st lucia second passport
Christian Reeves

Changes to the St. Lucia Second Passport Program in 2017

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One of the hottest citizenship by investment or purchase programs is the St. Lucia second passport. An investment of $500,000 to $550,000 in government bonds, or paying a fee of $100,000 (single), gets you one of the top passports on the market.

Because of the popularity of the government bond program, they’ve made this option more expensive in 2017. Here are the new fees all the changes to the St. Lucia second passport program in 2017.

The new government fees as of January 1, 2017 for the “donation to the Saint Lucia National Economic Fund” citizenship program are as follows. Whenever you see the word “donation,” know it means purchase price.

  • Single applicant: $100,000
  • Husband and wife: $165,000
  • Husband, wife and up to two dependent children: $190,000
  • Each additional dependent child: $25,000

These fees don’t include other government charges, such as your background check, or legal fees. If you’re from a top country, like the US, UK, Canada, etc., additional fees are usually around $30,000 for a single applicant. If you’re from a country where a background check is more  difficult, such as China or India, expect to pay around $40,000.

If you prefer to get citizenship and a second passport in St. Lucia through investment rather than purchase, you can buy non-interest bearing government bonds. These 5 year bonds issued and guaranteed by the government.

A single applicant will need to invest $500,000 in government bonds and a husband and wife can invest $550,000 to qualify for a second passport from St. Lucia. You will get this investment amount back after 5 years. You won’t earn any interest but you get your investment back in full.

The new government charge as of January 1, 2017 for the purchase of these bonds is $50,000. This is a non-refundable fee applicable only to bond investors.

However, in practice, this is not really a “new” fee. Most agents and lawyers who facilitate these programs charge a fee of around $50,000. They don’t earn a commission on the bonds, so this was the standard fee being charged by the industry. What the government has done is to formalize the fee.

So, your total out of pocket costs for the government bond program are around $50,000. Your total out of pocket costs for the donation / purchase option are around $130,000. This assumes a single applicant from a top tier country.

The question becomes, do you want to lock up $500,000 for 5 years to save $80,000?

A husband and wife investing $550,000 into government bonds for 5 years will be saving  around $100,000. This is because of the additional legal fees associated with multiple applicants.

Of course, it ignores the opportunity costs associated with the investment. You get zero interest from St. Lucia and could have deployed your capital elsewhere.

Another way to value the St. Lucia bond program is that an investment of $500,000 gives you a return of $80,000 over 5 years. This is a ROI of $16,000 or just over 3% per year… not horrible and not to exciting.

No matter which program you chose, a second passport from St. Lucia is a top tier travel document. It gives you visa-free or visa on arrival access to 125 countries and territories, ranking the Saint Lucian passport 37th in the world. Click here for a list of visa free countries.

While a passport from St. Lucia doesn’t get you into the United States or Canada, it does give you access to all of the European Union. Most importantly, it gives you visa free access to the EU’s Schengen Region, which includes Austria, France, Germany, Italy, Spain, Switzerland, and 26 different European nations in all. Basically, it gets you anywhere you want to be in Europe.

If you’re focused on visa free access to the United States, you’ll need a passport from Malta. This one requires an investment of $1.2 million and is far more complex to acquire than St. Lucia.

For example, Malta has a physical presence requirement where you must live on the island for 183 days of the first year. You must also buy a home, and fulfill other terms. For more, see: Second Passport from Malta.

St. Lucia has no physical presence requirement or other hoops to jump through. So long as you have the cash, and a clean background (no criminal history), you’ll be approved.

And, again ignoring the opportunity costs, getting that passport for only $50,000 out of pocket, is an amazing deal. That’s a fraction of the cost of competitors like St. Kitts.

I hope this article on the St. Lucia passport program for 2017 has been helpful. For more information on this or other citizenship by investment options, please send an email to info@premieroffshore.com or give us a call at (619) 483-1708.

offshore LLC
Christian Reeves

US Filing Requirements for Offshore LLCs

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Did you form an offshore LLC last year? Are you using an offshore LLC to hold foreign investments or to protect an international bank account? Here are your US filing requirements for that offshore LLC.

As the owner of an offshore LLC, you’ll need to file an entity election form, an annual tax return, a foreign bank account report, and possibly a statement of foreign assets. Here are the primary US filing requirements for offshore LLCs.

IRS Election to be Classified as a Disregarded Entity

Most offshore LLCs used as investment holding companies should be classified as disregarded entities for US tax purposes. This means that income and profits flow through to your personal tax return (Form 1040) as they are earned.

An offshore LLC owned by one person is a disregarded entity. An offshore LLC owned by a husband and wife, who live in a community property state, is also a disregarded entity. An offshore LLC owned by two people who are not married is a partnership.

Note that only offshore business profits can be held in an offshore corporation as retained earnings. Thus, only business profits can be deferred using a foreign structure.

Because there is no US tax benefit for passive investors in using an offshore corporation, they usually select an LLC with disregarded entity status. This is because the IRS form required from a disregarded entity is much easier (and cheaper) to complete than the one for an offshore corporation.

You must file a form with the US IRS to classify your offshore LLC as a disregarded entity, partnership or corporation. That is to say, you need to select this classification by telling the IRS your preference.

To select your classification, you should complete IRS Form 8832 within 75 days of forming your offshore LLC. I suggest you send in this form as soon as you receive your company documents from the registrar.

As you go through this form, you’ll see that there is a default classification for various entities. If you’re at all unsure, send in the form. It’s better to get the guaranteed result by filling in one extra form than wonder or make a mistake.

Also note that there are some structures that can’t elect to be treated as a partnership or as a disregarded entity. See page 7 of the instructions to Form 8832 for a list of those entities. In most cases, a corporation can’t elect to be treated as a disregarded entity.

Annual Tax Return for an Offshore LLC

Once your international LLC is categorized as a disregarded entity, you must file IRS Form 8858 each year. This form reports income, expenses and transactions involving the LLC, all of which should flow-through to your personal return.

Form 8858 is a simplified tax return that just asks for the basics on your foreign transactions. It’s attached to your personal return (Form 1040), so no need to send in a separate packet. This also means it’s due whenever your personal return is due (April 15 or October 15).

If you didn’t make the election to be considered a disregarded entity, then you might need to file a Foreign Partnership Return (IRS Form 8865) for a Foreign Corporate Tax Return (IRS Form 5471). Both of these take a lot more work to complete than Form 8858.

It’s very important that you file Form 8858 every year. The penalties for missing it are outrageous.

The penalty for failing to file IRS Form 8858 is $10,000 per year. If the IRS sends you a notice reminding you to file, the penalty becomes $10,000 + another $10,000 for every 90 days you refuse to file after being notified. The cumulative penalty can be $50,000 per year per entity. See page 2 of the instructions to Form 8858 for more details.

Foreign Bank Account Report for an Offshore LLC

If your offshore LLC opens a bank account, and you’re the signer or beneficial owner of that account, you must file a Foreign Bank Account Report (or FBAR) on FINCEN Form 114.

An FBAR is required for your offshore LLC if you held more than $10,000 in cash or securities in an offshore account. Even if you had that balance for only one day, you must file a foreign bank account report.

Also, this is the cumulative total of all your accounts… all the accounts you are either the signer or beneficial owner of. If you have $5,000 in a personal account and $6,000 in your offshore LLC, then you have $11,000 offshore and need to report.

Like Form 8858, the penalties for making a mistake on the FBAR are quite high. If you think you might need to file, then file. Submitting an extra form to cover your backside is always better than taking a risk of $10,000 to $50,000 a year.

Statement of Foreign Assets

If you have significant assets offshore, you likely need to complete Form 8938, Statement of Foreign Assets for your offshore LLC. Here are the filing requirements for Form 8938.

  • If you’re married filing joint, living in the United States, and have more than $100,000 in foreign assets at the end of the year, or more than $150,000 on any day of the year, you must file Form 8938.
  • If you’re married filing separately, living in the United States, and have more than $50,000 in foreign assets at the end of the year, or more than $75,000 on any day of the year, you must file Form 8938.
  • If you’re single, living in the United States, and have more than $50,000 in foreign assets at the end of the year, or more than $75,000 on any day of the year, you must file Form 8938.
  • If you’re married filing joint, not living in the United States, and have more than $400,000 in foreign assets at the end of the year, or more than $600,000 on any day of the year, you must file Form 8938.
  • If you’re married filing separately, not living in the United States, and have more than $200,000 in foreign assets at the end of the year, or more than $300,000 on any day of the year, you must file Form 8938.
  • If you’re single, not living in the United States, and have more than $200,000 in foreign assets at the end of the year, or more than $300,000 on any day of the year, you must file Form 8938.

These are the most basic filing requirements. You should review the instructions carefully to figure what constitutes a “reportable” asset and whether you need to file this form.  

If you’re unsure, or right on the line, I suggest you send in the form because the penalties for failing to file can reach $50,000 per year (do you see a theme developing?). Better to be safe than sorry when it comes to offshore reporting.

I should also point out that there are a few investments that don’t need to be reported on the FBAR or the Statement of Foreign Assets. Primarily, gold and real estate held in your name outside of the US do not need to be reported.

However, if you hold those assets inside of an offshore LLC, the LLC must be reported. The only time gold and real estate are exempted are when they’re held in your name without a an offshore structure such as an LLC, corporation, trust or foundation.

And, when I say they don’t need to be reported, I mean that your ownership of them does not need to be reported. When you sell, the gain is taxable and is to be reported on your personal tax return. Also, if the foreign real estate is a rental, you must report income and expenses to the United States just as you do domestic property.

I hope you’ve found this article on the offshore filing requirements for offshore LLCs to be helpful. For more information, or to be connected to an international tax expert who can prepare your returns, please contact us at info@premieroffshore.com or call us at (619) 483-1708. 

offshore trusts and community property
Christian Reeves

Offshore Trusts and Community Property Law

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Here’s an overview of offshore trusts and community property law.  If you’re married, and live in a community property state, you and your spouse must work together to form the most efficient asset protection structure. An offshore trust must include special provisions for those in community property states.

Let me frame the issue surrounding offshore trusts and community property a bit…

In a community property state, all assets are equally and jointly owned by both spouses. When one spouse passes, 100% of the assets get a step up in basis to their value at the time of his or her death.

For example, let’s say you have assets worth $1 million. You purchased them years ago for about $400,000. Thus, if you sell them, you’ll pay capital gains tax on the $600,000 profit.

When a spouse dies in a community property state, 100% of the joint property transfers to the surviving spouse. Also, the basis of that property is bumped up to the value on the date of death.

So, in the example above, the basis of the property increases from $400,000 to $1 million. If the surviving spouse were to sell all of the assets on that date, she would pay zero in capital gains tax. If the survivor holds the assets for 3 years, and they increase in value to $1.1 million, she will pay capital gains tax on only $100,000.

If this same couple didn’t live in a community property state, the surviving spouse would receive a 50% step up in basis, rather than 100%. This is because common law states view ownership as 50/50, rather than 100% by the community.

The surviving spouse would get a step up of 50%, from $400,000 to $700,000. If she sold the assets on the date of death, she would pay capital gains tax on $300,000.

Here’s how community property law impacts an offshore asset protection trust…

Most offshore asset protection trusts are structured to make transfers to them as incomplete gifts, so that the gift tax rules do not apply. When an incomplete gift is made to an offshore trust, the value of trust assets remain in your U.S. estate for federal estate tax purposes.

Because offshore trusts with U.S. settlors / owners are considered grantor trusts under the U.S. code, community property and other rules also apply. This means that, when one spouse in a community property state passes, the survivor should receive a step up in basis of 100% of the assets in the trust. If the couple lives in a common law state, 50% of the assets in the asset protection trust receive this basis increase.

The issue is that offshore trust are, by definition, formed in a foreign country. Some jurisdictions have community property statutes built in to their laws and some do not. If the country where you form an asset protection trust does not have a community property statute, the surviving spouse may not be entitled to a 100% step up in basis. In some cases she will receive only a 50% increase because the offshore jurisdiction will be considered a common law county.

For example, in California, community property transferred to an irrevocable trust loses its community property character. A poorly planned offshore asset protection trust might convert community property assets into common law assets, thereby costing you hundreds of thousands or even millions of dollars at tax time.

For this, and many other reasons, you should always hire a U.S. expert to quarterback your offshore trust.

