
 sandptrader 
Valdosta, GA. U.S.A
 
Experience: Advanced
Platform: Sierra , TOS
Trading: 6E, ES, CL, GC
 
Posts: 498 since Sep 2010
Thanks: 1,881 given, 472 received

hello Big Mike....this is very interesting information....i have did some research on the General topic of Wealth Protection in different forms.....but from what i have discovered is there is less & less ways to do it with current rules.
Especially for us/Dollar Denominated assets.
The LLC.....idea sounds Great, and i am going to follow your thread, and see what i can find to maybe help with information that is out there.
I know in General...Singapore is a Good place for Wealth Preservation, as far as their Structure set up concerning Tax on Investment..... from what i have read.
All this is becoming almost impossible for us....."we the people".

Articles:
https://www.globalwealthprotection.com/end-series-llc/

https://www.globaladvisors.org/global-ap-structures/

https://globalwealthprotection.com/private-llc/gwp-advantage/

https://www.sovereignman.com/

Reply With Quote
 
(login for full post details)
  #8 (permalink)
 leinster 
Brussels / Dublin
 
Experience: Intermediate
Platform: ninjatrader
Trading: Stdev + 2
 
Posts: 468 since Jun 2010
Thanks: 844 given, 595 received

@bigmike take a look at hong Kong but the only issue you may have is a us passport / citizenship a lot of banks will / are not too keen to have to comply with us citizen reporting requirements. For me the former British colony's generally seem to have the best setup and most secure and some reporting requirements would be less onerous.

Reply With Quote
 
(login for full post details)
  #9 (permalink)
 Private Banker 
La Jolla, CA
 
Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,850 received

Mike,

Be very careful with any sort of offshore entity. I don't know your situation at all and I can't give you legal advice but you need to consult an Attorney who specializes in this type of arrangement. Nevis LLCs like many other foreign LLCs do indeed provide an extra layer of protection against creditors, etc. They can be expensive to set up and its best to appoint a 3rd party to serve as manager of the LLC rather than being your own just as it would be with an LLC in the US.

I guess the question would be, why go through all the trouble? Usually a Delaware or Wyoming based LLC is good enough. The concern with being an owner of an LLC and you are being sued by someone is to have a charging order against the LLC. This means that whatever income/distributions come out of the LLC to the owner are redirected to the creditor until the charging order is fulfilled.

From what I recall, if and when a creditor were to win a suit against a defendant's LLC, the creditor will immediately assume phantom income for the entirety of the awarded amount. But because the assets are held in an LLC, the creditor cannot force the owner of the LLC to sell or distribute the assets which makes it a very difficult pursuit for creditors. Basically, the creditor would win the case, get the charging order, assume phantom income and after all that, no guarantee they will every get any money out of the LLC. Not sure if this is still the case but that's how I recall it being.

There are other alternatives for those looking to protect assets while gaining some sort of preferential tax gain while maintaining control of the assets and keeping them "onshore".

One would be establishing a charitable remainder trust (CRT). These trusts are commonly used by those with assets that want to protect and gain income from while maintaining control. A CRT is a trust set up where the grantor transfers assets to this trust for the eventual benefit of a named beneficiary (which can be changed as needed). Let's say someone has $5 million that they want to eventually gift to their favorite charity. But they want to maintain control of the assets and continue to receive income during their lifetime. Many high-end executives will carve out a chunk of their company's stock that isn't doing much for them and transfer those shares into a CRT. They can then sell the stock with no capital gains tax and diversify the assets so that they can begin taking an income stream from them. The distributions can be taxable but its best to speak with a CPA about that. This type of trust is irrevocable and cannot be touched by creditors although again the income could potentially be.

You can even take it a step further and make the beneficiary foundation your own family foundation.

Another very simple method of asset protection is to simply encumber the assets with a credit facility. This is probably the most basic form in that the individual will have their account(s) at a broker or private bank and encumber their accounts with a credit line. The bank would then have first right of those assets in the event of a liquidation or whatever. All other creditors would be SOL basically. Even if the line isn't drawn, those assets are encumbered and bound by the loan's underlying covenants.

Again, this is not legal advice. Just a general discussion but the best thing to do though is speak with an estate planning attorney and CPA that specializes in these advanced asset protection and tax advantaged strategies.

Reply With Quote
The following 8 users say Thank You to Private Banker for this post:
 
(login for full post details)
  #10 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


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

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #11 (permalink)
 tigertrader 
Philly, Pa
 
Experience: Master
Platform: NinjaTrader
Trading: ES, ZB
 
tigertrader's Avatar
 
Posts: 6,255 since Jul 2010
Thanks: 6,574 given, 34,957 received


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

https://buckleyfinelaw.com/team/william-a-ensing/

Follow me on Twitter Reply With Quote
The following 2 users say Thank You to tigertrader for this post:
 
(login for full post details)
  #12 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


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

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 6 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #13 (permalink)
 tigertrader 
Philly, Pa
 
Experience: Master
Platform: NinjaTrader
Trading: ES, ZB
 
tigertrader's Avatar
 
Posts: 6,255 since Jul 2010
Thanks: 6,574 given, 34,957 received


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.

Follow me on Twitter Reply With Quote
The following 2 users say Thank You to tigertrader for this post:
 
(login for full post details)
  #14 (permalink)
 ar3s 
Hamburg; Germany
 
Experience: Intermediate
Platform: TT
Broker: Advantage Futures
Trading: Treasuries
 
Posts: 23 since Dec 2013
Thanks: 11 given, 11 received


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

Reply With Quote
The following user says Thank You to ar3s for this post:
 
(login for full post details)
  #15 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

Regarding hedge funds setup as offshore trading businesses:

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

























Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Attached Thumbnails
Offshore Banking and Asset Protection, Offshore Trading-hff_structuring_offshore_hedgefunds_02-2014-1-.pdf  
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 4 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #16 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


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

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
 
(login for full post details)
  #17 (permalink)
 ar3s 
Hamburg; Germany
 
Experience: Intermediate
Platform: TT
Broker: Advantage Futures
Trading: Treasuries
 
Posts: 23 since Dec 2013
Thanks: 11 given, 11 received

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

Reply With Quote
 
(login for full post details)
  #18 (permalink)
 sandptrader 
Valdosta, GA. U.S.A
 
Experience: Advanced
Platform: Sierra , TOS
Trading: 6E, ES, CL, GC
 
Posts: 498 since Sep 2010
Thanks: 1,881 given, 472 received


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.

