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Information provided on this site is for general guidance only and
is often simplified. Actual IRS procedures are complex, and taxpayers
should obtain professional assistance or use IRS sources for complete
information.
Information
provided on this site is for general guidance
only and is often simplified. Actual IRS procedures
are complex, and taxpayers should obtain professional
assistance or use IRS sources for complete information.
Overseas
Investment Income
The
IRS has done quite a thorough job of catching
the income or capital gains from just about every
kind of offshore or foreign investment that US
residents can get involved in. Taxes are either
applied as gains are made, or they are applied
when an investment is realised, with taxes being
calculated back over the period of the investment
and compounded forward to the time of payment.
Some
of the key tax collection mechanisms over the
years have been aimed at Controlled Foreign Corporations,
Foreign Personal Holding Companies, Foreign Investment
Companies, Passive Foreign Investment Companies,
Grantor Trust Provisions and Foreign Trust Reporting
Requirements.
Although
US citizens may still choose to set up offshore
trusts, the rationale will be asset protection
rather than tax minimisation. Trusts are caught
by the legislation as much as other types of investment
structure, and should be considered as tax-neutral
at best.
As
far as 'passive' income is concerned, international
tax planning for US residents is therefore concerned
with providing investment structures which are
fiscally transparent, so that the gains from higher-yielding
international or offshore investments can be taxed
in the investor's hands on the same basis as domestic
investments. This usually means employing limited
partnership or limited liability company structures,
which are provided by many offshore jurisdictions,
which are usually un-taxed in the offshore jurisdiction,
and which are treated as fiscally transparent
by the IRS.
Straightforward
investments into public offshore investment funds,
which may offer superior returns to domestic funds,
will be caught by the Passive Foreign Investment
Company legislation, and it will often be correct
to make a QEF election in order to pay tax year-by-year
on the fund's increase in asset value (excluding
unrealised capital gains).
Individuals
who have significant 'active' business income
may be able to make use of offshore corporate
tax shelters, although the foreign sales corporation
(outlawed by the WTO) has now been abolished.
www.lowtax.net
contains details of the corporate and partnership
legal structures available in the 35 most prominent
offshore jurisdictions, together with descriptions
of the most important business sectors in each
jurisdiction, local tax regimes, and the international
treaties entered into by each jurisdiction.
Foreign
Bank Account Reporting (FBAR)
Under
the Bank Secrecy Act, each United States person
must file a Report of Foreign Bank and Financial
Accounts (FBAR), if the person has a financial
interest in, or signature authority (or other
authority that is comparable to signature authority)
over one or more accounts in a foreign country,
and the aggregate value of all foreign financial
accounts exceeds $10,000 at any time during the
calendar year.
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largest and most authoritative business and investment information
sources. Alongside topical, daily news on worldwide
tax developments, you can receive weekly newswires or
access up-to-date intelligence
reports on a range of legal, tax and investment subjects.
Our 16 constantly
updated intelligence reports cover every important aspect
of 'offshore' and international tax-planning in depth, including
banking secrecy, the EU's savings tax directive, offshore
funds, e-commerce, offshore gaming and transfer pricing. Reports
are available for immediate downloading or as subscription
services with news pages.
New On The Network Today
This feed is published daily with selected new or updated
content from across our network. For a list of network sites, many of
which feature daily news, see below.
Providing essential tax news and information for globally
mobile artists, contractors, entrepreneurs, professionals, small businesses,
sportspersons and entertainers.
Lowtax Network Sites
Lowtax Network Portal:
'Low-tax' business and investment in the top 50 jurisdictions covered in
exceptional detail.
Tax News: Global
tax news, continuously updated through the day.
Law & Tax
News: Daily news and background data on tax and legal developments
for international business.
Offshore-e-com:
A topical guide to offshore e-commerce focused on tax and regulation.
Lowtax Library:
One of the web's largest and most authoritative business and investment
information sources.
US Tax Network:
The resource for free online US taxation information, covering: corporate
tax, individual tax, international tax, expatriates, sales and e-commerce
tax, investment tax.
NEW! Personal
Business Tax Guide: Providing essential tax news and information
on business for contractors, entrepreneurs, professionals, small businesses,
artists, sportspersons and entertainers.
IMPORTANT NOTICE:
THE LOWTAX NETWORK has taken reasonable care in sourcing and presenting
the information contained on this site, but accepts no responsibility
for any financial or other loss or damage that may result from its use.
In particular, users of the site are advised to take appropriate professional
advice before committing themselves to involvement in offshore jurisdictions,
offshore trusts or offshore investments. All materials on this site copyright
The Lowtax Network 1999 - 2010.
All content on this
site has been provided by BSIRN.