When selecting a jurisdiction for an offshore trust for a community property client, we often start with the Cook Islands. This country was the originator of the offshore asset protection trust and is always working to improve it’s effectiveness as a tax and asset protection tool for U.S. persons.

The Cook Islands has enacted legislation to preserve the community property character of assets and the 100% step up in basis. Section 13J of the International Trusts Act provides that where a husband and wife transfer community property into an international trust or to a trust that, subsequently becomes an offshore trust (under Cook Islands law), that property will retain its community property status. Specifically, the Cook Islands will deal with the property according to the law of the jurisdiction from where it came (the community property state).

It’s also possible to use this same Cook Islands statute to preserve the separate property status of assets held before marriage in a community property state. For example, a trust set up before marriage might include language ensuring it remains separate property. Also, if both spouses agree after marriage to separate their property with a transmutation agreement, a Cook Islands trust can be designed to enforce that agreement.

The bottom line is that, so long as both spouses agree on how to handle the assets, a Cook Islands trust can be drafted to meet their needs. It’s not possible to transfer community property into an offshore trust without both spouses consent. To do that would result in a fraudulent conveyance.

I hope you’ve found this article on offshore trusts and community property law to be helpful. Please contact me anytime for assistance in forming an offshore trust or asset protection structure. You can reach me directly at info@premieroffshore.com or call us at (619) 483-1708. All consultations are private and confidential.

Panama financial services license
Christian Reeves

Panama Financial Services License

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A Panama Financial Services Company is a licensed but unregulated financial entity which allows you to hold and manage client funds in Panama. The Panama financial services license is issued by the Panamanian Ministry of Commerce (Ministerio de Comercio and Industrias). It’s much easier to keep in compliance than a license issued by the banking authority (Superintendencia de Bancos de Panamá).

Here’s a summary of the benefits of a Panama financial services license:

  • These licensed Panama corporations are most commonly used by offshore financial services companies and international banks that handle third-party funds. For example, cash management and investment services for an offshore bank licensed in another jurisdiction or for providing electronic payments services, credit and debit cards, or other similar payment processing activities.
  • If you will manage client money, you must have a of license. The lowest cost and most efficient licensed but unregulated entity is the The Panama Financial Services Company.
  • These financial services companies can work effectively with other foreign structures – for example, to outsource services for tax efficiency (because Panama won’t tax foreign sourced profits) and/or to set up a trading desk in a more reputable jurisdiction than your country of licensure.

A Panama financial services license allows you to conduct the following types of transactions on behalf of your financial institution (in addition to the normal business functions of the company):

  • Open corporate bank accounts and accept client funds, usually on behalf of a licensed and regulated entity operating in another jurisdiction.
  • Operate as a basic correspondent account managing and transferring funds on behalf of clients of a bank licensed in a separate jurisdiction.
  • Act as a payment Intermediary.
  • Currency / FX and Bitcoin accounts.
  • Conduct precious metal trading (gold, silver, platinum, etc.).
  • Factoring.
  • Leasing.

Capital and Office Requirements

In most cases, a Panama Financial Services Company will not have a capital requirement (a minimum amount of paid in capital). The only major exception is leasing services, which requires special permission and capital of $100,000.

While it’s not required, I recommend clients contribute as much capital as possible if they’re  going to operate as a correspondent bank account. Starting with $100,000 to $250,000 paid-in shows prospective banks your commitment to your Panama Financial Services Company.

I also recommend correspondent banking desks open an office in Panama with one or more employees. Turn your offshore corporation into a domestic operating company. It’s not required under the law, but it will improve your chances of success.

A local presence will give you access to a wider range of banks in Panama. Many banks will only do business with local companies. Having an office and an employee will help you throughout the process and gives you someone on the ground to deal with issues as they arise.

You can get this done at a low cost by setting up a small executive suite and paying an employee for half of his or her time. For example, Regus has 6 office buildings in Panama City and provides excellent services. Click here to find a Regus office.

Remember what’s important here is what a local bank / correspondent partner wants to see, not the minimum requirements listed in the law.

Limitations of a Panama Financial Services Company

The  Panama financial services license does not allow the Panama company to engage regulated activities such as:

  • Securities trading or broker-dealer activities including investment funds, managed trading etc.
  • Credit Union (cooperativas)
  • Savings and Loan (financiera)
  • Fiduciary (trust company) services
  • Cash transmittal services or currency exchange (e.g. bureau de change)

These services are regulated differently by the Panamanian government and all require their own license with minimum capital and audit requirements.

It’s also prohibited for the Panama Financial Services Company to offer any banking services. To be clear regarding “correspondent banking,” a Panama Financial Services Company may offer services to a licensed and regulated bank in another jurisdiction. It may not offer services to the clients of the bank, only to the bank.

Conclusion

The setup costs for a Panama Financial Services Company are $35,500 and the annual fees are about $1,250 depending on nominee directors and other factors. This does not include a registered or virtual office.

In most cases, a Panama Financial Services Company can be completed in about 15 days once all of the documents are submitted.

I hope you’ve found this article on the Panama Financial Services Company company to be helpful. For more information, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

EB-5 visa scam
Christian Reeves

Another EB-5 Visa Scam

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The EB-5 visa program is fraught with fraud and under fire from Democrats in the U.S. Congress. I expect it to survive, but problems will continue to plague the program. Here’s why and what you can do to protect yourself.

First, a brief review. The U.S. EB-5 visa program promises high net-worth foreigners a green card in exchange for an investment of $500,000 to $1 million depending on where the investment or business is located. After 5 years of residency, you’re guaranteed citizenship and a passport.

Most of the money for EB-5 visas has come from Chinese investors. In fact, 84% of U.S. visas issued under the EB-5 program are to Chinese nationals.

There are two ways to use the EB-5 visa program. You can start a business or invest in someone else’s project. The only requirement is that the businesses must hire 10 employees. The purpose of the EB-5 program is job creation.

It’s that second option, investing in another person’s project or business, where the risk of fraud comes in. I’ve been warning about this for years, but investors continue to be scammed and robbed by unscrupulous promoters.

The most recent EB-5 visa scam hit us at Premier very close to home… literally.

Here’s the story:

As reported in the Los Angeles Times, the SEC alleges that Orange County lawyer Emilio Francisco misspent at least $9.5 million from 131 investors who wanted to participate in the federal EB-5 visa program. Apparently, he diverted cash from Chinese investors to support his business and buy a yacht.

This likely means that the investors have lost their money, their green cards, and their residency status. Because the money wasn’t used to build a business, it’s safe to assume Mr. Francisco can’t afford to hire 10 employees for each investor and keep them employed for 5 years until his clients receive their passports.

Mr. Francisco promised to build assisted living facilities and restaurants under the name Cafe Primo throughout Southern California. He built a few Primo’s, but no assisted living units.

And here’s why it hits close to home: Our office is in a building in San Diego with one of the few Cafe Primo’s that was actually built out and operational. Primo’s was where we’d meet for lunch to plan our publishing schedule, gather for a beer or three after work, and watch NFL games.

I was basically sitting above Cafe Primo when I wrote my most recent article on EB-5 visa fraud. The coincidence is amazing…

Coincidence aside, the EB-5 visa scam is relatively common. The U.S. government has indicted about 10 groups of promoters in the last 2 years. Based on the various court filings and news reports, hundreds of millions of dollars has been lost to fraudsters.

There’s only one way to avoid the EB-5 visa scam – start your own business in the United States. Don’t rely on a promoter or bet your future on the success of a large real estate development. Set up a small business with 10 employees and do it yourself.

We at Premier offer a very unique version of the EB-5 visa. One that eliminates U.S. tax on your business and on your worldwide income.

  • Once you have a green card, the U.S. will tax your worldwide income. The only way to avoid this is with pre-immigration tax planning and the option described below.
  • Most EB-5 visa applicants pay about 35% in Federal taxes and 7 to 12% in state taxes on their worldwide income.

Here’s how to qualify for the EB-5 visa and cut your tax rate down to 4%.

U.S. Federal taxes apply to U.S. citizens no matter where they live. Americans in every state pay Federal taxes. American’s living abroad pay Federal taxes.

The ONLY exception to U.S. Federal income tax is found in the U.S. territories. Federal tax law does not apply in the U.S. territories. Each territory has its own tax code which superseeds the Federal code.

And the U.S. territory of Puerto Rico has a tax deal you can’t refuse: start a service business with 5 employees on the island and pay only 4% corporate tax on your profits. If you live on the island, you’ll pay zero Federal income tax on your capital gains and dividends from your Puerto Rico company.

As a territory, the island’s tax laws trump Federal tax law. But, U.S. immigration law applies, thus the EB-5 visa program is available (and thriving). I should also note that anyone born in Puerto Rico is a U.S. citizen, just as they are when born in a state.

When we combine Puerto Rico’s tax laws with the EB-5 visa program, we get a service business with at least 10 employees operated from Puerto Rico. A business that’s providing a service from Puerto Rico to persons and companies outside of Puerto Rico.

  • Puerto Rico’s tax law required 5 employees, but the EB-5 program required 10.

Using Puerto Rico’s tax laws and the EB-5 visa program together, you have a business paying only 4% in tax and a green card. You can immigrate to the United States, stay as a resident for 5 years, and be guaranteed citizenship and a passport… all without paying U.S. taxes.

For the entrepreneur, the EB-5 visa program is an amazing opportunity. And Puerto Rico is the ONLY place this tax efficient version can be had.

I hope you’ve found this article. For more on setting up an EB-5 visa business in Puerto Rico, see: Coming to America Tax Free with the EB-5 Visa and Puerto Rico

For assistance with Puerto Rico, you can reach me at info@premieroffshore.com or call us at (619) 483-1708. 

design

شاهد الإباحية مع زوجتك – لماذا يجب أن تفعل ذلك

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ما هي العوامل التي تجعل xnxx مختلفًا عن الأفلام العادية؟ كيف أصبحوا مشهورين جدا بين الناس؟ هناك عدة عوامل وكلها تتلخص في شيء واحد – التحفيز البصري!

يمكن مقارنة التحفيز البصري في xnxx  بالشعور الذي تشعر به عندما ترى شخصًا واقعيًا يقوم بعمل مشابه لك. الأفلام الإباحية أو مقاطع الفيديو المثيرة أو أفلام الجنس الحقيقي هي أفلام تصور موضوعات جنسية صريحة حتى يتمكن المشاهد من تحفيز أنفسهم وإمتاعهم. تقدم الأفلام الإباحية محتوى حقيقي للبالغين يتضمن عادةً العُري وأحيانًا الاتصال الجنسي والمداعبة. عادةً ما يكون المحتوى في هذه الأفلام بالغًا بطبيعته ، لكن ليس بالضرورة أن يكون ضارًا ويمكن أن يكون ممتعًا للغاية بالنسبة لبعض الأشخاص.

إذا لم تكن قد شاهدت واحدة من تلك المجانية على الإنترنت xxx ، فأنت تفقد شيئًا مثيرًا ومثيرًا للدغدغة. ربما تكون قد سمعت عن النجوم الإباحية الحقيقية للهواة أيضًا. هم الذين يفضلون معظم المشاهدين النظر إليهن ويقدمن أفضل المص الذي رآه أي شخص على الإطلاق. عادةً ما تكون مقاطع الفيديو الخاصة بها متاحة عبر الإنترنت ليراها الجميع.

لكن الشيء هو أنهم ليسوا مجرد فتيات يؤدين هذه الأنواع من xnxx. إنهم في الواقع رجال أيضًا يحبون الأداء في هذه الأفلام الإباحية. بغض النظر عن مدى جودة أو سوء النجمة الإباحية ، فإنها ستظل إباحية من قبل زوجها بطريقة أو بأخرى.

هذا هو السبب في أن هذه المواقع تحظى بشعبية كبيرة بين النساء. يمكنهم الاستمتاع بمشاهدة نجومهم الإباحية المفضلين أثناء الاستمتاع بكل أنواع الأشياء الأخرى التي يمكنهم العثور عليها في هذه المواقع. كل ذلك يضيف شيئًا مدهشًا تمامًا لأي امرأة.