Reply With Quote
 
(login for full post details)
  #19 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


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

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 2 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #20 (permalink)
 artemiso 
New York, NY
 
Experience: Beginner
Platform: Vanguard 401k
Broker: Yahoo Finance
Trading: Mutual funds
 
Posts: 1,129 since Jul 2012
Thanks: 765 given, 2,541 received

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.

Reply With Quote
The following 4 users say Thank You to artemiso for this post:
 
(login for full post details)
  #21 (permalink)
 leinster 
Brussels / Dublin
 
Experience: Intermediate
Platform: ninjatrader
Trading: Stdev + 2
 
Posts: 468 since Jun 2010
Thanks: 844 given, 595 received


artemiso View Post
I'm not a lawyer so this should not be construed as legal advice.



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.



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.



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.



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.




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.

Hong Kong for EU citizens has certain benefits eg: roll money into a company and then be employed by said company paying standard rate of tax. Company controls the money @0% tax. Malta has certain benefits for residents also. However after the banks got fined for there US clients I believe having a us passport is not so user / bank friendly.

Reply With Quote
 
(login for full post details)
  #22 (permalink)
 leinster 
Brussels / Dublin
 
Experience: Intermediate
Platform: ninjatrader
Trading: Stdev + 2
 
Posts: 468 since Jun 2010
Thanks: 844 given, 595 received

I think key is everyone has different advise for each situation so u need a taxation specialist preferabbly a former IRS tax manager ( who left public service to go private) , someone at management level. Expect to pay around 400-500 bucks an hour for advise. I'm European for this type of advice in Ireland I paid 250 euros per hour. (Well worth it).

Reply With Quote
The following user says Thank You to leinster for this post:
 
(login for full post details)
  #23 (permalink)
itradeit
Västerås Sweden
 
 
Posts: 148 since Sep 2014
Thanks: 59 given, 308 received

You might want to look into what Sovereign Man ? Internationalization for Personal Liberty and Financial Prosperity has to say about the subject.

Reply With Quote
 
(login for full post details)
  #24 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


artemiso View Post
I'm not a lawyer so this should not be construed as legal advice.



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.



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.



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.



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.




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.

Hi @artemiso,

Let's say for example you have an internet based business with no physical presence outside of a datacenter of your choosing. If that business were to be incorporated outside of the US, then it would seem to me it is not a US business but a foreign business. Then that business would not be subject to US taxes. Now, members of that business that may be US citizens would of course be subject to US taxes on their income.

This is just one example. Keeping in mind I am not an attorney nor an accountant, and that I am still researching this but the above represents my current understanding as of this post.

I have explored the insurance option. It is not a cost effective option for my situation. It is better for me to create my own insurance.

As for the reporting, while I certainly don't like the invasive nature of FBAR/FATCA, the goal is not evasion but avoidance. I don't believe "secrecy" is the key here and is not my goal. That said, if there is a legal opportunity to skip FBAR/FATCA reporting, then why not take it?

With regards to cost, yes I've been quoted around $10-12k for the formation and approximately $2-4k per year in maintenance fees, excluding accountants/tax prep.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #25 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


Itchymoku View Post
What are some examples of lawsuits you could avoid? That whole AMP nonsense?

Most likely, as they would need to put up a $25,000 bond as the first step. Nevis also has a loser-pays law.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #26 (permalink)
 artemiso 
New York, NY
 
Experience: Beginner
Platform: Vanguard 401k
Broker: Yahoo Finance
Trading: Mutual funds
 
Posts: 1,129 since Jul 2012
Thanks: 765 given, 2,541 received


Big Mike View Post
Let's say for example you have an internet based business with no physical presence outside of a datacenter of your choosing. If that business were to be incorporated outside of the US, then it would seem to me it is not a US business but a foreign business. Then that business would not be subject to US taxes. Now, members of that business that may be US citizens would of course be subject to US taxes on their income.

OK so I think I have a better understanding of what you're up to now: you are dealing with the issue of (a) the business entity for futures.io (formerly BMT) as well as (b) the business entity for your trading activities. Note that these two are (and should be treated as) different issues.

(a) Regarding your internet business (futures.io (formerly BMT)), I agree with your analysis. It seems to me that you don't really need an "offshore company" in the sense of directing income with U.S.-source tax character through a non-U.S. entity. Rather, you need a regular company in the same way a HK citizen might start a HK company. Provided you've renounced your U.S. citizenship and continue to maintain futures.io (formerly BMT) from Ecuador, U.S. withholding tax is probably not a problem. Since you won't have any U.S.-source income, I don't see a pressing need to maintain an offshore keiretsu with expensive agreements. You should simply incorporate a regular company with limited liability for its owner in the city most convenient for you or where you will be spending most of your time, i.e. probably Ecuador. You should also be able to maintain a U.S. bank account for that Ecuador entity without incurring U.S.-source income character or significant U.S. reporting requirements.

(b) As for your trading, you can probably do it personally and supply a Form W-8BEN as described in my previous post.

In either case, this is a cheap problem to solve and shouldn't require you paying $13-14k in year 1.


Quoting 
As for the reporting, while I certainly don't like the invasive nature of FBAR/FATCA, the goal is not evasion but avoidance. I don't believe "secrecy" is the key here and is not my goal. That said, if there is a legal opportunity to skip FBAR/FATCA reporting, then why not take it?

I have nothing against this. As I've mentioned elsewhere on this forum, anyone is free to arrange his affairs that his taxes shall be as low as possible; there is no patriotic or statutory duty for you to choose the pattern that will pay most to the IRS. I would call this "tax planning" or "minimization" rather than "avoidance" though.


Quoting 
I have explored the insurance option. It is not a cost effective option for my situation. It is better for me to create my own insurance.