ميزة أخرى مع توفر هذه xnxx المجانية عبر الإنترنت هي أنه يمكنك الانتقال بينها بسهولة. قد ترغب بعض النساء فقط في مشاهدة نوع واحد من الأفلام الإباحية. في هذه الحالة ، يمكنهم بسهولة الالتزام بموقع واحد والاستمرار في الوصول إلى مقاطع الفيديو طالما يحلو لهم. بهذه الطريقة ، يمكنهم أيضًا اختيار واختيار نوع الفيديو الإباحي الذي يرغبون في مشاهدته في وقت معين.

هناك أيضًا بعض النساء اللواتي يعشقن فكرة القدرة على تنزيل مقاطع فيديو إباحية مجانية من الإنترنت. بالطبع ، هناك بعض النساء الأخريات اللواتي قد يعتقدن أن تنزيل الأفلام الإباحية هو ببساطة أمر سيء للغاية. بعد كل شيء ، قد يعتقدون أنها سرقة. بالطبع ، ليس لديهم الحق في إخبار رجالهم أنه لا ينبغي لهم الانغماس في هذا النشاط. كل ما يجب عليهم قوله هو أن هناك بعض المزايا لمشاهدة مقاطع الفيديو الإباحية المجانية من الانخراط في تنزيل المواد الإباحية.

بالطبع ، لا يوجد فرق كبير بين مشاهدة xnxx مجانًا وتنزيل المواد الإباحية. كلاهما وسيلة فعالة للغاية للبقاء في حالة مزاجية. بعد كل شيء ، الشيء المهم هو أن تجد النوع المناسب من المواد الإباحية للتمتع والرضا.

بالطبع لا ضير من الاستمتاع بكلا النوعين من المواد الإباحية ، خاصة إذا كنت امرأة ومتزوجة. طالما أنك لا تؤذي أي شخص ، فأنت ضمن حقوقك تمامًا في الانغماس في كلا النشاطين. علاوة على ذلك ، ليس عليك حتى إنفاق الكثير من المال للحصول على مقاطع فيديو إباحية مجانية من الإنترنت. بعد كل شيء ، حتى تكلفة الدخول إلى بعض دور السينما للبالغين لا تُقارن بالمزايا التي يمكنك الحصول عليها من مشاهدة مقاطع الفيديو الإباحية المجانية عبر الإنترنت.

ومع ذلك ، إذا كنت رجلاً ، فعليك توخي الحذر. يجب ألا تفكر أبدًا في أن السيدات سوف يسمحون لك بالانغماس في الإباحية إذا أخبرتهن أنك مهتم بمشاهدة xxx مجانًا. هذا لأن النساء أكثر تحفظًا ولا يستطعن ​​تحمل فكرة وجود رجل يراقبهن. سيكون من الأفضل أن تتظاهر باهتمامك بالاباحية حتى تتمكن زوجتك أو صديقتك من إقناعك بأنه ليس شيئًا تريد فعله حقًا. بهذه الطريقة ، يمكنك الاستمرار في الاستمتاع بوقتك في مشاهدة مقاطع الفيديو الإباحية المجانية على الإنترنت دون الحاجة إلى مواجهة أي نوع من المشاكل من زوجتك أو صديقتك.

في الواقع ، يمكنك حتى مشاهدة الأفلام الإباحية أثناء العشاء. بهذه الطريقة ، لن تشك زوجتك أو صديقتك في أنك تخفي شيئًا عنها. طالما بقيت بعيدًا عن غرفة النوم عندما يكون شريكك في الجوار ، فلن تشك أبدًا في أنك تحب الإباحية على الإطلاق. بعد كل شيء ، لا فائدة من إخفاء فيلم إباحي في غرفة العربة ، خاصة إذا كنت ستعرضه على زوجتك أو صديقتك في كل مرة تدخل فيها إلى المنزل.

بالطبع ، لا حرج في الإباحية. طالما أنك تستخدمه باعتدال ، فلن يضر بعلاقتك بزوجتك أو صديقتك. إذا كنت قد جربت الأفلام الإباحية في الماضي ، فقد ترغب في تجربة هذه الأنواع من الأفلام قبل أن تتخذ خطوة أخرى وتحاول تلبية احتياجاتك الجنسية من خلال إقامة علاقة جنسية حقيقية. فقط تأكد من أنك لا تشاهد الكثير من مقاطع الفيديو الإباحية المجانية لأن هذا قد يؤدي في النهاية إلى ممارسات جنسية أكثر خطورة. إلى جانب ذلك ، تحب النساء رجالهن ، ومن المرجح جدًا أن يقلبن عشاقهن عندما يكتشفن أن أزواجهن أو أصدقائهن هم من عشاق الإباحية.

offshore bank license
Christian Reeves

Top 5 Offshore Bank License Jurisdictions for 2017

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There have been big time changes in the offshore bank license industry over the last year. If you’re looking to form an international bank, here are the top 5 offshore bank license jurisdictions for 2017.

In this post, I’m talking about countries where you can get a license… countries that will issue a license to a startup bank.  This is not a list of the largest or most respected banking jurisdictions. It’s a list of countries where you will be approved if you have a solid business plan, an experienced board of directors, and the requisite capital.

My list of the top 5 offshore bank license jurisdictions for 2017 is focused on offshore options where you will get a license and a correspondent account from a reputable institution. Sure, you can buy a cheap license from Africa or elsewhere, but good luck using it.

1. Dominica

The best “pure” offshore bank license is from the Caribbean nation of Dominica. The Commonwealth of Dominica is a sovereign island country and part of the Windward islands in the Lesser Antilles archipelago of the Caribbean Sea. It’s current population is about 75,000 and it’s a member of the Eastern Caribbean group of countries and the ECC banking system.

Dominica is a leader in the offshore banking and second passport industries. Many who establish a bank on the island also buy a passport from Dominica. For more on second passports, see A Second Passport from Dominica.

The reason I have Dominica at the top of my list is that this island is actively seeking new candidates, has a reasonably efficient application process, has a relatively low capital requirement, and banks from Dominica are able to find correspondent banking partners.

The capital required to secure a license on Dominica is only $1 million. That’s the lowest of any reputable offshore jurisdiction.

I should point out that, once you have your license, you will probably need more capital to get a correspondent banking account. It will be difficult to find a partner bank to take on a client with only $1 million in cash. The costs and compliance overhead on correspondent accounts make small clients unattractive.

For more on a bank license from Dominica, see: How to get an Offshore Bank License in Dominica.

2. Puerto Rico

Above, I wrote that the best “pure” offshore license is from Dominica. The best hybrid bank license, and possibly the best overall depending on your objectives, is from the U.S. territory of Puerto Rico.

Capital required is only $550,000. Of this, $200,000 should be paid-in capital to your corporation and $350,000 on deposit with the government.

The costs of formation, licensure and operation in Puerto Rico will be a fraction of the other options on this list. For this reason, the lowest cost offshore bank license is Puerto Rico. For example, the annual license fee in Cayman is about $85,000 compared to $8,000 in Dominica and only $5,000 in Puerto Rico.

Finally, there are no FATCA or U.S. reporting for the bank or the customers of the bank. U.S. citizens can go offshore to Puerto Rico with zero IRS reporting headaches. This is a major competitive advantage and cost savings for an international bank licensed in Puerto Rico.

I’ve listed all the positives as to why you should consider an offshore bank license from Puerto Rico.

The negatives are that your bank will be tied to U.S, government oversight, SEC and other rules, U.S. immigration considerations, and your bank must have a minimum of 5 employees in Puerto Rico.

This low license fee is balanced against your tax costs. If you have 5 employees in Puerto Rico, and qualify under Act 273, your tax rate will be 4%. If you do not meet these requirements, your tax rate will be about 35%.

Immigration can be an issue for some. All employees must be U.S. citizens and you must meet Federal immigration criteria to move to Puerto Rico. If you buy a passport from Dominica you can become a citizen in about 90 days. It’s not so easy to immigrate to the United States.

If you want to run a bank without U.S. oversight, Puerto Rico is not for you. If you want a bank with a solid reputation based on a rigorous compliance and regulatory environment, then give Puerto Rico a chance as a low cost high value hybrid license.

3. Cayman Islands

Puerto Rico is the second largest offshore banking jurisdiction after Cayman Islands. Cayman is the most reputable and highest cost “pure” offshore banking jurisdiction. There are about 70,000 companies registered in Cayman, along with 350 banks and 700 insurance companies. There’s over US $1 Trillion in assets in Cayman banks.

The cost of a banking license in Cayman Island (the fees paid to the government upon issuance) are quite high. They range from $160,000 to $600,000 for a Class A license. Add on to this about $500,000 in legal fees, not to mention auditors and other required professionals, and the startup costs add up quickly.

Also, the vetting process will take over 12 months and a Cayman banking license is notoriously difficult to negotiate. For more on the costs and process, see the Cayman Islands Monetary Authority website.

If you can make it through the gauntlet, you’ll come out the other end with a world class offshore banking license.

4. Belize

The banking law in Belize says an international license requires $1 million in capital and a full license required $3 million in capital. In practice, be prepared  to deposit $5 million for the international license. No one bothers with the full license any longer (which allows you to sell to Belizeans).

If you’d like to do some market research, annual and quarterly reports for all Belize banks are available on the Central Bank’s website. This is a great resource if you’re considering a bank license from Belize.  

The due diligence process in Belize will be a minimum of 12 months (compared to 3 to 4 months in Puerto Rico). Some offshore bank licenses have taken as long as 18 months to complete.

If you are planning to setup an investment management bank, Belize has some of the highest capital ratios in the world (20% in many cases). For this reason, Belize banks are considered safe by depositors.

5. Panama

Panama is a top tier banking jurisdiction with many billion dollar institutions and a well developed regulatory system. If I were to describe Panama in one sentence, it would be “the best offshore bank license when cost / capital is no issue.”

Like Belize, Panama has an international license and a full license. The problem is that Panama won’t issue an international license unless you already have a full license from your home country. For example, if you have a U.S. license, you can get a subsidiary bank license in Panama.

This means that a startup bank will need to open under the full license which is likely to require $24 million in capital. The law says $10 million for a general license and $3 million for an international license, but these values will increase significantly when negotiations begin with the Central Bank.

I should point out that Panama has many different financial services licenses. For example, a bank in Dominica or Belize, that wants to manage client funds in Panama, might apply for a Financial Services license. This would allow you to operate a trading desk and open a correspondent account in Panama without a local license.

Another option in Panama is to set up a Credit Union. Similar to U.S. cooperatives, Panama’s credit unions are savings and loans where each depositor is a shareholder.  Known as “Cooperativas”, Panamanian credit unions are licensed as financial co-op institutions.  They are regulated under Law 17 of 1997 which granted them non-profit tax free standing.

There are hundreds of credit unions in Panama, but most are for employees of one industry or another. For an example of a public cooperativa, see Cooptavanza.

Depending on your business model, it might be possible to set up in Panama with capital of $1 to $3 million as a credit union. The IPACOOP “Instituto Panameno Autonomo Cooperativo regulates all of Panama’s credit unions.  For more informaiton, see: www.ipacoop.gob.pa

For more how to accept deposits from clients, and alternatives to an offshore banking license, take a read through Offshore Money Management Business: How to Accept Client Funds and Deposits.

To delve deeper into offshore bank licensing and operation, please review my articles on offshore bank licensing and operation. I’ve been working in offshore banking for over a decade. My recent articles on the topic are:

If you’re considering forming an offshore bank or filing for an offshore banking license, you need to be ready for a lot of red tape, a significant vetting process, and to maintain a sizable deposit with the central bank (your corporate capital).

Countries are cautious when issuing offshore banking licenses. If any bank fails in a small country, it can result in a loss of confidence in the entire system. And, of course, no country wants to risk upsetting the mighty U.S. of A, as Belize did. This little spat shut down their banks for about 6 months.

If you want to enter the offshore banking market today, you need a solid business plan, an experienced board of directors, and an agent to quarterback your application.

I hope you’ve found this review of the top 5 offshore bank license jurisdictions to be helpful. If you’d like more information, please contact me for a consultation at info@premieroffshore.com or call (619) 483-1708

Private Placement Life Insurance
Christian Reeves

Benefits of Private Placement Life Insurance

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For top tier investors, hedge funds and foreign investments offer broad diversification and attractive returns. Because these returns are often taxed at ordinary rates, affluent investors turn to private placement life insurance for tax efficiency.

The reason to invest using a private placement life insurance is to reduce or eliminate income and estate taxes. All gains inside a properly structured PPLI are tax deferred until taken out as a distribution by the investor. If you leave those investments in the policy, and set up an irrevocable life insurance trust, it’s possible to transfer these assets to your heirs with a step-up in basis and tax free (no estate tax).

This is important because hedge funds and offshore investments can be extremely tax-inefficient. Most hedge fund earnings are taxed as ordinary income or short-term capital gains. Federal rates can be as high ast 43.4% and, when you add in state taxes, the combined rate can be near 50%.

The same goes for many types of offshore investments and foreign mutual funds (which may be inside a hedge fund or you may hold directly). Any foreign investment where 75% of the returns are passive, or 50% of the capital is held in passive investments, is a Passive Foreign Investment Company (PFIC). PFICs are taxed at ordinary rates and gains are taxed in the year accrued, not in the year sold.

Likewise, dividends from an offshore investments are often non-qualified dividends for U.S. tax purposes. Non-qualified dividends are taxed at ordinary income rates.

Anyone investing in foreign products or companies generating ordinary income, or PFIC income, should do so through an insurance policy. Gains inside of a Private Placement Life Insurance policy are tax free if held for the life of the insured or tax deferred if taken out as a distribution by the insured.

In most cases, you can use low interest loans against the policy to access the cash during the life of the insured without incurring U.S. tax. Also, you can typically withdraw your original investment in the contract tax free.

But, the real value of a Private Placement Life Insurance policy is in allowing the investments to grow and compound tax free.

Another way to look at the PPLI is as giant IRA without distribution requirements or contribution limits. Investments in an IRA grow tax free (ROTH) or tax deferred (traditional). Add a UBIT blocker corporation to an offshore IRA LLC and you effectively convert investments that would have otherwise generated ordinary income into tax free capital gains.

Like an offshore IRA, a Private Placement Life Insurance policy increases your returns without increasing risk. This “structured alpha” is based on reducing tax costs, not increasing returns.  

Note that this article is focused on foreign investments and those returning ordinary income. A PPLI might not be right for U.S. investments taxed as long term capital gains rates. This is because distributions from the policy to the insured are taxed at ordinary rates.

Thus, it would be possible for a Private Placement Life Insurance policy to convert long term capital gains into ordinary gains. Conversely, if held (deferred) for many years and passed to your heirs tax free with a step-up in basis, a PPLI might be efficient for long term capital gains… it will depend on your situation.

A PPLI provides advanced investors a tax efficient management system not available in any other product. It offers the flexibility to invest in hedge funds, offshore companies, active businesses, foreign mutual funds, and offshore passive foreign investment companies without the tax penalties that keep average people from making these investments and realizing these higher returns.

Likewise, a Private Placement Life Insurance policy eliminates “phantom income” from partnerships or PFICs. Because the gains are tax free, there are no issues of taxable income on a K-1 when no actual distribution is made.

I’ll close by noting that PPLI’s offer excellent asset protection benefits. When held inside of an offshore trust, it’s impossible for a future civil creditor to breach your life policy or access your profits.

Add to this the fact that the trustee can retain the right to limit distributions to heirs if they’re being sued, and you will see significant multigenerational tax and asset protection benefits by combining an offshore trust with a PPLI.

These products are only available to accredited investors and qualified purchasers. You must have a net worth of $1 million (excluding your primary residence) or income of $200,000 (single) to $300,000 (joint) in each of the preceding two years to be an accredited investor. You will also need to have at least $5 million in net investments to be a qualified purchaser.

I hope you’ve found this article on Private Placement Life Insurance to be helpful. For more information, please contact me at info@premieroffshore.com or call us at (619) 483-1708. We can assist you to set up offshore and introduce you to a qualified PPLI agent.

We can also assist you to transfer an existing life insurance policy into a PPLI using a tax-free exchange (called a 1035 exchange).

PFIC investment
Christian Reeves

What is a PFIC Investment – Passive Foreign Investment Company

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In this article, I’ll review the rules around PFIC investments and the Passive Foreign Investment Company statutes. Here’s everything you need to know about passive income in an offshore corporation.  

First let me define a few terms around PFIC.

Passive Income: Income from interest, dividends, annuities, capital gains, and most rents and royalties.

Passive Foreign Investment Company: An offshore company used primarily to hold passive investments rather than to operate an active business. The two tests to determine if a corporation or LLC is a Passive Foreign Investment Company are:

  1. Any foreign company where 75% of it’s is passive is a PFIC, and  
  2. Any foreign company where 50% or more of its assets are assets that produce passive income is a PFIC

PFIC Investment: A passive investment within a Passive Foreign Investment Company. Also, any investment in a foreign mutual fund, or in a corporation treated as a PFIC is a PFIC investment. Buying stock in company generating passive income, and not operating an active business, can be a PFIC investment.

Second, here are the consequences of investing in a PFIC.

I’ll start with a little commentary in saying that these punitive PFIC rules are a form of capital control imposed on Americans who want to invest offshore. The IRS is charging you a penalty for investing offshore. And, god forbid you make a mistake in reporting your offshore account. The penalties will be swift and severe.

These PFIC penalties where the brainchild of the U.S. mutual fund industry… not a political conspiracy. The industry didn’t want to compete with the better products available abroad, so they paid lobbyists and Congress to invent the PFIC. But, the result is the same as if the Illuminati were imposing capital control on average Americans.

As for the reporting, the IRS estimates it taxes up to 30 hours of work to complete Form 8621, which must be filed each year for each PFIC investment. Add to this forms for the corporation, foreign asset statement, FBAR, and maybe a trust, and you’re over 200 hours to report your offshore investment.

And most of these forms are required no matter the size of your investment and regardless of whether you made a profit. Having a single PFIC investment of $100 inside of an offshore corporation will trigger multiple filing obligations and cost a couple thousand in tax prep should you decide to hire a professional.

This, and the fact that the penalty for getting it wrong on that $100 investment is over $10,000 per year, and you see that average American’s can afford to go offshore. This effectively locks them and their cash in the United States.

All of this negativity and I haven’t even gotten to the PFIC penalties yet. Here they are:

Penalty 1: When you receive a dividend or sell a PFIC share, you must prorate the investment over your holding period and pay an interest charge in addition to the tax.

That’s right, where passive investments in the United States are taxed when sold, those same investments offshore pay tax for each year they are held plus an interest penalty. The purpose of the interest charge is to treat the gain as if it were earned and taxed each year over the holding period.

For example, let’s say you buy a PFIC investment in 2017. You hold it for 3 years and sell it for a gain of $300,000 in 2019. When you file your 2019 return, you’ll need to split the investment over the holding period and pay tax on it as if ⅓ was sold in 2017, ⅓ in 2018 and ⅓ in 2019. That is to say, report $100,000 in gains for each year, plus pay interest on the gains made in 2017 and 2018 (because you reported them “late.”)

Penalty 2: Capital gains from PFIC investments are taxed at the highest ordinary income rate plus the interest charge. Long term capital gains rates are NOT available.

While long term capital gains are taxed by the Feds at 20% to 23.8% (including Obamacare taxes as applicable), the top ordinary income rate is 39.6%. When you add up penalties 1 and 2, the tax and interest penalties for investing offshore can eat up 70% or more of your gain.

Penalty 3: Capital losses on PFIC investments can’t be used to offset capital gains on domestic investments.

While U.S. passive gains and losses offset each other, you can’t reduce your U.S. capital gains with offshore capital losses from PFIC investments. This means your offshore investments MUST turn a profit, or the penalties for going offshore will be severe.

Here are a few exceptions to the PFIC investment penalties…

You can opt out of the PFIC Investment rules with an LLC. If you form an offshore LLC and then make an election to be classified as a disregarded entity or partnership, you will not be considered a PFIC. Only a foreign entity with the ability to retain earnings, such as a corporation or an LLC treated as a corporation, is classified as a PFIC.

In most cases, the PFIC rules do not apply to investments of less than $25,000 (single) or $50,000 (joint).

  • My example above of a $100 investment was inside a corporation, which must always be reported no matter the size.

You can opt out of the PFIC investment rules by making a QEF Election. If a PFIC meets certain accounting and reporting requirements, and is FATCA compliant, you can avoid the PFIC penalties by treating the investment as a Qualified Electing Fund (QEF).

But a QEF election is very complex and difficult to use unless your offshore investment or fund is set up for QEF reporting. In my experience, only the very largest offshore funds have the ability to provide QEF reports that allow you to use the QEF election. This is because:

  1. You must report and pay tax on your share the ordinary gains and passive income of the PFIC investment each year. Your investment might not be able to provide (or willing to provide) such an annual report.
  2. You can elect to report but pay no tax on the QEF elected gains in a PFIC. In this case, you will pay interest on untaxed gains when the investment is sold. You are effectively “carrying over” your gains and losses year to year and paying the tax plus interest when the sale is made. This is best if the returns are uncertain or you have gains in some years and losses in others.
  3. If you don’t make the QEF election in the first year, it becomes difficult to make it later. You need to report a “deemed sale” and then begin with the QEF from that year.

The bottom line is that Passive Foreign Investment Company rules are complex and punitive. They’re a form of capital controls being imposed on Americans by the Internal Revenue Service.

And I haven’t even covered the more esoteric areas of PFIC investing, such as 1291 funds, or the mark-to-market election for stock under the PFIC and section 1296.

For this reason, it’s important to hire a U.S. expert to form ANY offshore structure. Whether you use it to buy real estate, invest in stocks, hold a bank account, or operate a business, a U.S. expert should be the one to quarterback your offshore adventure.

I hope you’ve found this article on the joys of PFIC investments and the Passive Foreign Investment Company Rules helpful. For more information on structuring your investments offshore, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

Which Countries Tax Worldwide Income?
Christian Reeves

Which Countries Tax Worldwide Income?

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When you’re planning a move abroad, you need to consider the tax laws of your country of citizenship and your country of residence. The key to a solid expat move is to determine which countries tax worldwide income and avoid them whenever possible.

There are four basic tax groupings of countries. I won’t consider the 22 countries that don’t tax citizens or residents. You can find that list here.

Here’s the 4 tax categories:  

  1. Countries that tax citizens and legal residents on their worldwide income no matter where they live. These countries also tax residents on their worldwide income.
  2. Countries that tax residents on their worldwide income. This is called a residential or physical presence tax system.
  3. Countries that tax citizen residents on their worldwide income but not foreign residents.
  4. Countries that tax residents on their local source income but not foreign source income. This is called a territorial tax system.

The only major nation that taxes its citizens (and green card holders) regardless of where they live is the United States. So long as you hold a U.S. passport or green card, the Internal Revenue Service wants its cut of your profits and capital gains.

  • Some lists of countries that tax citizens and legal residents on their worldwide income include Libya, North Korea, Eritrea and the Philippines. The tax systems of these countries are not well developed and data is limited.

The United States taxes all U.S. persons on their worldwide income. A U.S. person is a citizen, green card holder (who is a legal resident but not necessarily present in the United States), and residents. A resident is anyone who spends more than 183 days a year in the United States.

If you’re living and working outside the United States, and qualify for the Foreign Earned Income Exclusion, you can earn up to $102,100 in salary during 2017 free of Federal income tax. If your salary is more than the FEIE, you will pay US tax on the excess.  

Also, the FEIE only applies to your salary. You will pay US tax on capital gains, dividends, rents, royalties, and passive income no matter where you live.

Category two includes countries that tax residents on their worldwide income. In most cases, a resident is anyone who spends more than 183 days a year in the country. If you’re not living within their borders, you won’t pay tax to these nations, even if you’re a citizen.

I should point out that the “183 days” test is the standard definition of a resident. Some have more complex tests to determine who is and who is not a tax resident. For example, Colombia uses your presence in the country and the following:

1. Staying continuously or non-continuously in Colombian jurisdiction for more than 183 calendar days during a 365 day period (1 year);  
2. 50% or more of your income comes from Colombian sources;
3. 50% or more of your assets are held in Colombian Territory;
4. 50% or more of your assets are managed from Colombian Territory;
5. Having a tax residence in a jurisdiction declared as “tax haven” by the Colombian government.

The best known category two residential taxation countries are Australia, Austria, Brazil, China, Colombia, Japan and Mexico. The residency tax system is the most common and a complete list can be found here.