I trust you've made a thorough analysis but I'm curious - why is that? General liability insurance coverage would probably cost you less than $60 per month and cover you up to $5M in legal liability. Seems way less than $2-4k per year to me. If you need more than $5M or your own custom insurance terms, you can usually communicate your needs to the insurance underwriter or approach an insurance broker, e.g. Marsh, Aon. Is there something similar in Ecuador? If not, then your problem reduces the one of finding a jurisdiction outside of the U.S. with the most navigable legal and insurance system, which would probably be somewhere in Europe rather than in the Caribbean.

The legal risks are probably significant at my firm (a $25k bond will certainly not deter anyone likely to litigate us) and nevertheless we take care of it with insurance.

Again, I'm not a licensed accountant or lawyer, so do consult such persons on these points.

Reply With Quote
The following 4 users say Thank You to artemiso for this post:
 
(login for full post details)
  #27 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


artemiso View Post
OK so I think I have a better understanding of what you're up to now: you are dealing with the issue of (a) the business entity for futures.io (formerly BMT) as well as (b) the business entity for your trading activities. Note that these two are (and should be treated as) different issues.

(a) Regarding your internet business (futures.io (formerly BMT)), I agree with your analysis. It seems to me that you don't really need an "offshore company" in the sense of directing income with U.S.-source tax character through a non-U.S. entity. Rather, you need a regular company in the same way a HK citizen might start a HK company. Provided you've renounced your U.S. citizenship and continue to maintain futures.io (formerly BMT) from Ecuador, U.S. withholding tax is probably not a problem. Since you won't have any U.S.-source income, I don't see a pressing need to maintain an offshore keiretsu with expensive agreements. You should simply incorporate a regular company with limited liability for its owner in the city most convenient for you or where you will be spending most of your time, i.e. probably Ecuador. You should also be able to maintain a U.S. bank account for that Ecuador entity without incurring U.S.-source income character or significant U.S. reporting requirements.

(b) As for your trading, you can probably do it personally and supply a Form W-8BEN as described in my previous post.

In either case, this is a cheap problem to solve and shouldn't require you paying $13-14k in year 1.



I have nothing against this. As I've mentioned elsewhere on this forum, anyone is free to arrange his affairs that his taxes shall be as low as possible; there is no patriotic or statutory duty for you to choose the pattern that will pay most to the IRS. I would call this "tax planning" or "minimization" rather than "avoidance" though.



I trust you've made a thorough analysis but I'm curious - why is that? General liability insurance coverage would probably cost you less than $60 per month and cover you up to $5M in legal liability. Seems way less than $2-4k per year to me. If you need more than $5M or your own custom insurance terms, you can usually communicate your needs to the insurance underwriter or approach an insurance broker, e.g. Marsh, Aon. Is there something similar in Ecuador? If not, then your problem reduces the one of finding a jurisdiction outside of the U.S. with the most navigable legal and insurance system, which would probably be somewhere in Europe rather than in the Caribbean.

The legal risks are probably significant at my firm (a $25k bond will certainly not deter anyone likely to litigate us) and nevertheless we take care of it with insurance.

Again, I'm not a licensed accountant or lawyer, so do consult such persons on these points.

I have not renounced yet. I may never. But at minimum, I cannot until I obtain citizenship outside the US, which will be ~3 years more for Ecuador.

WRT insurance, I contacted a half dozen firms and the short version is none were willing to provide cost effective insurance (for example, <$100/mo) for the business. They cited various reasons which primarily involved the financial content which they viewed higher risk.

As for the $25k bond, yes I agree - but in the past instance of where I was sued, I feel pretty confident it would have deterred them. That in combination with the loser-pays law in Nevis. If the USA had loser-pays, it would have likely deterred them as well. At the very least, they would owe me a substantial amount in legal expenses, since futures.io (formerly BMT) won the suit.

Ecuador has its own set of challenges. For example, the 5% exit tax for monies deposited here. So it is not an ideal "hub" for assets.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #28 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

@artemiso,

BTW the way I understand it, FBAR/FATCA reporting is for US citizens regardless of where they live or where they bank. Banking institutions are required to automatically report to the USA, it is non-voluntary and any bank that does not report is subject to 30% withholding. Some banks (many banks I am told) have chosen to not allow American's to conduct business, because they don't want the headache.

I already have multiple banking relationships in Ecuador (and they are part of FATCA). But Ecuador is not a "safe haven", so even those assets should be included in the new organization for asset protection reasons -- based on my present understanding.

It gets slightly more complicated due to my residency visa, which was obtained via a real estate investment. So I am not sure that particular title could be transferred out of my name.

I'm working through these questions with multiple sources.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 2 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #29 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

Just finished a conference call with another attorney. This group wanted over $80,000 for the creation of trusts and LLC's and that was separate any tax advice/CPA work. That figure was after they wanted an approximate "picture" of my assets, something that I felt was wrong from the beginning. Just saying, buyer beware.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #30 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

@artemiso I will revisit the commercial insurance after I make the organizational changes. Maybe you can make an introduction for me so I can get it done this time without further time wasted.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #31 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

I just had a very productive call and got all my remaining questions answered with an attorney that specializes in "this". He is also an expat himself. My next step is to consult with my local Ecuadorian attorney about some of the proposals to ensure we are on the same page, and then my CPA, and with luck I will be able to begin the process not long after of restructuring.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #32 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


artemiso View Post
You're probably already aware of this but just sharing for the rest of the readers: My experience has been that when an established/reputable attorney quotes an absurd fee or retainer for their services, it is an attempt to pre-qualify you if they think that you're not a serious client and you're not going to end up paying/engaging their services after all the free, pre-engagement consultation and advice. They won't phrase it that way but it's the only logical reason why they would need a retainer. Still, avoid attorneys who require such a deal because it's a sign that you're not a priority for them. The only exception is if the attorney appears to be capable of churning out paperwork very fast despite an expensive retainer, and that time is an important variable for you.

Regardless of why, I told that attorney that I didn't get to where I was today by not pursuing a good value. Sure, I need expert advice, but I also need to pay a fair fee for that advice. And that wasn't $80k. Keep in mind this attorney was going to have me fill out a 50 page questionnaire detailing all assets, then they would just pick a structure they've picked a hundred times before for other clients, and populate some names on a PDF form. Then call me a dozen times for no more than 30 minutes per call. That is not good value in my eyes.