Category three, countries that tax foreign residents differently than citizen residents, technically includes only Saudi Arabia, Cuba and Philippines. However, some countries impose worldwide taxation on residents only after they have been in the country for several years. So, this category can vary by your situation.

When you’re moving abroad and looking to reduce or eliminate income taxes, you want to move to a category 4 country. These nations are on a territorial tax system and tax only your local source income.


If you live in a category 4 country, operate an online business from a territorial tax country, and don’t sell to locals, you won’t pay income tax to your country of residence. If you move to a territorial tax country and open a restaurant, you will have local source income and thus pay tax on your profits.

The most “business friendly” territorial tax system is in Panama. Other options include Belize, Costa Rica, Hong Kong, Malaysia, and Singapore. For a complete list, click here.

Those are the four tax systems available, with territorial and residency based taxation being the most common. Your objective should be to become a resident of a category 4 country and be a tourist or visitor in countries who would want to tax your business income.

There’s a fifth option you if you plan to spend a lot of time on the road.

You can elect to become a perpetual traveler, as so many internet marketers and entrepreneurs with portable businesses do. If you keep moving, never spending 183 days a year in any one country, you never become a tax resident and are not subject to their income tax reporting or paying requirements.

A perpetual traveler might split her time between Europe, Canada and Asia, or between the United States, Mexico, and South or Central America, never becoming subject to any of these countries tax laws. This option has become popular with nomad internet professionals.

I have two important notes for perpetual travelers:

The first is for Americans. Remember that the U.S. taxes its citizens on their worldwide income, including perpetual travelers. If you go this route, you need to qualify for the FEIE using the 330 day test and not the residency test. Here’s a detailed article on the FEIE for US citizen perpetual travelers. It’s much easier to qualify for the FEIE if you’re a resident of a foreign country for U.S. purposes, even if you spend less than 183 days in that nation.

The second is for everyone else. Several countries will attempt to tax you based on citizenship if you’re a perpetual traveler with no tax home. While their legal standing to require a tax home is unclear, I have seen many nomad clients go to battle with their home country on this issue.

Therefore, I suggest all perpetual travelers become residents of a country with a territorial tax system for the purpose of reporting (or defending your status) to your country of citizenship. Becoming a resident of Panama, while spending only a few days a year there, can simplify your worldwide tax picture.

Panama has one of the lowest cost residency programs. If you’re from a top 50 country, you can become a resident with an investment of only $20,000.

I hope you’ve found this article on which countries tax worldwide income to be helpful. For more on how to setup an offshore company or plan an international trust, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

Offshore Trust or Panama Foundation
Christian Reeves

Offshore Trust or Panama Foundation?

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The top two international asset protection structures are the offshore trust and the Panama foundation. These tools are very different from one another and I don’t think of them as competing solutions. Even so, I’m asked all the time, offshore trust or Panama foundation? In this article I’ll try to explain the differences.

A properly structured offshore trust formed in and managed from a tax free and max protect jurisdiction such as Belize or Cook Islands, provides the strongest asset protection. A foreign trust is more secure than a Panama foundation and offers a wider range of estate and tax planning options.

But these benefits come with limitations. In order to maximize the asset protection benefits, you must be willing to give up control of the assets. An offshore trust is best when a foreign trustee and a foreign investment advisor are making the decisions.

Likewise, the settlor (you) and any U.S. persons connected to the trust should not have the ability to replace the trustee nor the right to terminate the trust. If these rights rest in a U.S. person, a U.S. court can compel the trust be dissolved and the assets brought back to this country.

In most cases, both the offshore trust and the Panama foundation will be tax neutral. They’ll not increase nor decrease your U.S. taxes and all income and gains generated in the structure will be taxable to the settlor as earned.

A trust has additional advanced tax planning options not available to the foundation. For example, you can build a dynasty trust or multi generational trust that can eliminate gift, estate, and capital gains tax. In addition, a trust can hold a U.S. compliant offshore insurance policy which will operate as a massive tax free account, with no capital gains and estate tax due when the assets are distributed to your heirs.

For these reasons, an offshore trust is best for someone who wants to put a nest egg offshore for his or her heirs. A foreign trust will provide the highest level of protection and give you access to banks and investment options around the world typically closed to Americans. And it will accomplish this by bringing in foreign advisors and other professionals to make the trades, distancing itself from its American owner.

An offshore trust is not the structure for someone who wants to manage their own investments, is an active trader, or wants to protect an active business. A trust is meant to be static and stable over many years. It’s the castle behind whose walls you store your wealth… a castle that will stand the test of time and will prove impenetrable for decades and generations to come.  

If you prefer to balance flexibility with asset protection, then consider a Panama Foundation. While the offshore trust is about maximum protection, the foundation is about control and maximum privacy. If you need an estate planning and asset protection structure to hold an active business, look to a Panama foundation.

The Panama foundation is a hybrid foreign trust and holding company. It’s meant to hold both active businesses and investments (real estate, brokerage accounts, etc.). And it comes with many of the same asset protection benefits of a traditional offshore trust.

One reason I’m so high on the foundation is that it’s used by foreigners (Americans, Canadians, etc.), expats, and locals (Panamanians). Every wealthy family in Panama holds their local assets inside of a foundation. Also, the shares of most most banks, investment firms, and large businesses in the country are held inside of foundations.

Because Panama is a major financial center, and because the foundation is used by both locals and foreigners, it’s unlikely the laws will ever change. The Panamanian government will not reduce the protection or privacy of it’s foundations because to do so would go against their ruling class and entrepreneurs.

The bottom line is that both offshore trusts and foundations are sold asset protection and estate planning tools. Each has its strengths and weaknesses and each will give you access to a wide range of offshore banks and investment opportunities.  

So, should you go with an offshore trust or Panama foundation? That depends on your situation. If the above hasn’t answered this question yet, then consider the costs of each and compare that to amount of assets you need to protect.

The costs to form an offshore trust can range from $10,000 to $30,000 compared to $3,500 to $9,500 for a Panama foundation. Also, the costs to maintain an offshore trust will be much higher than a foundation because of the use of foreign trustees and advisors. Most foundations are managed by the founder / owner.

For this reason I recommend a trust when a client has $2 million or more in assets they wish to protect. More importantly, they have this amount in cash and want to hold it offshore to be managed by a Swiss, Cook Islands, or Belize investment advisor.

A Panama foundation can be formed for a variety of reasons. Most clients either hold $100,000 in assets or an active business. Because of it’s lower cost, the foundation is an excellent estate planning tool for anyone with foreign investments.

I hope you’ve found this article on the offshore trust vs Panama foundation to be helpful. For more information, and a confidential consultation, please contact me at info@premieroffshore.com or call us at (619) 483-1708. We will be happy to review your situation and devise a custom solution that fits your needs.

Best Lawsuit Protection
Christian Reeves

Best Lawsuit Protection

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The best lawsuit protection is an offshore trust… period. No structure or plan, no matter how complex, can compete with the good old offshore trust for lawsuit protection. It’s the only way to move your assets out of the United States, out of our court system, out of the reach of creditors and U.S. judges, and behind an impenetrable barrier.

To come to the conclusion that the best lawsuit protection is an offshore trust, I start from the position that all U.S. structures are flawed. Domestic asset protection is governed by U.S. law and U.S. judges. So long as your assets are in this country, they’re subject to the whims of an American court.

The way to escape our creditor friendly country is to change the jurisdiction and venue of the fight. To move your assets to a country that values your rights of ownership and self determination. To a country whose laws were specifically designed to protect you and your family from civil creditors and to get the case heard by a judge who will uphold those laws.

The two most important components of building the best lawsuit protection trust offshore are timing and control.

Timing is everything when funding an offshore trust. You must setup your asset protection structure before you have a problem. Once the cause of action has arisen, you will be unable to transfer assets out of the United States.

For example, if you hit someone with your car today, and fund a trust tomorrow, your offshore trust won’t protect you. A U.S. judge will likely claim the transfer is a fraudulent conveyance and hold you in contempt until you bring the cash back under his or her control.

  • The cause of action arises when the harm occurs, not when a case is filed.

The second component of the best asset protection is that you should give up control over your assets once they’re in the trust. Professional investment advisors and a trustee should be hired to manage the trust per your written directives. These experts should be outside of the United States and, like your assets, out of the reach of the U.S. courts. No one with the authority to dissolve or modify the trust should be in the United States.

Not everyone who sets up an offshore trust gives up control. It’s possible to retain control through a variety of mechanisms. What I’m saying here is that, if you want maximum protection, and truly the best lawsuit protection, you must turn over the management of the trust to a third party.

What I’m describing is the Cadillac of asset protection structures – an offshore trust formed in the perfect jurisdiction managed by licensed and experienced professionals. This is not an off the shelf product for the masses. It’s not a cheap solution. It’s the best in lawsuit protection, not some offshore shelf company sold on the corner to anyone with a few grand to protect.

Not everyone can afford an offshore trust, nor does every situation call for a top of the line solution. For example, I would not recommend an offshore trust to anyone looking to protect less than $2 million.

If an international trust isn’t appropriate, then the best lawsuit protection is the offshore structure you can afford to build, maintain, and keep in compliance.

If the Cadillac is a foreign trust, then the Ford is a Panama Foundation. This will cost a fraction of a trust, allows you to maintain control of your investments, and is a solid deterrent. This structure will get you into some good banks, doesn’t require a foreign trustee or investment advisor, and has a strong world image (Panama Papers notwithstanding).

Another lower cost option is to move your retirement account offshore. Rather than a trust, you might form a single member LLC, owned by your IRA, and place that with an international bank… one with no branches or exposure to the United States.

The most important advice I can give you about the best lawsuit protection, and going offshore in general, is this: If you can’t afford to do it right, don’t do it at all.

Any American living, working, investing, or doing business offshore is a target. The IRS is waging war on those who move their cash out of the reach of their government, and the penalties for failing to comply are severe.

For example, failing to properly report an offshore trust can result in minimum penalties of $40,000 per year ($10,000 for each missed form, 3520, 3520-A, FBAR and 8938). Worse, the penalties for 3520 and 3520-A can be 10% of the trusts assets. If the trust has $5 million, your penalty could be $500,000 per year!

For these reasons, you must hire a U.S. expert to quarterback your offshore plan. If you’re a U.S. citizen, you need someone who understands the laws of your home country and how those interact with your country of formation.

Remember that 100% of your risk of liability is in the United States. Your offshore trust or other structure is a tool to protect your assets from U.S. creditors. Thus, only someone experienced in both jurisdictions is qualified to help you achieve your goals.

If you’re unable or unwilling to pay the fees charged by U.S. professionals, stick to domestic asset protection. If you’re going to go offshore, you need to do it right or not at all.

I hope this article on the best lawsuit protection has been helpful. For more information, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

offshore trust tax
Christian Reeves

Offshore Trust Tax Status and U.S. Tax Filing Requirements (Form 3520-A)

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An offshore trust owned by a U.S. person must file Form 3520-A and a variety of other reports to remain in compliance with the IRS. Here are the tax filing requirements for offshore trusts with U.S. owners.

First, allow me to define a few terms around offshore trust tax reporting:

Settlor or Grantor: The person or persons creating and funding the trust. The terms settlor and grantor are synonyms for estate planning and the U.S. tax code.

Owner of an Offshore Trust: The settlor is the owner of the trust until his death. Once the trust passes to the heirs, they become the owners for U.S. tax purposes.

Grantor Trust: A grantor trust is considered a disregarded entity for income tax purposes. Any taxable income or deduction earned by the trust will be taxed on the grantor’s tax return. The settlor(s) or grantor(s) are the beneficial owner of the trust for tax purposes until his or her death.

Beneficial Owner: The owner of the assets of the trust for tax purposes. More specifically, Any person treated as an owner of any portion of a foreign trust under the grantor trust rules (Sections 671 to 679 of the U.S. Tax Code).

U.S. Person: Any U.S. citizen, green card holder, or tax resident. This article is focused on offshore trusts owned by U.S. persons. The rules are different for offshore trusts owned by non-resident aliens who become U.S. persons after the trust is funded.

Tax Resident: Any person who spends more than 183 days a year in the United States.

Now let’s get to the U.S. tax filing requirements of offshore trusts with U.S. owners.

We start from the position that U.S. persons are taxed on their worldwide income, no matter where it’s earned and no matter where they live. So long as you hold a U.S. passport or green card, or are a U.S. resident for tax purposes, the IRS will expect you send them their share each year.