My best guess is a fair cost is more in the neighborhood of $15k. And I am including post-creation support and hand holding in that figure. I'll find out soon if I am right or wrong.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #33 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


artemiso View Post
You're probably already aware of this but just sharing for the rest of the readers: My experience has been that when an established/reputable attorney quotes an absurd fee or retainer for their services, it is an attempt to pre-qualify you if they think that you're not a serious client

Come to think of it, she did ask me several times if I owned any boats or planes. By the third time I said no, she did seem quite disappointed.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #34 (permalink)
 leinster 
Brussels / Dublin
 
Experience: Intermediate
Platform: ninjatrader
Trading: Stdev + 2
 
Posts: 468 since Jun 2010
Thanks: 844 given, 595 received

Mike are ocra no use to you there such a large organization of be surprised they did not have a lot of what u need excluding insurance..

Reply With Quote
 
(login for full post details)
  #35 (permalink)
 artemiso 
New York, NY
 
Experience: Beginner
Platform: Vanguard 401k
Broker: Yahoo Finance
Trading: Mutual funds
 
Posts: 1,129 since Jul 2012
Thanks: 765 given, 2,541 received


Big Mike View Post
Come to think of it, she did ask me several times if I owned any boats or planes. By the third time I said no, she did seem quite disappointed.

Mike

That's amusing.

Reply With Quote
The following 2 users say Thank You to artemiso for this post:
 
(login for full post details)
  #36 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


leinster View Post
Mike are ocra no use to you there such a large organization of be surprised they did not have a lot of what u need excluding insurance..

Perhaps, but I generally try to avoid large corporations.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
 
(login for full post details)
  #37 (permalink)
 tturner86 
Elite Member
Portland, Oregon
 
Experience: Intermediate
Platform: F-16CM-50
Trading: GBU-39
 
tturner86's Avatar
 
Posts: 6,172 since Sep 2013
Thanks: 10,456 given, 12,604 received


artemiso View Post
You're probably already aware of this but just sharing for the rest of the readers: My experience has been that when an established/reputable attorney quotes an absurd fee or retainer for their services, it is an attempt to pre-qualify you if they think that you're not a serious client and you're not going to end up paying/engaging their services after all the free, pre-engagement consultation and advice. They won't phrase it that way but it's the only logical reason why they would need a retainer. Still, avoid attorneys who require such a deal because it's a sign that you're not a priority for them. The only exception is if the attorney appears to be capable of churning out paperwork very fast despite an expensive retainer, and that time is an important variable for you.


Big Mike View Post
Come to think of it, she did ask me several times if I owned any boats or planes. By the third time I said no, she did seem quite disappointed.

Mike

Having provided marketing for a few attorneys this seems to be the norm. We would use high fee quotes to weed through inquires looking for those with the most potential/ability to pay.

Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #38 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


tturner86 View Post
Having provided marketing for a few attorneys this seems to be the norm. We would use high fee quotes to weed through inquires looking for those with the most potential/ability to pay.

I am ready to pay. Just not ready to be ripped off. In this case, if that was their tactic then they lost my business. If I could add a zero to the end of my net worth then it would matter less, and I guess that is part of the problem. Most of the paperwork they are doing would be identical regardless if your net worth is 5M or 50M. So they choose to target the upper end of that echelon, and of course at that point their fee seems more reasonable to some.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 2 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #39 (permalink)
 tturner86 
Elite Member
Portland, Oregon
 
Experience: Intermediate
Platform: F-16CM-50
Trading: GBU-39
 
tturner86's Avatar
 
Posts: 6,172 since Sep 2013
Thanks: 10,456 given, 12,604 received


Big Mike View Post
I am ready to pay. Just not ready to be ripped off. In this case, if that was their tactic then they lost my business. If I could add a zero to the end of my net worth then it would matter less, and I guess that is part of the problem. Most of the paperwork they are doing would be identical regardless if your net worth is 5M or 50M. So they choose to target the upper end of that echelon, and of course at that point their fee seems more reasonable to some.

Mike

I'm sure you are correct. Also the attorneys I worked for were criminal defense attorneys. So I am sure there is some difference there. (They are not dealing with the most trust worthy people.)

I no longer provide services to attorneys. There is a reason why. That is all I will say.

Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #40 (permalink)
 leinster 
Brussels / Dublin
 
Experience: Intermediate
Platform: ninjatrader
Trading: Stdev + 2
 
Posts: 468 since Jun 2010
Thanks: 844 given, 595 received


Big Mike View Post
Perhaps, but I generally try to avoid large corporations.

Mike

I do understand that however I'd be inclined to believe the bigger corporations would get it setup right in terms of keeping there reputation intact. I cannot see it costing too far north of 10 to setup even with big corporations.

Reply With Quote
 
(login for full post details)
  #41 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

On a similar note (restructure, off-shore, etc), see this thread:



I believe it is a completely separate topic so created a separate thread for it.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
 
(login for full post details)
  #42 (permalink)
 artemiso 
New York, NY
 
Experience: Beginner
Platform: Vanguard 401k
Broker: Yahoo Finance
Trading: Mutual funds
 
Posts: 1,129 since Jul 2012
Thanks: 765 given, 2,541 received


Big Mike View Post
Regardless of why, I told that attorney that I didn't get to where I was today by not pursuing a good value. Sure, I need expert advice, but I also need to pay a fair fee for that advice. And that wasn't $80k. Keep in mind this attorney was going to have me fill out a 50 page questionnaire detailing all assets, then they would just pick a structure they've picked a hundred times before for other clients, and populate some names on a PDF form. Then call me a dozen times for no more than 30 minutes per call. That is not good value in my eyes.

My best guess is a fair cost is more in the neighborhood of $15k. And I am including post-creation support and hand holding in that figure. I'll find out soon if I am right or wrong.

Mike

Yeah, $80k is way out of the ballpark. A 1-2 person internet company with no tangible products looking for an offshore jurisdiction is standard fare for them and shouldn't require specialized CPA advice; the tax attorneys at the firm should be able to handle it.

I'd say that $10k each ($30k total) for an upper tier onshore law firm, CPA firm and offshore law firm (Walkers, Maples, Ogier) would be the maximum I would pay for this. You could probably eliminate the CPA firm as I mentioned, making this $20k max. Your mileage will vary.