Next, all offshore trusts with U.S. owners are grantor trusts for U.S. tax purposes. This means that all income earned within an offshore trust is taxable to the grantor. Likewise, this means that the settlor is considered the beneficial owner of the trust assets for tax purposes.

Note that I repeatedly write, “for tax purposes.” The settlor may not be considered the owner of the assets for liability and litigation purposes. Also, she might not be the owner of the assets for estate planning purposes. This article on the U.S. tax status and filing requirements of offshore trusts looks at these matters only from the point of view of the IRS.

This all means that the settlor or owner of an offshore trust must pay U.S. tax on the taxable gains earned within the trust. This includes capital gains from stock trading, rental income from real estate, and the gain realized on the sale of any trust assets.

Of course, it’s possible for an offshore trust to have non-taxable gains. For example, profits earned within a U.S. compliant offshore insurance wrapper are not taxable to the owner.

The bottom line is that, any income earned within an offshore trust which is not within a tax exempt structure is taxable to the owner. Taxes are not deferred until the profits are brought into the United States, they’re due when the gains are realized.

U.S. Tax Filing Requirements for Offshore Trusts

The most important filing requirement for an offshore trust with a U.S. owner is Form 3520-A.

An offshore trust treated as a grantor trust for U.S. tax purposes must file IRS Form 3520-A each year. Gains, losses and ownership are reported to the IRS on this form. It doesn’t matter whether there were transactions or gains in the trust, Form 3520-A must be filed each and every year.

Failure to file Form 3520-A, or filing an incomplete or inaccurate Form 3520-A  can result in a penalty of the greater of $10,000 per year or 5% of the gross value of the trust assets owned by U.S. persons. That means that the minimum penalty for failing to file this form is $10,000 per year.

An offshore trust where the settlor is alive and a U.S. person will be 100% owned by a U.S. person and the penalty for failing to file Form 3520-A will be 5% of 100% of the trust assets. In the situation where the settlor has passed and one or more of the beneficiaries are not U.S. persons, the penalty will apply only to the portion of the assets owned by U.S. persons.

Note that an offshore trust with U.S. owners must also file Form 3520 to report changes in ownership and certain transactions involving the trust. Failure to file this subform will result in an additional penalty of the greater of $10,000 per year or 5% of the gross value of the trust assets owned by U.S. persons.

So, failure to report an offshore trust in a year where both Form 3520-A and Form 3520 are required can result in a total penalty of $20,000 or 10% of the gross assets. Miss these forms or file them incorrectly for a few years and the penalties add up quickly.

Foreign Bank Account Report (FBAR)

The most basic offshore form is the Report of Foreign Bank and Financial Accounts, Form FinCEN 114, generally referred to as the FBAR. Anyone who is a signor or beneficial owner of a foreign bank or brokerage account with a value of more than $10,000 must disclose their account(s) to the U.S. Treasury.

The $10,000 amount is the value of all offshore bank and brokerage accounts combined. If you  have 4 offshore accounts, each with $4,000, your total offshore balance is $16,000 and an FBAR report is due each year.

The penalty for failing to disclose an offshore bank account is $10,000 for each non-willful violation. If the violation is intentional, the penalty is the greater of $100,000 or 50% of the amount in the account for each violation. A separate penalty will be imposed for each year you failed to report the international bank and/or brokerage account associated with your offshore trust.  

In addition to filing the Foreign Bank Account Report, your offshore account must be disclosed on Form 1040, Schedule B of your personal tax return.

Other Tax Forms for Offshore Trusts

Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations. If your trust owns a foreign corporation, Form 5471 will be required.

A foreign corporation or limited liability company owned by an offshore trust should review the default classifications in Form 8832, Entity Classification Election and decide whether to make an election to be treated as a corporation, partnership, or disregarded entity.

Form 8858 – Information Return of U.S. Persons with Respect to Foreign Disregarded Entities. If your foreign trust owns an offshore Limited Liability Company, you might need to file Form 8858. If not this form, then Form 5471. Which form is required is determined using the instructions to Form 8832.

Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation. If your offshore trust invests in a U.S. business, or in an offshore corporation that does business in the United States, you may need to file Form 5472 to report U.S. source income.

Form 926 – Return by a U.S. Transferor of Property to a Foreign Corporation. Form 3520 is generally used to report transfers to an offshore trust. Form 926 can be required if you transfer property into a foreign corporation owned by your trust.

Form 8938 – Statement of Foreign Financial Assets was introduced in 2011 and must be filed by anyone with significant assets outside of the United States. Whether this Form 8938 is required will depend on many factors, such as the value of your foreign assets and whether you’re living in the United States or abroad. I won’t go into the details here. Suffice it to say that most offshore trusts are large enough that Form 8938 is required.

Conclusion

Because of the complex web of tax forms and rules that apply to offshore trusts, the severe penalties for getting it wrong, and the potential to use an offshore trust as a tax planning tool (when combined with an insurance wrapper) or as a way to minimize estate tax, I strongly suggest you hire a U.S. expert to form your structure.

Only a U.S. tax and asset protection lawyer is qualified to design and implement an offshore trust for an American citizen or resident.

Only a professional with years of experience in the field should be hired to quarterback your asset protection team.

Only a U.S. lawyer can build an asset protection trust to protect you from U.S. creditors. If your risks are in the United States, so must be your legal counsel.

Only a U.S. tax expert is qualified to keep your offshore trust in compliance.

Only an attorney experienced in both offshore planning and U.S. taxation can assist you with pre-immigration planning using offshore trusts.

Sure, it’s cheaper to hire an offshore trust agent. Take a read through the penalties for failure to file or report again, and then consider whether the savings are worth the risk.

Here’s the bottom line: If you can’t afford to do it right, don’t do it at all. If the amount of assets you want to transfer offshore don’t warrant hiring a U.S. lawyer, then don’t go with a trust. Plant your first flags offshore in a less costly and less complex structure.

For example, if you will move $100,000 offshore, go with a Panama Foundation rather than an offshore trust. The cost savings will be significant and the Foundation offers many of the same asset protection benefits. Also, a Panama Foundation is a great way to hold active trading accounts and businesses, which don’t play well with offshore trusts.

If you want to take a U.S. retirement account offshore, use an offshore IRA LLC rather than an international trust. Your setup and ongoing costs will be a small fraction of those associated with a properly designed trust.

Finally, it’s possible to invest offshore and legally report nothing to the IRS. If you buy foreign real estate, or hold gold offshore in your name, there will be no IRS reports to file. Stick to gold and real estate, avoid offshore structures, and do not have an offshore bank accounts with more than $10,000, and your investments will remain totally private.

Assets within an offshore corporation, including gold and real estate, must be reported on Form 5471. The above refers only to assets held in your name without a corporate structure, LLC, or foreign trust. For more, see: Offshore Privacy Exists!

I hope you’ve found this article on the U.S. tax status and IRS filing obligations of offshore trusts to be helpful. For more information on building an international asset protection structure, please contact me at info@premieroffshore.com or call us at (619) 483-1708 for a confidential consultation.

stop paying payroll tax
Christian Reeves

How to Stop Paying Payroll Tax

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During the election,Trump claimed he’s paid “hundreds of millions of dollars” in taxes over the years. Yet, he probably didn’t pay any personal income taxes since 1995 because of a $916 million loss carryforward. How can both of these statements be true? Because most Americans pay more in payroll taxes than income tax!

In this article, I will explore how you can opt out of the US payroll tax and self employment tax systems by going offshore. How to stop paying into Social Security and other government programs that might not be there when you need them. How to create your own security blanket offshore that’s under your control.

Federal payroll tax is about 15%, with half being paid by your employer and half being deducted from your check. In addition, most states charge a payroll tax of 1.5% to 7.5%, again with half coming from the employee and half from the employer.

Self employment tax is basically payroll tax for small business. If you operate without a corporation, and report your income and expenses on Schedule C of your personal return, you will pay 15% of self employment tax. This is intended to match up with the 7.5% paid by an employer and the 7.5% withheld from every paycheck.

  • I’m using round numbers to keep it simple. For the precise cost of hiring an employee in California, see this great infographic.
  • For purposes of this article, I’ll use the terms self employment tax and payroll tax interchangeably.

When the Donald says he’s paid hundreds of millions in taxes, he’s probably counting employment taxes paid by his many companies, plus payroll and other taxes he’s paid personally. Assuming a payroll tax cost of 10% for each employee, the numbers add up quickly and his boast is probably correct… even if he paid zero in personal income taxes.  

About 66% percent of households will pay more in payroll taxes than they will in income tax. Only one in five households will pay more in income taxes than employment taxes. Those who do pay more income taxes than payroll taxes are at the very top of the wage scale. Middle income and low income taxpayers are paying far more in payroll than income tax.

Only 18% of US households pay neither payroll nor income tax. Of these, half are retirees living on their Social Security and have no other taxable income. The rest have no jobs and not much income.  (source: T16-0129 – Distribution of Federal Payroll and Income Taxes by Expanded Cash Income Percentile, 2016, Tax Policy Center)

If you’re a business owner or an independent contractor, here’s how to stop paying payroll taxes… and income tax on your first $102,100 of salary in 2017.

Live outside of the United States, qualify for the Foreign Earned Income Exclusion, operate your business through an offshore corporation in a zero tax jurisdiction, and you will pay no payroll taxes of any kind.

In order to qualify for the Foreign Earned Income Exclusion, you must be out of the United States for 330 out of 365 days or be a legal resident of a foreign country and out of the US for 7 or 8 months a year. Any income earned while in the US will be taxable here.

As a legal resident, your new country should be your home base for the foreseeable future. If you move somewhere for a short term job, you’re not a resident for purposes of the FEIE. You need to move to a foreign country with the intent to live there indefinitely.

If you don’t want to go through the hassle of getting a residency visa, you need to be out of the US for 330 out of 365 days. While this version of the test doesn’t give you much time with friends and family in America, it’s far easier to prove should the IRS challenge your tax return.

If you live abroad and qualify for the FEIE, but don’t operate your business through an offshore corporation, you will still pay payroll taxes! You will eliminate income tax on your first $102,100 in 2017, but self employment tax will apply at 15%. So, a business that net’s $100,000 is basically paying a penalty of $15,000 for failing to incorporate offshore. A husband and wife who net $200,000, could pay a $30,000 penalty.

  • If you run your foreign business through a US corporation, you will pay payroll taxes. If you don’t have any corporate structure, you will pay self employment tax.

What happens if you make more than $100,000 (single) or $200,000 (both spouses work in the business)? Any excess salary you take out of the business will be taxed at about 32% by the IRS. Still, no payroll or self employment taxes will apply.

If you’re operating through an offshore corporation, you may be eligible to hold those profits in the company and not pay tax on them until they are distributed. That is to say, you can hold income over the FEIE amount as retained earnings in your offshore corporation.  

These retained earnings will basically create a giant retirement account or security blanket. Like money contributed to an IRA, this cash is untaxed until you take it out of the corporation. Unlike an IRA, there are no rules or age requirements forcing distributions.

So, if you want to stop paying payroll taxes and self employment taxes, move out of the United States, qualify for the FEIE, and operate your business through an offshore corporation.

For help on setting up a tax compliant structure, please contact me at info@premieroffshore.com or call us at (619) 483-1708. I will be happy to assist you to set up offshore.

money management accept client funds
Christian Reeves

Offshore Money Management Business: How to Accept Client Funds and Deposits

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If you want to receive client funds into your offshore account, you must have a license or set up a specially designed offshore structure. Whether you’re raising money or managing money, if you’re not the owner of the cash in your offshore bank account, you will need an offshore money management license.  In this article, I will describe how to accept client funds and deposits offshore.

First, let me explain what I mean by client funds. It’s money that doesn’t belong to you, the owner of the offshore company. The most common examples of “other people’s money” in offshore accounts are brokerage firms, FX or Bitcoin exchanges, and anyone who manages or invests money for other people.

This does not include income from selling a product or a service. Nor does it include money invested by shareholders of the offshore company. So long as those shareholders are disclosed and provide due diligence documents to the bank, and you’re operating a business, not an investment pool, the account will be in compliance.

I should point out that most offshore banks will limit the number of shareholders… not for legal reasons, but for practical ones. No bank will want to put in the time and effort to research 50 shareholders investing $5,000 each. That doesn’t make economic sense for a bank. In most cases, you will be limited to 2 to 5 shareholders per offshore company.