Reply With Quote
 
(login for full post details)
  #43 (permalink)
 SMCJB 
Legendary Market Wizard
Houston, TX
 
Experience: Advanced
Platform: Trading Technologies
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
 
Posts: 4,046 since Dec 2013
Thanks: 3,346 given, 7,994 received


Big Mike View Post
Keep in mind this attorney was going to have me fill out a 50 page questionnaire detailing all assets, then they would just pick a structure they've picked a hundred times before for other clients, and populate some names on a PDF form.

Sounds about the norm for lawyers.

Reply With Quote
 
(login for full post details)
  #44 (permalink)
 artemiso 
New York, NY
 
Experience: Beginner
Platform: Vanguard 401k
Broker: Yahoo Finance
Trading: Mutual funds
 
Posts: 1,129 since Jul 2012
Thanks: 765 given, 2,541 received


SMCJB View Post
Sounds about the norm for lawyers.

Not really. Our offshore law firm's KYC questionnaire only required 2 pages of standard contact info and addresses; they did require scans of passports and proofs of addresses for the general partners and major unitholders though. Mike is correct that the lawyers have a duty to learn the client's needs from their conversations and not to pass you a 50 page boilerplate questionnaire.

As for picking the structure and populating the names, I've seen 50/50 of reused materials and creative new language, I think the latter becomes more frequent over time. Sometimes having the same language as 100 other clients is a good thing and if you don't want boilerplate treatment, make sure you have only 1 point person and not 9-10 different names on the time sheets for your invoices.

Reply With Quote
 
(login for full post details)
  #45 (permalink)
 Cachevary 
Russia,Khabarovsk
 
Experience: Beginner
Platform: NT
Trading: Gold
 
Cachevary's Avatar
 
Posts: 407 since Feb 2014

Obtain russian citizenship.Here is,our ''IRS'' still sometimes have difficulties to understand what a brokerage is.Additionally,In some cases a small entity here pays only 6% in taxes per year,not sure if a web based bussiness would qualify,but it very much might be.

There`s no privilege whatsoever in offshore banking - you still pay taxes.There are some benefits for the large companies with big staff in terms of the wafge tax reduction,as i recall.

Reply With Quote
 
(login for full post details)
  #46 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


Cachevary View Post
Obtain russian citizenship.Here is,our ''IRS'' still sometimes have difficulties to understand what a brokerage is.Additionally,In some cases a small entity here pays only 6% in taxes per year,not sure if a web based bussiness would qualify,but it very much might be.

There`s no privilege whatsoever in offshore banking - you still pay taxes.There are some benefits for the large companies with big staff in terms of the wafge tax reduction,as i recall.

That's just flat wrong. Why would anyone the America region choose Russia, especially having to pay 6% instead of 0% in a tax haven close to home.

Also wrong about only big businesses benefitting.

And wrong about your offshore tax assumption.

If you read the thread these concepts were already discussed, including profit deferral and 0% taxes offshore. And using the foreign earned income of around 100k you can avoid self employment tax of 15% plus tax free on first 100k earned if your primary residence is outside the US.

Im not an accountant nor attorney and this is not tax advice

Sent from my phone

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #47 (permalink)
 Cachevary 
Russia,Khabarovsk
 
Experience: Beginner
Platform: NT
Trading: Gold
 
Cachevary's Avatar
 
Posts: 407 since Feb 2014


Big Mike View Post
That's just flat wrong. Why would anyone the America region choose Russia, especially having to pay 6% instead of 0% in a tax haven close to home.

Also wrong about only big businesses benefitting.

And wrong about your offshore tax assumption.

If you read the thread these concepts were already discussed, including profit deferral and 0% taxes offshore. And using the foreign earned income of around 100k you can avoid self employment tax of 15% plus tax free on first 100k earned if your primary residence is outside the US.

Im not an accountant nor attorney and this is not tax advice

Sent from my phone

I meant you pay 6% as a small venture in Russia being a Russian citizen,I didn't mean Russia as offshore zone.Sure there are zero tax heavens in Caribbean basin,what I meant you still have to pay 100% whatever you tax rate is in US for the income in that offshore.Plus,in some places you might be obliged to hire couple of locals as a so called "technical managers".Maybe in some places you don't have to,but that's what I was told by local attorney when I used to live there.

I did a research on offshores some years ago and to me it appeared more like myth.

Reply With Quote
 
(login for full post details)
  #48 (permalink)
 jsengxx2 
Portugal, Viana do Castelo
 
Experience: Intermediate
Platform: ninjatrader
Trading: 6e
 
Posts: 343 since Sep 2011

It is funny to read all this stuff, attorney here.... attorney there.... and nobody talks about CFC RULES.

The only good way to do this is the google, starbucks, shell etc.. way with Ireland and Holland as the main players, you will arrange a tax bracket in Holland that is confidential so you will not trigger the CFC RULES and pay legally less tax.
Another way is to be a citizen in a tax friendly country (not for US).

All the rest is just tax evasion and the structures will trigger the CFC RULES in your home country.

You will find allot of online sellers of offshore structures trying to sell stuff like Panama foundation with a Belize IBC and they tell you that this is the safe way to go offshore but in court they will look at that foundation and just look at the way it is used for and that will trigger the CFC RULES.

Just remember that all this companies and even attorney´s, all that they are after is your money!

Maybe this is a good subject for a webinar Mike?
How to legally going offshore?

All have a good trading year 2015,
JJ

Reply With Quote
 
(login for full post details)
  #49 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

https://www.offshorelawcenter.com/offshore-panama-foundation.html


Quoting 
Uses of Panama Foundations

Panama Private Interest Foundations may be established for the benefit of a person or persons, a family, or a specific social purpose. In general, Panama Private Interest Foundations are used by people who wish to control and maintain ownership of foreign corporations, however, they do not wish to own their corporations themselves directly, due to the Controlled Foreign Corporation (CFC) rules in their home countries. Several highly taxed countries such as the UK, Canada, USA, Australia, New Zealand, France, Italy, Spain, etc. have CFC rules which require that their citizens submit declarations (reports) to the appropriate tax authorities, in which they declare that they are the shareholders of such foreign corporations.