Also, even if all of your shareholders are approved, no offshore bank will allow you to operate a money management business without a license. You can’t combine client money into a pool and invest it for their benefit, even if they’re all shareholders of the corporation.

With that in mind, here’s how to accept client money as an offshore investment advisor.

Power of Attorney Model

In my opinion, the most efficient offshore solution for private wealth managers is the Power of Attorney model. I’ve seen the POA model work well for investment advisors with over 2,500 clients, all with managed accounts in Switzerland, and for smaller firms with accounts in Asia and the Caribbean.

You simply form an offshore company for each and every client. That offshore company is in the name of the owner (your client) and opens an account at the bank you wish to trade through. Then the client gives you (the investment advisor) a Power of Attorney over his or her company’s bank account.

With that Power of Attorney, you can invest the client’s funds per your agreement. You have full control without the need to be licensed as a broker or as a brokerage in the country where you’re trading.

The POA model completely eliminates licensing and regulation issues. It also allows you to bring client money together in an omnibus account or into a hedge fund. When combined with a white label trading platform, available from major international banks, you will present a solid image and back office to your clients.

The limitation of the POA model for managing client funds is obvious – the cost. You will need to form a separate LLC or corporation for every client and go through the account opening process at your trading bank for each.

Depending on your jurisdiction, an offshore company might cost $2,000 to $3,500 to setup and $850 per year to maintain. This cost is typically borne by the trader, so this model only makes sense for those managing larger accounts.

Bottom line: if you want to open accounts at major banks in Europe without setting up a fully licensed brokerage, the POA model is the way to go.

Bank License

Let’s jump from the easiest and most efficient option to manage client money offshore to the most complex and burdensome. If you want to go big into offshore, consider forming a fully licensed and regulated offshore bank.

An offshore banking license from a country like Dominica, St. Lucia, or Belize might cost $70,000 to $300,000+ and require capital of $1 million to $5 million. In addition, you will need a solid board of directors, 5 year business plan, an office with employees on the island, and licensing will take 6 to 16 months to complete.

Once you have your bank license, you will need a correspondent bank account. As no bank will bother to open a correspondent account for a bank with only $1 million in its coffers, you will need significantly more capital at this stage.

There’s one interesting hybrid license available to U.S. investment managers. You can form an “offshore” bank in the U.S. territory of Puerto Rico with only $550,000 in capital. U.S. Federal laws apply on Puerto Rico, but U.S. tax laws do not. This allows you to operate a bank from the island and pay only 4% in corporate income tax.

For more on Puerto Rico’s offshore banking statute, checkout: Lowest Cost Offshore Bank License is Puerto Rico.

For more information on offshore bank licenses in general, please review my articles below.

Brokerage License

Brokerage licenses are available from a number of jurisdictions. The lowest cost and capital requirements are in Belize, Anguilla, St. Lucia, Nevis, Seychelles and St. Vincent. The top offshore jurisdictions are Panama, Cayman and BVI.

The cost to secure a brokerage license in Belize is around $35,000 and the capital required is $50,000 to $150,000 depending on a number of factors.

Licenses from the countries above do not require you pass an exam or receive a personal license (like a Series 7). The corporate brokerage license will require you demonstrate proficiency and standing in the industry, but not in your country of licensure.

Before selecting a jurisdiction for an offshore brokerage, a review of local rules should be undertaken to ensure your client base is compatible with FATCA and other island requirements.

Fund License

The next level down from a brokerage license would be a licensed or registered hedge fund. The best jurisdictions for a fund are Cayman and BVI, but licenses are also available from Nevis and Belize.

There are four options for an offshore fund in Cayman:

  1. You can form a licensed fund, involving a rigorous investigation by the Monetary Authority of the fund documentation and promoters. These are rare (about 10% of Cayman funds) and allow you to accept investments of any size.
  2. You can form a registered fund, which requires only a form setting out the particulars of the fund, together with a copy of the offering document and consent letters from the Cayman licensed auditor and Cayman licensed administrator. This is available to funds that require a minimum initial investment per investor of US$100,000. The majority of funds in the Cayman Islands are registered funds.
  3. You can form an administered fund if you will have 15 or more investors. To be approved as an administered fund, you must have a Cayman fund administrator providing your principal office. The regulatory responsibility (and, thus the risk and liability) for the administered fund, which has more than 15 investors and which is not licensed or registered, is placed largely in the hands of a Cayman licensed fund administrator.
  4. You can form a non reported fund in Cayman if you have 14 or fewer investors. Cayman will allow you to form a company and launch a fund without much regulation or oversight. Once you reach 14 investors (call it a proof of concept), you’ll need to step up to an administered, registered or licensed fund.

To set up a Cayman licensed or regulated fund, one would first form a Cayman company, then open a Cayman office or have a local registered office, and then file an application with the government. In order to be approved, the manager must have a net worth of at least US$500,000 and the manager and prove himself competent as a based on past work experience. The application process can take 3 to 6 months.

Most of the funds we set up are master / feeder structures for U.S. and international investors. Note that tax preferred investors, such as offshore IRA LLCs, come in through the offshore feeder.  

For more on master / feeder funds, please contact me at info@premieroffshore.com for a confidential consultation.

Licensed but not Regulated Offshore Entities

In addition to funds, the Cayman Islands offers a licensed but not regulated option for FX and BitCoin firms. If you’re in the currency exchange or money transmission business, you might find Cayman one of the most marketable options… a jurisdictions that your clients will be comfortable with.

For a licensed Forex Brokerage operating in the Cayman Islands, see: Xenia.ky

For a licensed and regulated brokerage firm in the Cayman Islands, see: OneTRADEx.com

Note that, if you’re going to run a full-service brokerage, you must be a regulated entity. The licensed but unregulated option is available to FX and Bitcoin operators.

Another licensed but unregulated entity is a Panama Financial Services Company. This structure can be used to hold third-party funds or to operate an FX or Bitcoin business.

These structures are popular for holding client funds on behalf of a regulated entity from another jurisdiction. For example, you want to manage client money in Panama on behalf of your bank or brokerage licensed in Dominica. This is a way to outsource your investment management activities to a low-cost jurisdiction like Panama without setting up a full brokerage.

A Panama Financial Services Company is a cost-effective structure to accept client funds as an offshore money manager. Compliance is light because Bitcoin and FX are regulated by the Ministry of Commerce and Industry and not the Banking Commission.

The following activities require a banking or brokerage license in Panama, and thus may not be offered through a Panama Financial Services Company:

  • Securities broker-dealer activities including investment funds, managed trading etc.
  • Savings and Loan (financiera)
  • Fiduciary (trust company) services
  • Any banking services including credit and debit cards
  • Cash money transmittal services or money exchange (e.g. bureau de change)

For an example of a BitCoin exchange operating in Panama under this license, see: Crypto Capital

Belize Licensing Options

You can generally expect Belize to be the lowest cost reputable jurisdiction for licensed businesses. Licenses available in Belize include:

  • International money lending license
  • Money brokering services
  • Money transmission services
  • Money exchange services
  • Mutual and hedge funds
  • International insurance services
  • Brokerage, consultancy, and advisory services
  • Foreign exchange services
  • Payment processing services
  • International safe custody services
  • International banking license
  • Captive banking license
  • General banking license

For a list of applicable legislation, see: International Financial Services Commission, Belize

Conclusion

I hope you have found this article on how to accept client funds and deposits in an offshore money management business to be helpful. For more information on how to setup an offshore investment management firm, please contact me at info@premieroffshore.com or call us at (619) 483-1708.

Barrons Interview
Christian Reeves

Barron’s Interview: Top 5 Second Passports for 2017

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Dear Readers,

My interview with Barron’s was published this morning. You can find it here:

Top Five Countries for Secondary Citizenship

And here are links to detailed posts on the countries that made my top 5 list for 2017:

  1. Dominica (best value)
  2. St. Lucia (best investment option)
  3. Malta (when money’s no object)
  4. Austria (the gold standard, I will publish on this one shortly)
  5. Dominican Republic (best low cost backup passport)

Feel free to contact me at info@premieroffshore.com or call us at (619) 483-1708 with any questions on second passports. We will be happy to work with you to find the best program and negotiate your citizenship.

Best Regards,

Christian Reeves

Publisher, PremierOffshore.com

second passport from the dominican republic
Christian Reeves

The Lowest Cost Second Passport is from the Dominican Republic

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The lowest cost second passport is from the Dominican Republic… period. The program from the Dominican Republic is a fraction of the cost of competitors like St. Kitts, Dominica, St. Lucia, and Malta.

If you’re looking for a low cost citizenship option, take a look at the Dominican Republic. If you want to maximize the value of the U.S. Foreign Earned Income Exclusion, or improve your asset protection and banking options, a second passport from the Dominican Republic might be the way to go.

Note that this article describes a second passport from the Dominican Republic and not Dominica. Dominica has a strong passport which is available for purchase for about $140,000. For more, see: A Second Passport from Dominica is the Best Value in the Caribbean

I should point out that Dominica and Dominican Republic are not direct competitors. The uses and benefits of a DR passport are very different from those of Dominica or the European Union passports we offer (such as Malta which requires an investment of $1.2 million).

Who the Dominican Republic second passport program is for…

Here’s how to get a low cost second passport from the Dominican Republic in about 8 months from the date your residency is approved.

A second passport from the Dominican Republic is for those looking to diversify their current citizenship. It’s for citizens of top tier countries, such as the United States, Canada, United Kingdom, European Union, Japan, Australia, New Zealand, etc. Those who already have a strong passport and want a supporting travel and citizenship document.

If you’re concerned with the state of affairs in your home country, and want a hedge against country risk, consider a second passport from the Dominican Republic.

If you want to have a second passport in hand in the event that you decide to expatriate from the United States, think about the Dominican Republic.

If you want a smooth transition or landing spot should you pull the ripcord on your exit strategy, having a second passport is key.

If you’d like to invest and transact in private, a second passport from the Dominican Republic will help.

If you’re a U.S. citizen and concerned with the IRS or another government agency confiscating your passport, you must have a second passport in hand before trouble comes. Keep in mind that a U.S. passport is not a right, it’s a privilege bestowed upon us by our government. Your U.S. passport can be revoked for any reason at any time.

For more on how and why the U.S. can revoke your passport, see;

The bottom line is this: if you’re a citizen of a top tier country, and want the privacy, and security of a second passport, the lowest cost option is the Dominican Republic.

Who the Dominican Republic second passport program is NOT for…

The second passport program of the Dominican Republic is not for those who need to upgrade their passport. If you’re looking for a passport with more visa free travel options, the DR is not for you.

A passport from the Dominican Republic gets  you visa free or visa on arrival access to only 54 countries and territories, ranking it 83rd in the world. Here is a list of visa free countries.

By comparison, a passport from China gives you access to 50 countries and a passport from India gets you access to 52 countries. There is little benefit to persons of these countries in buying a second passport from the Dominican Republic

Citizens of China and India are the most likely to want to upgrade their passports rather than diversify as Americans and Europeans do. For more on upgrading your passport, see: 10 Best Second Passports and Citizenship by Investment Programs For 2016

The lowest cost passport upgrade is Dominica at about $170,000 for a person from China and India (compared to about $140,000 for a U.S. citizen). You’ll receive your passport from Dominica in about 90 days.

The lowest cost residency program for Chinese and Indian nationals is Panama, which requires an investment of $80,000. You can apply for citizenship and a passport after 5 years of residency. This passport gets you visa free travel to 127 countries, including all of the European Union and the Schengen Region.

Citizens of China, India, and other restricted nationalities can apply for a passport from the Dominican Republic. I’m not suggesting you are ineligible… my point is that a DR passport won’t be a major upgrade to your current passport.

Process to obtain a second passport from the Dominican Republic

There are two second passport programs available from the Dominican Republic. The fast track investor program and the fast track retiree / foreign passive income option. Both will get you a passport within 8 months of your becoming a permanent resident.  

Fast Track Investment Option: Start a business in the Dominican Republic with an investment of $200,000 or deposit $200,000 into a bank in the Dominican Republic (typically a CD which will provide a nice rate of return).

For the business option, all you need to do is form a corporation and deposit the capital into a local bank. There is no requirement to hire employees, operate the business, or pay taxes in the DR.

Your $200,000 must remain in the corporate account, or in your CD, for a minimum of 3 years. Some local banks offer accounts in US Dollars, Euros, the Dominican Peso (which is the local currency)

If you change your mind, you may withdraw your money from the Dominican Republic at any time. In that case, your residency and citizenship application will be cancelled.

  • Early withdrawal penalties may apply to CDs or other long term investments. If you perceive risk in the DR banking system, and want immediate access to your capital throughout the application process, hold it in a corporate checking account.

Most applications for citizenship under this fast track program are completed within 8 months of your residency being approved. The timeline of the corporate option is as follows:

  1. We form a Limited Liability Company for you in the Dominican Republic. Typically completed in one week.
  2. You travel to the Dominican Republic to open the bank account with our assistance. We suggest you stay a minimum of 3 nights on the island.
  3. You deposit the $200,000.00 into your corporate bank account and receive a confirmation letter. Note that you are the only signer on this account and the funds are always under your control. Typical processing time is 5 business days.
    Reporting the investment and filing various documents with the government. This takes 30 to 40 days.
  4. You provide us the certified and apostilled documents listed below and return to the Dominican Republic for a medical exam. This can be completed in one day.
  5. We prepare and file your permanent residency application, which requires about 30 days. In most cases, your permanent residency will be approved in 2 to 4 months.
  6. You travel to the Dominican Republic to receive your permanent residency documents and photo ID.
  7. Once you have your residency card in hand, you must wait for 6 months before you can apply for Citizenship. Typical processing time of these citizenship and passport applications is 60 to 90 days. You will need to travel to the Dominican Republic to receive your passport.

If you’re able to travel as soon as each step is completed, and you provide the required documents in a timely manner, we can complete your citizenship application in 8 to 10 months after you receive your residency card, depending on your availability.

The only timeline that’s fixed by statute is the 6 month wait between receipt of your permanent residency card and filing for citizenship.

Retiree / Foreign Passive Income Option:  Retirees are those with passive income from retirement accounts. Passive income applicants are those with rental properties, dividends, foreign bank deposits (from banks outside of the Dominican Republic), investment returns from foreign companies, and other forms of passive income which has been earned over 5 consecutive years.

Retirees must show income from a pension or retirement plan of $1,500 per month plus $250 for each dependent. There is no minimum age requirement to be considered a “retiree.” So long as you have a pension plan sending you regular payments, you will qualify.

Passive income applicants must show a minimum fixed monthly income of $2,000 plus $250 for each dependent.

Dependents include your spouse and any children under 18 years of age. College students who can prove they are dependent upon you for support may also be included in your application.

The typical processing time for a retiree / passive investor application is 8 months after you have your permanent residency card in hand.

Documents to Become a Resident of the Dominican Republic

We will need the following documents from each applicant to complete your residency and second passport package for the Dominican Republic.

  1. One questionnaire per family unit, a notarized copy of each applicant’s passport, and a notarized copy of a utility bill showing the primary applicant’s name and home address.
    1. A family unit is the primary applicant, your spouse, and your dependent children under 18 years of age. Full time college students who are dependent on you for support may also be included.
  2. A complete copy of each applicant’s passport (every page, including blank pages). Each passport should have 4 months of validity remaining. If less, you should renew before applying to the Dominican Republic.
  3. A government issued birth certificate notarized and apostilled in your country, or at the nearest Dominican Consulate. This document must be translated to Spanish and the translation also must be certified.
  4. Government issued marriage and divorce as applicable. These are to be translated into Spanish, certified and apostilled.
  5. Resume or biography for the primary applicant. A resume or bio from your spouse will also be helpful. There is no specific format, just something that gives the reader an idea of your education, work history, and some interesting facts about you.
  6. If applying as a retiree, proof of your monthly pension translated to Spanish and certified by the Dominican Consulate and at the Ministry of Foreign Affairs of the Dominican Republic.
  7. If applying as a passive investor, proof of such income over the last 5 years translated to Spanish and certified by the Dominican Consulate and at the Ministry of Foreign Affairs of the Dominican Republic.
    1. For example, a copy of the fixed income contract/certificate of deposit will be accepted.
  8. If applying as a corporation, various corporate documents to be certified by a local notary and authenticated at the Attorney General’s Office. A
  9. Police clearance report or FBI background report showing no criminal record. This should come from your home country. If you have lived abroad for 5 years or more, this should come from your country of residence.
    1. U.S. citizens, click here for information on obtaining an FBI clearance report.
  10. If you have lived in the Dominican Republic for 30 days or more (for example, during the residency period but before applying for citizenship), each applicant 16 years of age and older should provide a Certificate of Good Conduct by the Dominican authorities.
  11. Each applicant over 16 years of age is required to provide 9 passport photos (6 front pictures and 3 right profile). For children under 16, 5 passport photos are required (3 front and 2 right profile). Pictures should be 2”x2”, against a white background, and accessories such as earrings or sunglasses are not permitted

From time to time, the government might ask for additional or supporting documents. You should begin collecting these documents after you submit the questionnaire. The police report or FBI report can take months to complete. If you plan to use the fast track or expedited fast track program, start on these ASAP.

Costs of Residency and a Second Passport in the Dominican Republic

The cost for a single applicant from the US, EU, UK, Canada, or a similar country is $35,000. The cost for a husband and wife is $45,000. Each dependent will add about $3,300, but fees will vary based on age and history.

Fees for those from restricted countries, such as China, India, Pakistan, African nations, etc. will vary from case to case. The average has been an additional processing and due diligence fee of $10.000 per adult applicant. So, a single applicant would be $55,000 and a husband and wife would be $65,000 on average.

The fees listed above include both your residency and citizenship. That is to say, they the include filing and management of your application throughout the program until you have your second passport from the Dominican Republic in hand. They also include all government and other costs.

The government of the Dominican Republic is planning to add one or two investment options to it’s second passport program in the coming months. While we don’t have any details yet, I expect they’ll be based around government bonds and green reforestation programs.

For example, it might be possible to invest $150,000 in teak and receive residency and a second passport in exchange. Alternatively, you might be allowed in invest $250,000 in government bonds for 5 years and become a citizen after 6 months.

No matter what changes come down, the lowest cost options will be those described above. If you have a pension or passive income, you can buy a passport from the Dominican Republic for $35,000. If you don’t have a consistent cash flow, you can deposit $200,000 and qualify for a second passport.

Second Passport Scams from the Dominican Republic

A number of countries have been the targets of passport scam artists. I’ve seen scams from Panama, Mexico, Antigua, Paraguay, Comoros, and the Dominican Republic.  

The program we are offering was signed into law in 2014 and became active in 2015. Any website promoting a DR passport before this date is a scam. Only a formal program, founded in the law, will guarantee you a second passport.

Likewise, any website promoting an “instant passport” from the Dominican Republic is a scam. All legal programs require you become a resident for at least 6 months before you apply for citizenship. There is no way to expedite or pay a fee to circumvent this requirement.

Before publishing on this low cost second passport offering from the Dominican Republic, I did a great deal of research. I made multiple trips to the island, met with lawyers, promoters, and government officers and cabinet members at all levels.

Still not satisfied, I reviewed the files of 42 completed applications and spoke with many of the investors over the phone. In this way, I was able to confirm that each and every applicant has been approved and had received their passport after the statutory waiting period.

This is to say, I’ve been aware of the DR program for many months now. I did not write it up until I did my of research and had followed over 40 cases from start to finish. Only then did I feel comfortable bringing this to my readers.

I’m now 100% confident in the second passport program offered by the Dominican Republic.

Contact Us

Please contact me for more information on the Dominican Republic second passport program. We will be happy to work with you to gain residency and a second passport from the DR. All consultations are confidential. You can reach me directly at info@premieroffshore.com or at (619) 483-1708.

offshore bank license in dominica
Christian Reeves

How to get an Offshore Bank License in Dominica

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The most active low cost offshore bank license jurisdiction is Dominica. If you’re in the process of selecting a country to incorporate and license an offshore bank, give the Caribbean Island of Dominica a look.

You’ll find that the capital required for a bank license in Dominica is a fraction of it’s competitors. You will also find that the government and regulators want you to succeed… that they’ll work with you to build your brand and your bank… the opposite of what you’ll experience in competing financial centers like Belize, Panama and Cayman.

  • This article is about Dominica, one of the Windward Islands, the southern group of the Lesser Antilles in the West Indies, and a leader in the financial services industry. Please don’t confuse Dominica with the Dominican Republic.

An offshore bank license from Dominica will allow you to offer all manner of banking services. This includes deposit taking, wealth management, lending, credit cards, secured cards, debit cards, certificates of deposits, tax and business planning, currency exchange, and correspondent banking services.

The only limitation on an offshore bank licensed in Dominica is that it’s prohibited from offering services to locals. You may not sell banking services to residents or citizens of Dominica.

An offshore bank in Dominica might also offer company formation, asset protection structures, business and tax planning, tax efficient loans for corporations holding retained earnings in your bank, and wealth management. By maximizing the tax and privacy benefits of Dominica, you might leverage an offshore bank license several fold.

As an enticement to bring jobs and grow the financial sector, you (the owner of an offshore bank in Dominica) may qualify for a second passport or citizenship in the country. Shareholder can apply for immediate citizenship and a second passport. In most cases, the cost will be $130,000 to $180,000 for a single applicant.

An offshore banking license from Dominica has the lowest capital requirement of any offshore jurisdiction. While Belize and others are demanding $5 million, Dominica will allow you to license a bank with only $1 million in capital.

With $1 million in capital, you will get your bank license. You’ll then need to search out a correspondent banking partner.  It will be challenging to find such a partner for a small bank with minimal capitalization. Thus, many apply for the license with $1 million and then raise more money after the provisional license is granted.

Technically, the lowest capital requirement is the U.S. territory of Puerto Rico. That bank license can be had with $550,000 in capital. While Puerto Rico is “offshore” for tax purposes, it’s “onshore” for other Federal agencies.

Dominica is also the lowest cost license to procure. In fact, the cost of Dominica is a fraction of competitors such as Cayman and Belize. Assuming you have a business plan and a board of directors in place, a bank license from Dominica should cost around $100,000, including government and legal fees.

  • This estimate does not include due diligence fees on shareholders and directors. These will vary greatly depending on your country of citizenship. The typical range is $3,000 to $10,000 per person. The average is $7,500 for the primary applicant.


This would compare to $300,000+ in the Cayman Islands. The annual license fee alone in Cayman is about $85,000 compared to only $8,000 in Dominica and $5,000 in Puerto Rico.

In Cayman and Dominica, licensed banks are exempt from tax on their net income. The tax rate in Puerto Rico is 4% if you have at least 5 employees in the territory. If you don’t qualify for the Puerto Rico tax holiday, income will be taxed at about 35%.

Your offshore bank in Dominica will require an office, registered agent, and employees on the island. Compliance (FATCA, OECD, DAC, AML, etc.), account openings, information technology and security, and some basic services should be provided in Dominica.

It will be possible to manage bank assets outside of Dominica. For example, you might form a Financial Services Company in Panama as the management agent. This will allow you to work around some of the correspondent banking issues and manage client capital in a larger jurisdiction.

The typical annual fee for a registered agent in Dominica is $10,000. They will be your liaison to the government, agent for service, and local representative of the bank on the island.

In addition to the agent, employees, and office overhead, you will need to retain an audit and accounting firm to prepare quarterly reports to the government. The average cost of these services is $20,000, though fees vary widely from provider to provider.

The final major expense will be your banking software. We recommend Mobile Earth and
Temenos T24 Retail Banking Software Systems for Dominica. I won’t estimate prices here because of the variety of configurations available. Feel free to contact them directly for a quote.

Because of our long history and relationships on Dominica, we offer a turn-key offshore bank license in this jurisdiction. Everything required to be up and running in 3 to 6 months: government negotiations, board of directors, business plan, financial projections, office space, employees, etc.

If you’re considering forming an offshore bank, I suggest you take a look at Dominica. It’s the lowest cost and most efficient jurisdiction actively issuing licenses.

I hope you’ve found this article on how to get an offshore bank license in Dominica to be helpful. Please contact me at info@premieroffshore.com or call (619) 483-1708 for a confidential consultation on incorporating an international bank.

For more information on offshore banking licenses, please review my articles below.