Instead of holding the corporations' shares in their personal name or in bearer form, they establish a Private Interest Foundation in Panama that holds or owns the shares of their foreign corporation(s), thus avoiding the CFC reporting rules. Hence, the advantage of using the Foundation as a shareholder for their corporation is to remove ownership from one's personal name (or through a Bearer Share arrangement), and transfer ownership to the name of a foreign entity which does not have owners, rather has privately appointed beneficiaries, which are anonymous. In this way, there is no question as to who owns the company, since the company's shares are issued to the Foundations' name.*
The Panama Foundation provides additional advantages other than just ownership. For example, the Panama Foundation can be useful in transferring funds offshore or receiving funds from offshore. In some cases, people use Panama Foundations as vehicles for these purposes. Some people donate their funds to their Panama Foundations and later use the Foundation to give educational or special grants to their children, grandchildren, or any one else they choose. The advantage in this case, is to avoid fiscal regulations surrounding donations, where some governments impose "gift taxes" and exhaustive reporting requirements.

In general, Private Interest Foundations may not engage in habitual profit-making commercial activities as a corporation can. Nevertheless, they may carry out commercial activities from time to time, as long as the profits of those activities are used for the objectives of the foundation.

Sent from my phone

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
 
(login for full post details)
  #50 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received

https://premieroffshore.com/retained-earnings-in-an-offshore-corporation/


Quoting 
Controlled Foreign Corporation (CFC): If a U.S. person holds 10% or more of the stock (or voting control) of an offshore corporation, and U.S. persons hold more than 50% of the shares or control of that company, then U.S. persons can defer tax on active income, but not passive income.

In other words, if American(s) control an international business, then that business may defer U.S. tax on retained earnings in an offshore corporation from active / ordinary activities, not from investments. If less than 50% of the business is owned by U.S. citizen(s), then the CFC rules do not apply. For Deloitte’s worldwide CFC guide,*click here.

The CFC rules also limit deductions and control how retained earnings are taxed upon distribution:

Passive income from interest, dividends, investments, etc. is not active income, thus no U.S. tax deferrals are available. Passive income flows through to the shareholders of a CFC and is taxable on your personal return.When you distribute retained earnings from a CFC, they are taxed at your*marginal rate. Long term capital gains rates (currently 20% for 2013) are not available.Losses in a CFC do not flow through to the shareholders. Losses are not deductible until the company is liquidated.If you die holding shares in a CFC, your U.S. heirs do not get a*stepped up basis. When they sell the shares, they will pay tax on their value when you acquired them, not when they inherited them.

Sent from my phone

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 2 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #51 (permalink)
 leinster 
Brussels / Dublin
 
Experience: Intermediate
Platform: ninjatrader
Trading: Stdev + 2
 
Posts: 468 since Jun 2010
Thanks: 844 given, 595 received


jsengxx2 View Post
It is funny to read all this stuff, attorney here.... attorney there.... and nobody talks about CFC RULES.

The only good way to do this is the google, starbucks, shell etc.. way with Ireland and Holland as the main players, you will arrange a tax bracket in Holland that is confidential so you will not trigger the CFC RULES and pay legally less tax.
Another way is to be a citizen in a tax friendly country (not for US).

All the rest is just tax evasion and the structures will trigger the CFC RULES in your home country.

You will find allot of online sellers of offshore structures trying to sell stuff like Panama foundation with a Belize IBC and they tell you that this is the safe way to go offshore but in court they will look at that foundation and just look at the way it is used for and that will trigger the CFC RULES.

Just remember that all this companies and even attorney´s, all that they are after is your money!

Maybe this is a good subject for a webinar Mike?
How to legally going offshore?

All have a good trading year 2015,
JJ

That's slightly untrue as I'm irish I read a lot about the schemes etc. The double dutch and double irish will be shutdown in next 4 years to be potentially replaced with a patent box.

Its either Luxembourg Malta Gibraltar isle of man or hong Kong for European entities. Predominantly most of the former British colony's have some beneficial arrangements.

What those multinationals etc are doing is even a grey area in Ireland they have no HQ anywhere in the world is the line they tell the irish tax authorities. They route the money to the Bahamas to move out of Europe.

The larger irish companies operate from Luxembourg Malta or Gibraltar (gambling). private trading companies are known to operate from Gibraltar.

There are many ways this is all done legally.

The former British prime minister stored her house in the bvi to avoid inheritance tax so excuse me for pointing out what is perfectly legal to do .

If I was American I'd probably look to Delaware as pointed out earlier on the thread.

Hong Kong has no CFC rules.

Reply With Quote
The following user says Thank You to leinster for this post:
 
(login for full post details)
  #52 (permalink)
 jsengxx2 
Portugal, Viana do Castelo
 
Experience: Intermediate
Platform: ninjatrader
Trading: 6e
 
Posts: 343 since Sep 2011


leinster View Post
That's slightly untrue as I'm irish I read a lot about the schemes etc. The double dutch and double irish will be shutdown in next 4 years to be potentially replaced with a patent box.

Its either Luxembourg Malta Gibraltar isle of man or hong Kong for European entities. Predominantly most of the former British colony's have some beneficial arrangements.

What those multinationals etc are doing is even a grey area in Ireland they have no HQ anywhere in the world is the line they tell the irish tax authorities. They route the money to the Bahamas to move out of Europe.

The larger irish companies operate from Luxembourg Malta or Gibraltar (gambling). private trading companies are known to operate from Gibraltar.

There are many ways this is all done legally.

The former British prime minister stored her house in the bvi to avoid inheritance tax so excuse me for pointing out what is perfectly legal to do .

If I was American I'd probably look to Delaware as pointed out earlier on the thread.

Hong Kong has no CFC rules.

It all depends on the CFC rules of your country of tax residents.

The former British prime minister could store the house in the bvi because UK does not see the BVI as a tax haven, that is a loophole.

The best way to pay less tax is move too a tax friendly country.

Reply With Quote
 
(login for full post details)
  #53 (permalink)
thebanker
Vancouver BC Canada
 
 
Posts: 1 since May 2015
Thanks: 0 given, 1 received


Big Mike View Post
How to maximize retained earnings in an offshore corporationPremier Offshore Investor[/url]



Sent from my phone

@Mike

Hi Mike,
A key considerations is whether or not your broker and trading platform is domiciled in a private jurisdiction. I represent a well reputed, regulated private offshore brokerage that may interest folks here. Can we connect re: the possibility of offering our services to your forum members? I read your advertising/promotion policy and hope this post complies.

FYI - we do not accept US citizens or residents as clients.

Thanks

Reply With Quote
The following 2 users say Thank You to thebanker for this post:
 
(login for full post details)
  #54 (permalink)
Darthtrader4beta
western NY
 
 
Posts: 42 since Apr 2015
Thanks: 9 given, 26 received

If you don't like paying US taxes then move.

IMO if anyone is doing this I hope you do something wrong and either go to jail or get put out of business by an IRS penalty.

I'm with Charlie Munger's philosophy that people doing well in life in the US should have a moral obligation to not scrape the last dime possible.

It is not like you are going to get anything out of doing this anyway if you are successful enough to do this. You have already gained as much marginal utility from the dollar as you are going to get. At that point fanning the flames of avarice is just a bad strategy for your own personal well being. It is like a sex addict or alcoholic thinking that more sex and alcohol will lead to greater happiness. Duh.

Pay your taxes, enjoy the fire department and the roads and try donating to something that is not a tax strategy.

Reply With Quote
The following 2 users say Thank You to Darthtrader4beta for this post:
 
(login for full post details)
  #55 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


Darthtrader4beta View Post
If you don't like paying US taxes then move.

IMO if anyone is doing this I hope you do something wrong and either go to jail or get put out of business by an IRS penalty.

If this is addressed towards me, you have no idea what you are talking about. I don't live in the US. My residence is in Ecuador. However, as a citizen, I am required to pay taxes on my income -- even income earned outside of the US. The USA is the only country in the world that does this to its citizens. There is an exemption but it is only on the first 100k per year.

Your advice to "move" is completely wrong and not based on facts.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following 4 users say Thank You to Big Mike for this post:
 
(login for full post details)
  #56 (permalink)
 gregid 
Wrocław, Poland
 
Experience: Intermediate
Platform: NinjaTrader, Racket
Trading: Ockham's razor
 
gregid's Avatar
 
Posts: 651 since Aug 2009
Thanks: 320 given, 620 received


Big Mike View Post
If this is addressed towards me, you have no idea what you are talking about. I don't live in the US. My residence is in Ecuador. However, as a citizen, I am required to pay taxes on my income -- even income earned outside of the US. The USA is the only country in the world that does this to its citizens. There is an exemption but it is only on the first 100k per year.

Your advice to "move" is completely wrong and not based on facts.

Mike

Curious - does anyone know when this slavish law has been first introduced (requiring to pay income taxes even if you don't live in the US anymore)?

Reply With Quote
 
(login for full post details)
  #57 (permalink)
 cory 
the coin hunter
virginia
 
Experience: Intermediate
Platform: ninja
Trading: NQ
 
cory's Avatar
 
Posts: 6,042 since Jun 2009
Thanks: 854 given, 7,910 received


gregid View Post
Curious - does anyone know when this slavish law has been first introduced (requiring to pay income taxes even if you don't live in the US anymore)?

wayyy back, it came from British Law.

Reply With Quote
 
(login for full post details)
  #58 (permalink)
 gregid 
Wrocław, Poland
 
Experience: Intermediate
Platform: NinjaTrader, Racket
Trading: Ockham's razor
 
gregid's Avatar
 
Posts: 651 since Aug 2009
Thanks: 320 given, 620 received


cory View Post
wayyy back, it came from British Law.

hmm... I though Income Tax was implemented in the US in 1913, so theoretically it should not be older than that.

Reply With Quote
 
(login for full post details)
  #59 (permalink)
 grausch 
Luxembourg, Luxembourg
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Stocks
 
Posts: 491 since May 2012
Thanks: 1,641 given, 1,149 received


Darthtrader4beta View Post
If you don't like paying US taxes then move.

IMO if anyone is doing this I hope you do something wrong and either go to jail or get put out of business by an IRS penalty.

I'm with Charlie Munger's philosophy that people doing well in life in the US should have a moral obligation to not scrape the last dime possible.

It is not like you are going to get anything out of doing this anyway if you are successful enough to do this. You have already gained as much marginal utility from the dollar as you are going to get. At that point fanning the flames of avarice is just a bad strategy for your own personal well being. It is like a sex addict or alcoholic thinking that more sex and alcohol will lead to greater happiness. Duh.

Pay your taxes, enjoy the fire department and the roads and try donating to something that is not a tax strategy.

Every person should consider the best legal way to minimize their taxes. As an example, please refer to the following link to Jim Rohrbach's performance numbers for his newsletter - Historical Results | Stock Market Timing and Alerts | Investment Models. You will note that using his best results, an initial investment of $10,000 grows to $9,233,423 during the 43-year period. Now, you can pretty easily take those numbers into excel and calculate the effect of taxes on your portfolio. Using a 40% tax rate, I get to a final number of $647,669. Not quite as impressive anymore...

In the above example, I could set up a company and reduce my tax rate to 30% until I start withdrawing money. Lets say I keep all my money in a company, once I retire I can effectively determine my tax rate by varying the amount of salary / dividends I withdraw. At a 30% tax rate, the amount grows to $1,288,907 during the same period.

I don't think most people realise just how destructive taxes are to wealth-creation. In my situation, I constantly need to consider whether I want to hold a stock for six months or longer. After six months it is considered a capital gain in Luxembourg and becomes tax-free. Suddenly, a stock that has a 50% move in 2 months and then goes sideways for 4 months can still be quite attractive...

Reply With Quote
The following 2 users say Thank You to grausch for this post:
 
(login for full post details)
  #60 (permalink)
ClutchAce
Cookeville, TN
 
 
Posts: 58 since Oct 2011
Thanks: 15 given, 17 received

Mike,
I assume you've seen this info whilst considering renunciation, but just in case:

"The American Jobs Creation act of 2004 amended Section 877 again.[8] Under the new law, any individual who had a net worth of $2 million or an average income tax liability of $139,000 for the five previous years[9] who renounces his or her citizenship is automatically assumed to have done so for tax avoidance reasons and is subject to additional taxes. Furthermore, with certain exceptions covered expatriates who spend at least 31 days in the United States in any year during the 10-year period following expatriation were subject to US taxation as if they were U.S. citizens or resident aliens."
(source: Wikipedia's article on 'Expatriation Tax' ...extra grain of salt needed )

Elsewhere, a bit more recent, though still outdated figure of $145k as of 2010 for US income tax liability is listed...see renunciationguide[dot]com page titled "Exit tax on renunciants." (I am not affiliated with that site in any way, so no promotion of it or any services/links to services is intended.)

Reply With Quote
The following 2 users say Thank You to ClutchAce for this post:
 
(login for full post details)
  #61 (permalink)
 Boomer34 
Kampala, Uganda
 
Experience: Intermediate
Platform: TOS
Broker: TOS
Trading: SPX
 
Boomer34's Avatar
 
Posts: 164 since Mar 2011
Thanks: 74 given, 57 received

Interesting thread!

Has there been any decisions?

Follow me on Twitter Reply With Quote
The following user says Thank You to Boomer34 for this post:
 
(login for full post details)
  #62 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
Big Mike's Avatar
 
Posts: 50,004 since Jun 2009
Thanks: 32,468 given, 98,275 received


Boomer34 View Post
Interesting thread!

Has there been any decisions?

If this is directed at me, then yes. Everything is done for the most part.

Mike

We're here to help -- just ask

For the best trading education, watch our webinars
Searching for trading reviews? Review this list

Follow us on Twitter, YouTube, and Facebook

Support our community as an Elite Member:
https://futures.io/elite/

Visit other sites? Please spread the word about your experience with our community!
Follow me on Twitter Visit my futures io Trade Journal Started this thread Reply With Quote
The following user says Thank You to Big Mike for this post:
 
(login for full post details)
  #63 (permalink)
sgjohnson
Kingsport, Tennessee
 
 
Posts: 35 since Apr 2020
Thanks: 13 given, 12 received

This would be a nice thread to revive. I'm a US citizen contemplating renouncing at some point in the future. I also think it's a travesty you get taxed as a US citizen regardless where you earn it. I would like to live somewhere more free than this country and still be able to trade. Citizenship by Investment programs look nice but all the Caribbean products don't have access to a visa-free passport back to the US, just in case I wanted to come back. I guess if I'm successful enough at trading I can just pay to fly anyone I want to visit to wherever I'm at. Lol. I guess if you wanted Caribbean CBI along with access to visa-free travel back to the states you'd have to get another passport from somewhere else? Sovereign Man suggests Panama, Argentina, Chile, or Belgium. They don't take that long to get. A matter of months. The only visa-free passport in the CBI programs is Malta, and it's far more expensive than the others.

Would be awesome if Mike could find a pro at this willing to do a webinar....

Reply With Quote
The following user says Thank You to sgjohnson for this post:
 
(login for full post details)
  #64 (permalink)
 fesx 
Georgia
 
Experience: Intermediate
Platform: Ninja
Broker: AMP/CQG
Trading: ZN, ES, FGBL, FESX
 
fesx's Avatar
 
Posts: 131 since Jul 2009
Thanks: 832 given, 113 received


sgjohnson View Post
This would be a nice thread to revive. I'm a US citizen contemplating renouncing at some point in the future. I also think it's a travesty you get taxed as a US citizen regardless where you earn it. I would like to live somewhere more free than this country and still be able to trade. Citizenship by Investment programs look nice but all the Caribbean products don't have access to a visa-free passport back to the US, just in case I wanted to come back. I guess if I'm successful enough at trading I can just pay to fly anyone I want to visit to wherever I'm at. Lol. I guess if you wanted Caribbean CBI along with access to visa-free travel back to the states you'd have to get another passport from somewhere else? Sovereign Man suggests Panama, Argentina, Chile, or Belgium. They don't take that long to get. A matter of months. The only visa-free passport in the CBI programs is Malta, and it's far more expensive than the others.

Would be awesome if Mike could find a pro at this willing to do a webinar....

Take a look at the Puerto Rico Act 22. You don't lose your citizenship, earnings are tax free as long as you follow certain requirements, and best of all no US income taxes since Puerto Rico is considered an American territory.

Reply With Quote
The following user says Thank You to fesx for this post:
 
(login for full post details)
  #65 (permalink)
sgjohnson
Kingsport, Tennessee
 
 
Posts: 35 since Apr 2020
Thanks: 13 given, 12 received


fesx View Post
Take a look at the Puerto Rico Act 22. You don't lose your citizenship, earnings are tax free as long as you follow certain requirements, and best of all no US income taxes since Puerto Rico is considered an American territory.

That's funny. I found this shortly after posting: https://nomadcapitalist.com/2018/06/02/puerto-rico-tax-incentives/

A number of drawbacks, but not a bad jumping off point for a neighboring CBI program. I do agree their independence is in jeopardy now that Democrats are in control and have been discussing approving their statehood. Now they can get bailed out just like every other blue state. And I'm guessing there could be hidden tax burden they simply shifted elsewhere. One requirement is a home purchase, and from what I can find their property taxes are higher than say Puerto Vallarta, Mexico.

A little confused though from just this one article exactly when Act 22 status kicks in in regards to taxation. Is it only after your status is approved or when you become a resident and move into a home?

Reply With Quote
 
(login for full post details)
  #66 (permalink)
sgjohnson
Kingsport, Tennessee
 
 
Posts: 35 since Apr 2020
Thanks: 13 given, 12 received

Found this thread: https://www.elitetrader.com/et/threads/trading-from-puerto-rico.283354/

"Rival" forum? Hope that's cool. Lol.

Reply With Quote


futures io Trading Community Traders Hideout > Offshore Banking and Asset Protection, Offshore Trading


Last Updated on March 22, 2021


Upcoming Webinars and Events
 

NinjaTrader Indicator Challenge!

Ongoing
 

Journal Challenge w/$1,800 in prizes!

April
     



Copyright © 2021 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts