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The Offshore 1031 Exchange – Pay Zero US Tax on Your Foreign Real Estate Sale

09/14/2015/in Articles/by Christian Reeves

Are you planning to sell your offshore rental or business property? Are you thinking about buying a similar property abroad (anywhere other than in the United States)? Then you need to understand the offshore 1031 exchange for foreign real estate transactions.

Here are the basics of the offshore real estate tax:

If you are a US citizen and sell an offshore property, you will probably owe the US IRS. It doesn’t matter that you have not lived in America for years or that the money never touches the US. You will often owe Uncle Sam a big piece of the pie.

We Americans are taxed on our worldwide income no matter where we live. We expats can use the Foreign Earned Income Exclusion to reduce or eliminate US tax on a salary or income from an active business. But the FEIE does not apply to passive investments or capital gains from real estate.

The only savings available for capital gains is the Foreign Tax Credit. You get a dollar for dollar credit with the IRS for any taxes paid to the country where the property is located.

If the capital gains rate in your country is equal to or higher than the top US rate of about 23.8% for long term gains (including the 3.8% Obamacare tax) and 38.6% for shot term (max ordinary rate), you will probably not pay taxes on the transaction to the IRS. You still need to report the sale on Schedule D and take the Foreign Tax credit, but you shouldn’t owe any tax.

— for the rest of this post, I will focus on short term capital gains from real estate.

Because the US has one of the highest capital gains tax rates, most clients get a nasty surprise on their US return when they sell an offshore real estate property. They get to pay both the local tax rate and then 10% or so to the IRS.

Many have been hit hard by the IRS for their foreign real estate transactions. For example, the London Mayor Boris Johnson recently bowed to the IRS collection machine.

Of the OECD countries, only Denmark (42%), France (34.4%), Finland (33%), Ireland (33%), and Sweden (30%) have higher rates. The average capital gain rate in OECD countries is 18.4%. What’s more, nine OECD countries do not tax capital gains at all.

Here’s an example of selling a property in a country with a low capital gains rate:

Let’s say you bought a property in Colombia 5 years ago and will now sell it at a gain of $100,000. You’ll pay Colombian capital gains tax at 10%. You will then receive a credit for foreign taxes paid to Colombia of $10,000 on your US return. Because the US rate is 13.8% higher than the Colombian rate, you’ll also pay $13,800 to the IRS for the right to carry a US passport.

For more detail on US taxation of foreign real estate transactions, please read: Taxation of Foreign Real Estate Investments.

The Offshore 1031 Exchange

Here’s how you can use the offshore 1031 exchange to pay zero US tax on your foreign real estate transaction. There are many rules to follow, but we take care of most of the compliance and documentation items for you.

Here’s what you must do to ensure that the transaction qualifies as an offshore 1031 exchange after you sell your foreign real estate property:

You must exchange your foreign property for another foreign property or properties. This means you can exchange your rental property in Panama for an office building in Colombia or France if you like. You may not exchange your foreign property for a US property.

You must identify the exchange property or properties to us in writing within 45 days of closing on your sale property. We require a dated and notarized letter to ensure compliance.

You must close on the exchange property within 180 days of the sale of your property. If the cash remains in the custodial account for even one day beyond the 180 day limit, the entire transaction is void, all of the tax benefits are lost, and stiff penalties will apply.

You may not receive any cash from the transaction until after the purchase of the exchange property has been completed. All cash must be held by a qualified intermediary until the entire transaction is completed. * See comments below for more information.

— A partial offshore 1031 exchange is acceptable. You are not required to exchange your sale property for one of equal or greater value. You may exchange it for one or more properties that total to less than the sale price. Of course, this will reduce the tax benefit of the offshore 1031 exchange, but it is permissible under the rules.

— Even if you are going to purchase an exchange property for less than the sale property, you can’t receive any cash until the entire transaction is completed.

Surprisingly, you may exchange your property with a related party such as a family member, business associate or relative. If you set up an offshore 1031 exchange with a related party, the only limitation is that the property may not be sold for two years. In other words, a 1031 exchange with a related party adds the requirement that you must hold the exchanged property for at least two years.

The person who sells the property must be the same person who buys the exchange property. So, a husband can’t sell a property in Panama and his wife buy a like-kind property in Colombia. If H sells the property, H must buy the exchange property.

— However, you may use a different offshore company to by the exchange property. This can be a very important distinction when structuring an offshore 1031 exchange because of the local tax rules around holding title in a foreign company.

— The offshore company must to structured as a disregarded entity for US tax purposes.

— For example, if H sells a property in Panama, he may buy a property in Colombia in his name or in the name of an offshore company structured as a disregarded entity.

* There are three ways to deal with the cash issue in an offshore 1031 transaction as described in #4 above (referred to as the constructive receipt rule).

You can hire any of the US based 1031 exchange providers. This will require your buyer to wire funds to a US intermediary rather than you. It also means that all of the cash in the transaction will be held in a US bank, in the name of the US firm, and subject to US government inspection.

As most expats have no interest in placing the transaction in the hands of Uncle Sam, and no non-US buyer wants anything to do with a US based 1031 exchange, here are you other options.

The most common is to bring in a licensed and bonded offshore trust company to act as the intermediary. If you would like to use a licensed provider in Belize for your transaction, I will be happy to introduce you. Note that the 1031 exchange can be processed through any licensed provider and need not be completed in your country of sale or exchange.

The second option is to ask a bank in your country to create a three way trust account. Funds from the sale will be deposited in this trust account in your name. In order to release the funds, three signatures will be required: 1) a professional offshore 1031 exchange intermediary, 2) yours, and 3) the bank officer.

— This option requires a minimum of three signatures to avoid the constructive receipt rules of IRC section 1031 subsection g(6). Therefore, cooperation of the banker is typically required. None of the signatures may be related to you in any way. They may not be a family member, your attorney, your accountant or tax preparer, or anyone who has done work for you in the last two years.

Option 1 is common when escrow is the usual way to transfer real estate in your country and when the transaction is denominated is US dollars.

Option 2 is used in countries where escrow is not common and the buyer expects to pay the seller directly. It is also used when the transaction is denominated in the local currency… especially a volatile currency.

Documents Required for an Offshore 1031 Exchange

When hired to manage an offshore 1031 exchange, we typically prepare the follow documents:

The Exchange Agreement: A contract between you and the Qualified Intermediary that sets out the rules and guidelines. This must be followed to the letter in order to complete the 1031 exchange.

Notice of identification: A notarized legal notice must be sent from you to the Qualified Intermediary advising him that you have identified a property. The purpose of the legal notice is to prove you identified the replacement property within the required 45 days time frame.

An Assignment: An assignment of the sale to the Qualified Intermediary is required. This is in necessary because, in theory, the Qualified Intermediary steps into your shoes and sells the property.

Purchase Notice: A notice to the party on the other side of the transaction advising them that the transaction is indeed an offshore 1031 exchange. The purpose of notification to the other party is to prove, without doubt, that the 1031 exchange was in place at the closing.

Who Should Consider an Offshore 1031 Exchange?

Let me start with who should not use an offshore 1031 exchange. If your local capital gains rate is equal to or higher than the US rate, there is no benefit to an offshore 1031 exchange. The offshore 1031 exchange does not reduce your local tax, only your US taxes. If you pay 23.8% or more in local capital gains taxes, your US taxes should be near zero considering the Foreign Tax Credit.

If all parties to the transaction are US persons, and you don’t mind sending your cash to the US, then an offshore 1031 exchange might not be for you. A custom 1031 exchange completed offshore will be more expensive than one done by a 1031 exchange mill in the US.

Next, I suggest the gain on your foreign real estate sale should be at least $50,000 before you take on the costs and effort of an offshore 1031 exchange. If the gain is less than $50,000, the costs will take up a significant portion of the tax benefits.

This means that anyone:

who is selling a property in a country with a low or zero capital gains rate,
who will net at least $50,000 from the transaction,
who intends to purchase a similar property within 180 days,
and who would like to maintain some modicum of privacy offshore, should consider an offshore 1031 exchange.

December 2019 Update – The above article is for information purposes only. We do not offer 1031 exchange services. I’m not aware of any firm providing global 1031 services.

Cum să vizionezi videoclipuri de sex gratuit

09/09/2015/in Articles/by design

Pentru aceia dintre voi care sunt în industria divertismentului pentru adulți, este posibil să fi auzit de versiunile „hd” (înaltă definiție) și „x” (x evaluate) ale filmelor pentru adulți.

Diferența dintre cele două este că unul trebuie să fie achiziționat de o companie, iar celălalt poate fi descărcat gratuit de pe Internet. Așadar, cum se uită cineva la videoclipuri de sex „adulți”?

Ei bine, cea mai bună opțiune este să vă folosiți computerul sau laptopul. Descărcarea videoclipurilor de pe site-uri web necesită compatibilitate, deoarece fiecare computer are specificații diferite. Dacă utilizați un computer Windows, cea mai bună versiune de urmărit va fi în definiție standard sau „înaltă definiție”. Unii oameni nu le place să se uite la filme în definiție standard, deoarece cred că este prea moale sau chiar plictisitor.

Dar dacă ești un iubitor de videoclipuri de sex HD, aceasta este cea mai bună alegere pentru tine. Este disponibil în diverse formate și anume: DivX, XviD și DVD. Puteți chiar să descărcați mai multe copii gratuite pentru a le viziona de câte ori doriți. De asemenea, este disponibil în toate limbile, cu excepția spaniolei. Dacă vă aflați în alte țări, există canale locale care difuzează în HD.

O altă opțiune este să vizitați site-uri web plătite. Există două moduri de a viziona emisiuni TV gratuite la înaltă definiție: să le vizionați pe computer sau laptop și să le vizionați pe site-uri web cu vizionare cu plată. Aceste site-uri web necesită calitatea de membru și plata unei taxe lunare. Din fericire, majoritatea site-urilor porno oferă ambele opțiuni.

Pentru a alege cea mai bună opțiune, este important să consultați lista de site-uri web disponibile. Aici cercetarea poate da roade cu adevărat. Ar fi foarte neînțelept să cheltuiți bani doar pentru a descoperi că site-urile web nu au nicio calitate bună. S-ar putea să ajungi să cheltuiești mai mult decât trebuie.

Ca și în orice altceva, ar trebui să luați în considerare și ce fel de videoclipuri sexuale vă vor interesa. Puteți viziona fie filmeporno , fie filme intime cu lesbiene și gay. Există și site-uri „mari” care oferă mii de scene. Este posibil să vizionați filme franceze, filme germane și chiar filme japoneze și chinezești. Pentru cuplurile care ar dori ceva fără consimțământ, atunci există chiar site-uri care vă permit să vizionați filme pentru adulți.

Cu atât de multe site-uri web gratuite, de unde știi pe care să le urmărești? Unul dintre cei mai importanți factori este siguranța. Toate videoclipurile pentru adulți sunt produse de companii care au o bună reputație. Ar trebui să te simți în siguranță privindu-le. Puteți căuta recenzii pe diferite site-uri web. De asemenea, poate doriți să cereți părerile prietenilor și/sau celor dragi.

Singurul lucru pe care trebuie să-l rețineți este că ar trebui să fiți întotdeauna precaut atunci când alegeți un videoclip pentru vizionarea pe internet.

Deoarece nu există nicio modalitate de a vedea cu adevărat ce este în orice videoclip gratuit de sex, depinde de judecata dvs. dacă site-ul web merită sau nu cu adevărat timpul dvs. Aceasta înseamnă că ar trebui să citiți politica de confidențialitate și avertismentele de siguranță înainte de a decide să vizionați orice videoclip. Țineți cont de acest lucru și folosiți-vă bunul simț pentru a decide ce site-uri web să vizionați.

Există multe moduri diferite de a viziona videoclipuri sexuale gratuite. Mulți oameni folosesc motoarele de căutare populare precum Google, Yahoo și MSN pentru a căuta noi videoclipuri sexuale. Cu toate acestea, deoarece aceste site-uri își fac videoclipurile disponibile pentru toată lumea, este posibil să nu găsiți exact ceea ce doriți.

Dacă nu te deranjează să folosești alte site-uri care ar putea să nu fie la fel de populare, poți încerca și videoclipuri cu sex pe site-ul tău preferat de întâlniri pentru adulți. Chiar și site-urile de întâlniri online sunt perfecte pentru că de obicei au mii de membri. Atâta timp cât site-ul web vă permite să vizionați videoclipuri cu sex gratuit, veți avea o mulțime de opțiuni de vizionat. S-ar putea să găsiți ceva nou și interesant de urmărit. La urma urmei, cine spune că trebuie să te uiți la videoclipuri de sex pentru a-ți satisface partenerul?

O altă opțiune este plata per vizionare.

Aceasta înseamnă că va trebui să plătiți o taxă mică pentru fiecare videoclip pe care doriți să-l vizionați. Acest lucru va fi probabil mai scump decât vizionarea opțiunii gratuite, dar va fi mai privat și videoclipul nu va fi răspândit. Unii oameni preferă ideea de a plăti pentru ceva ce își doresc. Indiferent dacă alegi opțiunile gratuite sau cu plată pe vizionare, cu siguranță vei putea găsi ceva nou de vizionat.

În cele din urmă, dacă nu poți suporta acele videoclipuri urâte, grafice, poți oricând să vizionezi videoclipuri vechi de sex pe VCR-ul magazinului tău video local. Aceste videoclipuri nu sunt la fel de comune, dar ar trebui să poți găsi cel puțin un film de interes. S-ar putea să nu fie gratuit de vizionat, dar cel puțin nu va trebui să stai printr-un videoclip întreg pe care nu vrei să-l vizionezi.

ma kl hdha aleana’ hawl aljinsiat alearabiat?

09/04/2015/in Articles/by design

alearab hum majmueat earqiat fy alghalb taeish fi alealam alearabii , wayanhadirun aydana min alrueat alruhul aladhin hajaruu ‘iilaa al’aflam al’iibahiat alearabiat wal’aflam aljinsiat suria waleiraqi.

hajaruu ‘iilaa hadhih albaladan fi alqarnayn alssabie walthaamin , hayth ‘asasua mezm albaladat alty sakanuha. khilal alqarn alttasie eashar nasha ‘awal mujtamae earabiin munazam mae qudum altujjar alearab min dual ‘uwrubaa. shahid alqarn alttasie eashar sueud alduwal alearabiat alty ‘ansha’at jamieat alduwal alearabiat walmuasasat almasrifiat al’iislamiat alealamiat.

khilal alqarn alhadi waleishrin , barazat alduwal alearabiat kawahidatan min ‘aqwaa alkianat alsiyasiat fi alealam. ‘ususa alqadat alearab huiatan mutinatan li’umatihim , mae alhirs ealaa ‘an takun jmye ‘ajzayihim radiatan ean tariqat hayatihim maqal rayiysayin fi hadha alsadad hu mafhum al’akhwati. kl juz’ min alwatan alearabii yumin bifikrat al’ukhuat ‘aw al’ukhuat kawnuha mafhum alwahdat ‘aw mafhum almusawat bayn albashr. hunak qawl mathur biallughat alearabiat yaqul “klna ‘iikhiwta”. hadhih alfikrat mufeamatan bialhayat fi althaqafat alearabiat , hayth yufakhir kl earabiin bibaladah.

wamae dhlk , kan mafhum alhuiat alwataniat ‘aqala ttwraan fi albuldan alearabiati. aljinsiat ‘asasiha aldam walays alearaq ‘aw almirath. baed aikhtirae al’islam , ‘asbah mafhum aljinsiat ‘aqwaa bkthyr wala yazal eamlaan mwjhana liljinsiat alearabiati. mundh zaman alnabii muhamad salaa allah ealayh wasalam , kan alearab yuqatilun ghyr alearab wajaealuu ‘anfusahum daymana al’umat al’uwlaa fi nazar jmye al’umm.
alqadiat alrayiysiat almawjudat fi alealam alearabii hi wujud alhawiati. yuhawil alearab ‘iinsha’ mawaqieihim al’iibahit xnxxsexar.com wayafealun dhlk bimuhawalat tadmin aldiyn fiha.

ladayhim rumuzuhum wamuetaqadatuhum wayudeawn aleudwiat fi hadhih al’ashya’i.

wamae dhlk , fahi laysat wahidat mae mabadi eumum ‘arbab ‘aw wahdat alealam. kan mafhum alhuiat mhmana jdana fi eumum arbism. ‘iinah mabda yuahid alearab min jmye ‘anha’ alealam.

hadha maqal rayiysayun fi sharah jawhar alqawmiat alearabiati. yaqum mafhum aljinsiat ealaa fikrat alwahdati. wbhsb hdha almaqal , fa’iin aldawlat alearabiat hi almuzahir alhaqiqiu lil’umat alearabiat wahi fi nfs alwaqt ramaz alwahda. tuadih hadhih almuqalat kdhlk hajat alearab ‘iilaa nizam fidiraliin bdlaan min wujud shakal wahid min ‘ashkal alhukum. yuadih almaqal alrayiysia kdhlk ‘ana alnizam alfidiralia syuzhr alsuwrat alhaqiqiat lamaa satabdu ealayh al’umat ‘iidha kanat hukumatiha qayimat ealaa almabadi alhaqiqiat lilnizam alshaamil.

almaqal alrayiysiu alththalith yatahadath ean al’afkar aldiyniat wajawhar althaqafat alearabiati. wabahsb hdha almaqal , yjb muraeat al’afkar aldiyniat eind altaeamul mae althaqafat alearabiat , fahi juz’ min waqieiha , wala yumkin kasab shay’ min altazahur bikhilaf dhalik. yashrah almaqal alrrabie wal’akhir almashakil alty sayuajihuha alearab baed alaistiqlal.

hadha almaqal ean almawaqie al’iibahiat alearabiat xnxx xvideos hd walhuiat althaqafiat alearabiati. yatahadath ean alhuiat alearabiat biaietibariha aleamil alrayiysii aldhy yuahid alearab min jmye ‘anha’ alealam wabialttali fahi tuhadid wahdatahum alwataniat. min alhaqayiq almaerufat ‘an jmye alduwal alearabiat tuharib bedha albaed lilhifaz ealaa huiataha althaqafiati. yatahadath almaqal alssadis ean mustaqbal alduwal alearabiat wamustawaa altanmiat alty ymkn tawaqueuha fi almustaqbal. wasayuadih kdhlk kayf sayabdu mustaqbal alduwal alearabiati.

tatanawal hadhih almuqalat alhuiat alearabiat walhuiat althaqafiat alearabiati. laqad badhalat qusaraa jahdiun lisharh alwahdat alwataniat alearabiat wakadhalik alwahdat alearabiat bitariqat mantaqiatin. yumkin tawzie hadhih almaqalat mjanana ealaa sabil almithal lilmuasasat altaelimiat wadawr alnashr wamakatib al’akhbar wama fi hukmiha dun ‘iidhn musbiq. ealaa alkitab walsahfiiyn alearab aladhin qad yastakhdimun hdha almaqal lilnashr alta’akud min dhakar almasdar wanashr hdha almaqal ealaa mawqieihim ealaa al’intrnt fi ‘asrae waqt mumkinin.

Belize Residency Program Primer

08/27/2015/in Articles/by Christian Reeves

The Belize residency program is the best available if you want to live in Belize or if you’re on a budget. If you want access to a larger city, to operate a business, eventually gain citizenship, or not be required to live in your country of residence, look to Panama.

If you want to retire to happy and beautiful Belize, this residency program is for you. If you have a passport from a restricted country and can’t afford Panama, look to Belize.

The Belize residency program allows you to live and retire in Belize. If you’re a US citizen, it will help you maximize the value of the Foreign Earned Income Exclusion. Here’s everything you need to know about the Belize residency program.

Basics of the Belize Residency Program

Unlike Panama, the Belize residency program is focused on people who wish to “retire” abroad. But they use the term “retirement” quite liberally. In this context, it means that you have a pension or other type of guaranteed income stream of $2,000 or more per month and are at least 45 years of age.

And the cash doesn’t need to come from an IRA or other traditional retirement scheme. It simply needs to be a guaranteed payment (like an annuity) over a number of years. So, if you’re over 45 years of age, you can purchase an annuity of $2,000 per month and you qualify for the Belize residency program.

Also unlike Panama, Belize isn’t picky on who can qualify for residency. Anyone, no matter what passport you hold, who is 45 years of age or more and has a pension of $2,000+ per month can become a resident of Belize.

The only other limitations are that you must pass a medical check and a background check (no criminal history). They don’t want a repeat of John McAfee!

In Panama, those with US, UK, and EU passports have an easy go of it. Everyone else must pay to play. For a detailed article, see Panama Residency from Restricted Countries.

Another distinction is that the Panama residency program has a path to citizenship. This Belize residency program does not… there is no Belizean second passport at the end of the road.

Remember that the Belize program is meant for those who want to live in the country. So, one of the added benefits is that you can many thousands in taxes and import duty. But I am getting ahead of myself….

Let me tell you a bit more about Belize:

Belize is located at the south eastern tip of Mexico, so a short flight from the US. What draws me to the country is that English is the official language and spoken everywhere. No need to learn a language… no communication problems here.

Belize is the ONLY country in Central America where English is the official language. All business is conducted in English and everyone you come in contact with is fluent. In fact, while I often need my broken Spanish in my home town of San Diego, California, I have never needed it in Belize.

The Belize residency program is a great opportunity because of the many advantages the country has to offer.

First and foremost, cost of living is low.

Second, you can structure your life and business to pay zero taxes in Belize.

Third, because it’s tourist mecca there are tons of attractions, great weather much of the year, a slower but efficient pace of life, friendly people, beautiful beaches, to many islands to count (ok, Belize has 86 islands, but that’s alot!) and the list goes on…

Fourth, the US dollar is accepted as currency in Belize.

Here’s a list of reasons to sign up for the Belize residency program.

The low cost of living in Belize is one of the biggest reasons why one should think of moving to Belize

In Central America Belize is the only English speaking country, as I have already mentioned English is the official language

Real estate can be owned by foreigners (no fancy trusts or 99 year leases as in Mexico)

Easy access from the US and Canada

Being such a friendly country people are drawn by their loving and welcoming nature

There are no strict rules to the title to property owned in Belize, it could be taken individually, jointly or in a corporate name

One receives fee simple title to your property when purchasing in Belize

Financing is also easily available when purchasing property in Belize

Incentives is being offered by the government of the Caribbean to encourage more tourism

The cruise traffic has risen up to 300% in the last 5 years. This might sound like a negative, but a strong economy rises all boats!

Being a British commonwealth country Belize has a long standing tradition and independent judiciary

Belize is very diverse with rainforest, rivers, waterfalls, beaches and also tropical forest

The exchange rate is stable and fixed. US $1 = BZ $2

The waters in Belize is one of the best dive sites in the Hemisphere being the second largest reef in the world

The number of retirees gives opportunity to make friends and being social

Belize Residency Program – Qualified Retired Persons Incentive Program (QRP)

Ok, enough pontificating on why I love Belize. Let’s get back to the Belize residency program.

Anyone, and I mean anyone, that is at least forty five of years of age and can put up a CD earning $2,000 per month, can qualify for the Belize residency program. Just pass a background and medical check and you’re golden.

You will also need to open a bank account in Belize with cash to pay your local bills while living in the country. I typically recommend an account with an opening balance of at least $24,000 (24 months of expenses).

A qualified person can bring along his or her dependents – children who are under 18 years of age or who are person up to the age of twenty three if enrolled in a University. “Dependants” also include your spouse… everyone but the primary applicant is called a dependant.

This program was created for people of means who wish to live in Belize and who can prove a consistent permanent income from abroad with a pension or other form of annuity.

As such, the Belize residency program allows you to bring anything you need to live into the country tax / duty free. This includes cars, boats, planes, and everything necessary to build and outfit a home. If you are planning to live in Belize, the Belize residency program can save you tens of thousands of dollars on import duties alone.

Here’s how it works and how much it costs to get residency in Belize:

The applications are processed by the Belize Tourism Board in collaboration with the Ministry of National Security and the Department of Immigration and Nationality.

We will take you step by step through the Belize residency program. We will complete an application forms, coordinate your visits and medical, make your best claim for residency to the government, etc.

Items we will need are:

Birth and marriage certificates (the latter is only required if you wish to sponsor your spouse),
Copy of police record from current place of residence,
Notarized copy of every page of passport,
Medical certificate proof that shows that you do not carry any transmitted disease such as AIDS,
The items necessary to open a local bank account, like bank reference letters, and
Four front and four side view passport sized photographs.

Proof of income can be in the form of a bank reference letter or a bank statement mentioning the figures to at least be US $2,000 per month receivable as pension or retirement income. Or any financial statement from a financial institution in Belize stating that your account will be generating $2,000 per month.

If you’re an entrepreneur, we can help you structure your business so that you are not paying taxes in Belize. This typically means a corporate structure in another tax free jurisdiction like Panama.

Legal fees to prepare, file and negotiate Belize residency with Premier are $5,950 for the primary applicant and $3,350 for each dependant. Government fees are $1,000 for the primary applicant and $750 for each dependant plus $200 per person for the Belize residency card.

If you are interested in be Belize residency program, please contact me at info@premieroffshore.com. I will be happy to work with you to develop your international plan.

Residency in Panama from Restricted Countries

08/20/2015/in Articles, Latin America, Second Passport/by Christian Reeves

If you are a US or EU citizen, it’s very easy to get residency in Panama. I write about this all the time while singing the praises of Panama’s various visa programs.

For example, the Friendly Nations Visa will allow you to live and operate a business in Panama for about $8,500. Forget investing in overpriced real estate… just pay the fee and you’re golden.

This applies to people holding passports from the following 50 friendly nations:

Great Britain
Germany
Argentina
Australia
Republic of Korea
Austria
Brazil
Belgium
Canada
Spain
USA
France
Finland
Netherlands
Ireland
Japan
Norway
Czech Republic
Switzerland
Singapore
Uruguay
Chile
Sweden
Poland
Hungary
Greece
Portugal
Croatia
Estonia
Lithuania
Latvia
Cyprus
Malta
Serbia
Montenegro
Israel
Denmark
South Africa
New Zealand
Hong Kong
Luxembourg
Liechtenstein
Monaco
Andorra
San Marino
Taiwan
Costa Rica
Mexico
Paraguay

If you’re holding a passport from one of these countries, you’re golden. Pay your fee and move to Panama.

But what about the rest of the world? What if you are not on the friendly nations list? Then get ready to pay to play.

Panama Restricted Countries:

If you are holding a passport from one of the following “restricted” countries, must prove your net worth and jump through all kinds of hoops to get into Panama. And you must find a way in to Panama before you can apply for residency (as a tourist or with a special invitation from an attorney or large corporation).

Afghanistan, Albania, Algeria, Alto Volto, Angola, Armenia, Azerbaijan, Bahrain, Bangladesh, Belarus, Benin, Bhutan, Bosnia, Bulgaria, Burkina Faso, Burma, Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Comoros, Cote d’ivoire, Cuba, Dominican Republic, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, Gambia, Georgia, Ghana, Guinea, Guinea Bissau, India, Indonesia, Iran, Iraq, Jordan, Kazakhstan, Kenya, Kiribati, Kuwait, Kyrgyzstan, Laos, Lebanon, Lesotho, Liberia, Libya, Macedonia, Madagascar, Malaysia, Malawi, Maldives, Mali, Marshall Islands, Mauritania, Mauritius, Micronesia, Moldova, Mongolia, Morocco, Mozambique, Myanmar, Namibia, Nauru, Nepal, Niger, Nigeria, North Korea, Oman, Palau, Palestine, Papua New Guinea, People’s Republic of China, Qatar, Romania, Rwanda, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Slovakia, Slovenia, Solomon Islands, Somalia, South Africa, Sri Lanka, Sudan, Swaziland, Syria, Tanzania, Tajikistan, Togo, Tonga, Tunisia, Turkey, Turkmenistan, Tuvalu, Ukraine, United Arab Emirates Uzbekistan, Vanuatu, Vietnam, Yemen, Zaire, Zambia, and Zimbabwe.

As I said above, you must be in Panama as a tourist or be invited in by a lawyer or business. If you can get a tourist visa, then you can file to amend your status once you are in the country. If you can’t get a visa, then expect to pay for an invitation letter. The going rate is $5,500 per person per letter. So, a family of 4 will need 4 letters (yes, your kids will need an invitation letter).

Fyi… if you have a valid visa for Australia, any European Union country, Canada or the USA, you can usually enter Panama so long as you have a return ticket. Speak with your travel agent before traveling to Panama on a non-Panamanian visa.

When traveling to Panama from a restricted country, you should have a valid visa, passport, minimum of $500, bank statement, travelers check or credit card and a valid onward or return ticket.

So, if you can get into Panama as a tourist you will save some cash on the invitation letter.

Once you’re in, here’s how to gain residency in Panama from a restricted country:

Form a Panama corporation, preferably owned by a Panama Foundation with you as the founder. The corporation will operate a business and the Foundation will serve as your “persona” in the country.
Deposit $200,000 or more in to a personal account held as an 18 month CD. The intent here is to prove you can afford to support yourself while in the country and that you intend to “contribute to the economy of Panama.”
Apply for a change in status and residency. Minimum legal and application fees: $15,250. Processing time 2 to 6 months.

If you are holding a restricted passport and would like to become a resident of Panama, please contact me for more information. Send an email to info@premieroffshore.com or call me directly at (619) 483-1708.

Change to the FBAR Due Date

08/17/2015/in Articles, Offshore Banking, Taxation/by Christian Reeves

The FBAR due date has been changed from June 30 to April 15. If you file an extension for your personal return, you will have until Oct. 15 to submit your FBAR.

Finally the US government has done something which makes sense. This change to the FBAR due date will help new expats big time. Here’s why:

The FBAR was due on June 30 which made no sense. Oh so many newbie expats missed the filing deadline because they assumed the FBAR was due with their tax return. And because most expats file extensions, especially those looking to qualify for the Foreign Earned Income Exclusion using the physical presence test, the June 30 deadline was missed.

Fyi… The FBAR is not filed with your Federal tax return. In fact, it is not filed with the IRS at all. The FBAR is sent to FINCEN or filed through the FINCEN portal online.

But now the FBAR due dates have changed from June 30 to April 15. This means the due date is linked to the due date of your personal income tax return. You still file the return with FINCEN, but it is due on the same date as your personal return

This change to the due date of the FBAR is applicable for taxpayers after December 2015.

With the change in dates of filing of FBAR there has been no change in the filing requirements. The standard rules are as follows:

The minimum amount of $10,000 is required to have in the FinCen 114 (FBAR) account and it should be filed.

Failure to timely file or failure to request for the extension to file the FBAR are subject to extreme penalties.

The Bearer Share Company Hack

06/09/2015/in Articles/by Christian Reeves

Bearer share companies have gone the way of the dodo. Here’s the offshore company hack to create a bearer share company like structure to maximize privacy and protection.

First, a word on bearer share companies. Back in the day, bearer share corporations allowed for anonymous ownership of assets and bank accounts. Whoever held the shares owned the offshore company. No public record of ownership was required.

Of course, the U.S. government doesn’t like anonymity… privacy in financial dealings allows U.S. citizens to cut out Uncle when it comes tax time… and the beast must be fed.

The U.S. launched an attack on offshore banking and bearer share companies in 2003 with the Patriot Act and has been hard at work stripping away financial freedom ever since. By 2015, all offshore banks have fallen in line and bearer share companies are no more.

Here’s the offshore company bearer share hack.

Let’s say you’re a law abiding citizen who wants to maximize the privacy and protection of your offshore company. How should you structure your affairs?

In my opinion, the best asset protection structure is the Panama Foundation and the best jurisdiction to incorporate an active business is also Panama. There are exceptions… such as an offshore IRA LLC is best formed in Nevis. But let’s stick with Panama for this post.

Fyi… even if your country of incorporation allows for bearer shares, no bank will open an account for your offshore company. So, bearer shares are effectively dead in every jurisdiction.

A Panama Foundation requires a founder and a foundation counsel. A Panama corporation requires three officers and three directors.

The Panama Foundation counsel is public record. Directors and Officers of a Panama corporation are also public record. Back in the day, we would work around this by appointing nominees and issuing bearer shares.

With bearer shares are out, the owner must be listed in the company or foundation documents.

The founder and counsel of a Panama Foundation may be either a person or an offshore company. That offshore company may be incorporated in any country.

Likewise, the directors and officers of a Panama corporation may be persons or corporate entities from any jurisdiction.

Now comes the hack: an LLC from Nevis may be formed with one member. The registrar in Nevis doesn’t disclose any information in the public record. Ownership of a Nevis LLC is totally private. These offshore companies make for excellent founders, council members, officers and directors.

In order to create a totally private offshore structure, much like a bearer share company of old, we form a Panama Foundation with the founder and council being Nevis LLCs. Then the Foundation incorporates a Panama corporation with Nevis LLCs as it’s officers and directors.

And you, the beneficial owner of the Nevis LLC, are in complete control of the Panama structure. You are the only signer on the bank accounts and corporate documents… none of the risk associated with turning over your assets to nominees.

And that’s the bearer share offshore company hack. For more information, please contact me at info@premeiroffshore.com for a confidential consultation. We will be happy to form your structure, open bank and brokerage accounts, and keep it in tax compliance.

Estonian E-Residency Makes No Sense

06/07/2015/in Articles/by Christian Reeves

The tiny country of Estonia is selling a new kind of residency… one it calls e-residency or e-citizenship. Here’s the bottom line on why e-residency in Estonia is a waste of time for Americans… and might get you into trouble with the IRS.

The Estonian e-residency program has been written up by the Wall Street Journal and The Guardian, and recommended by Simon Black and International Man. Simon went so far as to suggests it will change the “nation state” as we know it.

What a bunch of BS… here’s the real story.

Let’s start with the pitch: Sign-up for e-residency, turn over your information and biometrics, pay small fee (about $62), appear at one of their embassies and you get a biometric ID card.

What can you do with your Estonian e-residency card? Not a lot.

That card “allows” you to form a company in Estonia online. WIth corporation in hand they might, just might, allow you to open a bank account in the country. Note that you’ll need a legitimate business purpose and travel to the bank in Estonia to open the account.

The ID card doesn’t make the process of opening an offshore bank account easier or provide any additional privacy. The bank will want all of the usual supporting documents, such as your US passport and reference letters. No, you can’t use the card as your ID to open the bank account and they’ll report your account under FATCA just like any offshore bank.

Sure, e-residency in Estonia sounds hip and cool, but it offers zero value. In fact, it might get you into trouble.

Now, you might be wondering what I’m on about. So what if people want to spend $62 for an online ID card? Most of the headlines cited above are from 2014. Why am I harping on it now?

Because the Estonian e-residency program might cause all kinds of confusion and IRS trouble for Americans.

First, e-residency isn’t a path to citizenship, a second passport, or even traditional residency. It’s only an online identification card… which doesn’t include your photo, so it can’t even be used as an ID or travel document in the normal world.

And here’s my real concern with this program:

I new client came into my office last week looking to prepare his U.S. taxes. Let’s call him Bob.

Bob spent about 240 days out of the U.S. in 2014, operated an online business through an offshore corporation and netted about $100,000.

Bob thought he qualified for the Foreign Earned Income Exclusion because 1) he was out of the US for most of the year and 2) he was an e-resident of Estonia.

Bob was wrong. In order to qualify as a resident of a foreign country under the FEIE you must be living in the country, have legal resident status, and generally “make that country your home.” You should be filing taxes there and it should be your base of operation… the place you return to after traveling.

Estonia’s e-residency program provides none of those things. Sure, you can call yourself a resident, but all you really have is a fancy online ID card.

Had he not been confused, Bob could’ve qualified for the FEIE without putting down roots or paying for a real residency permit. But he should have been out of the U.S. for 330 out of 365 days, not 240.

Had he not been confused by internet sites hyping Estonia’s e-residency program, and had he planned his offshore business structure properly, he could have saved big money in 2014 and again this year.

This confusion cost Bob about $36,000 in US taxes in 2014. He’ll probably pay through the nose again this year. He relied on the e-residency program, and his own research rather than a hiring a professional, and got burned.

Those of us who write about the offshore industry are always looking for the next big thing. What can we do to increase privacy and protect our assets? In the case of Estonian e-residency, I must call BS.

The bottom line is that Estonia e-residency offers little value to the American and is likely to do more harm than good.

You will find many articles on this site on how to legally minimize taxes and protect your assets abroad. If you’re new to this offshore thing, take a read through my Getting Started section.

Don’t be like Bob. Hire a firm experienced in U.S. tax planning to form your offshore structure and plan your offshore adventure.

Your FBAR Due Date is June 30th… No Extensions!

06/03/2015/in Articles/by Christian Reeves

Don’t get stomped by the IRS! If you have authority over a bank account outside of the United States, and you had $10,000 or more in that account or accounts for even one day in 2014, you must file an Foreign Bank Account Report (FBAR) by June 30, 2015.

Here’s everything you need to file your 2014 FBAR online and on time.

Fyi… the official name of the FBAR changed in 2013 from TD F 90-22.1 to FinCEN Report 114, Report of Foreign Bank and Financial Accounts. We in the business simply call it the FBAR.

Even if your personal return is on extension until October 15, you must file your your FBAR by June 30. Extending your personal return does not affect your FBAR due date.

And its the combined value of all of your offshore accounts that counts toward the $10,000 threshold. So, if you had 3 offshore bank accounts at 3 different banks, each with $5,000, you had a total of $15,000 offshore and must file.

The information you will need to gather to prepare this form is:

Name of your bank
Address of your bank
Your account number
Highest balance in the account during the year

Any U.S. citizen, green card holder, or resident with an offshore account must file the Foreign Bank Account Report. There are a few exceptions, but if you have an offshore company, trust, foundation, LLC, or a foreign personal account, you need to file.

If you are uncertain, file! There is no cost to filing and the penalties for getting it wrong are extreme.

Exceptions to the FBAR filing requirement are:

United States persons included in a consolidated FBAR
Correspondent/Nostro accounts
Foreign financial accounts owned by a governmental entity
Foreign financial accounts owned by an international financial institution
Owners and beneficiaries of U.S. IRAs
Participants in and beneficiaries of tax-qualified retirement plans
Certain individuals with signature authority over, but no financial interest in, a foreign financial account
- Commentary: This exception is intended for traditional investment managers… those managing other people’s money. Don’t rely on this section if you have an offshore company and manage your own investments.
Trust beneficiaries (but only if a U.S. person reports the account on an FBAR filed on behalf of the trust)
Foreign financial accounts maintained on a United States military banking facility.

Review the FBAR instructions and the IRS website for more information on the reporting requirement and on the exceptions to the reporting requirement.

You should file your FBAR online through the BSA e-filing system. For more information on e-filing see my post New FBAR Filing Requirements for 2014.

Offshore Shelf Companies are of Little Value

06/03/2015/0 Comments/in Articles, Offshore Company/by Christian Reeves

I’m frequently asked about the use of offshore shelf companies in international business. If you are debating between forming a new offshore corporation or buying an offshore shelf company, read this article before spending the extra cash.

Some online incorporators market offshore shelf companies as the greatest invention since the numbered bank account. I think they’ve lost most of their value over the last few years as banks require more information on their customers (beneficial owners) and bearer shares have been eliminated.

Bottom Line: An offshore shelf corporation has no tax or banking benefits. It can be helpful in marketing because it makes it appears as if you’ve been around for a few years… not a startup for fly by night operator.

Since an offshore shelf company can be used in marketing without backdating any documents, or doing anything improper, go for it. If someone suggests falsifying records, run the other way.

Maybe I’m getting ahead of myself. Let’s start from the beginning.

What the heck is a shelf company? It is a corporation formed months or years before that has been sitting on the incorporator’s shelf unused. Because it has no history of operation, no bank account, and no creditors, there’s no risk in purchasing a shelf company.

The legitimate benefits of an offshore shelf corporation are:

1. The company is ready to use off the shelf. You don’t need to wait for the company to be formed, the name to be approved, or for the directors to be assigned. Forming a new offshore company in Panama takes 1 to 2 weeks.

You can market the name and age of the shelf company. For example, your letterhead and marketing materials can refer to “International Marketing Services (Panama), S.A., Established 2006,” if you bought a corporation by that name formed in Panama in October of 2006.

But, buyer be ware. The abuses of shelf companies are well documented. Many purchase these entities and then ask the director to sign back dated documents. While you can find some less scrupulous directors who are willing to sign for a few extra dollars, such a practice is obviously improper.

And, let’s say you go through the trouble of buying a shelf company and faking up the documents for whatever reason. Now what? If you are audited by the U.S. IRS it will appear as if you’ve owned an unreported offshore company for years. They’ll hit you with all kinds of penalties. And what’s your defense? “errrr, I didn’t own the company for these years. I was just perpetrating a little fraud on my bank… nothing to concern the IRS.” Good luck with that.

Back in the days of Bearer share companies, these offshore shelf companies had some additional benefits. Whomever held the shares owned the company. No need to fake up documents… it was already in bearer form.

Unfortunately, the days of the bearer share company are long gone (more on this in a future post), as I believe are most of the benefits of the offshore shelf company.

Because of the nature of the industry, it is difficult to find a shelf company older than about 14 months. Here’s how these shelf companies typically come about:

Offshore companies are usually formed by the incorporator on behalf of a particular client. The client does not pay the fee or changes his mind, so the entity sits on the shelf to be sold to someone else. After 12 months, the annual dues must be paid, which the incorporator is not willing to do. Around the 14th to 16th month, the company is closed by the government registrar.

In fact, this happens quite often. At the time of this writing, I have 3 shelf companies sitting around collecting dust. If someone needs an offshore company immediately, great. Maybe they’ve traveled to Panama and want to open a bank account while they’re here. They don’t want to hang around the hotel for a week or two for a new formation, so they buy a shelf company.

I hope this post on offshore shelf companies has been helpful. For more information on services please contact me at info@premieroffshore.com for a confidential consultation. I will be happy to form your offshore company, open bank and brokerage accounts, and create your asset protection structure.

Offshore Bank Advertising Rules – Why Opening an Account is Difficult

04/26/2015/in Articles/by Christian Reeves

Opening an offshore bank account can be hell for Americans. It’s 10 times more difficult for the offshore bank trying to navigate the ever changing environment. I’ve written posts on the impact of FATCA and how the US has turned foreign bankers in to unpaid IRS agents. Here’s the rest of the story on offshore bank advertising and why opening an account is so difficult.

Not only must offshore banks report most transactions involving US persons, they’re prohibited from marketing to us gringos. You won’t see a commercial for a Panamanian bank on ESPN any time soon. Nor will brokerages in Cayman advertise in the Wall Street Journal. The US has made sure our banks aren’t forced to compete on a worldwide playing field.

Advertising by foreign banks is prohibited by the Securities Act of 1933. Regulation S specifically covers international banks, brokerages, exchanges, and securities offers. It essentially prohibits all forms of solicitation of people in the United States.

Offshore banks that offer investments must also comply with the advertising rules of Section 15 of the Exchange Act and statutes enforced by a myriad of other agencies that are beyond the scope of this article. This post is focused on banking and will barely scratch the surface of foreign securities offerings.

So, a bank in Singapore can’t advertise in the US nor cold call prospects to sell securities or banking services. If a US resident approaches the offshore bank, that’s fine. We are talking here about the bank’s ability to market to US residents.

Note that HSBC and a few others offer their offshore services to Americans online and in print. This is allowed because HSBC has a US banking license. An offshore bank is one without offices in the United States.

Because foreign banks don’t want to deal with the SEC, many have decided to avoid the issue altogether by refusing accounts to Americans. Because of Reg S and FATCA, the majority of offshore banks, along with their highest returning investment options, are closed to US citizens.

Banks that do accept Americas with our scarlet letter A are careful not to solicit our business. TV and print ads are obviously out. The internet is a more interesting medium.

The most recent guidance by the SEC on internet advertising is from 1998, 5 years before Facebook and when Compuserve and AOL were cool. These rulings are more recent than the 1933 SEC code but still way out of touch with today’s online world. See: SEC International Series Release No. 1125 (March 23, 1998).

Advertising by Offshore Banks

Here’s what offshore banks need to do to avoid the SEC’s wrath.

Offshore banks are considered to be “offering” and “selling” an offshore bank account, much like an offshore brokerage sells you an international security. To qualify under Regulation S, the offer and sale (account opening) must both occur outside of the United States.

Let’s first consider the offer. An offer is made to a person in the States when someone located in America views an advertisement or any other message from the bank meant to “condition the US market.”

On the internet, this means the bank’s website may not “push” advertisements to Americans. Pushing includes advertising in outbound email campaigns and pay-per-click where you can control the region / country where the ad is displayed. For example, Google’s PPC system allows you to determine where your advertisements will be seen. Online ads may not be displayed to anyone located in America. In my opinion, affiliate marketing also falls in to this category and is prohibited.

Push ads vary from “pull” lead generation or organic search optimization in that pull is passive content applicable to anyone anywhere. Most agree that blogs and other SEO tools for organic placement are acceptable so long as content does not directly target US investors. An American actively searching for information is seen as being different from a US person who sees and ad and is thereby motivated (coerced) to view an offer.

Active push campaigns may constitute an offer where pull posts might not… unless the website allows the customer to open an account online. In general internet terms, a “sale” occurs online wherever the server is located. It seems logical that a Belize bank could allow customers to open an account online through their server located in Belize. Not so sayeth the SEC. The ability to complete the transaction online while physically present in the US means the bank is making an offer to US persons, which is prohibited. It’s the location of the buyer and not the server that controls here.

So, how do you find the best offshore bank if they can’t push out advertisements? Some have invested in SEO and content based pull systems. Otherwise, firms like mine can qualify and introduce clients to offshore banks that accept Americans. An offshore bank will always be more comfortable with a referral than someone off the street, especially if you hold a blue passport. Also, if the referrer offers US tax compliance, all the better because the bank knows the client won’t get them in to trouble.

Regulation S for Offshore Banks

Regulation S, rules 903 and 904, and a variety of other sections govern advertising to US persons by offshore banks. Under Reg. S:

An offer or sale must be made in an offshore transaction; and
No “direct selling efforts” may be made by the issuer, a distributor, or any of their respective affiliates, or any person acting on their behalf.

An offshore transaction is one where:

No offer is made to a person in the United States; and
At the time the buy order is originated or the account opening initiated, the buyer or client is (or is reasonably believed to be by the bank) physically outside of the United States.
1. The customer is outside of the US if he is physically located out of the country. It is not sufficient for her agent to be offshore. She must be out of the country.
2. If the buyer or account holder is a corporation, then the company’s authorized representative must be out of the country. The authorized representative is the account signatory.

Offshore banks and brokerages are prohibited from advertising in publications with a “general circulation” in the United States. This applies to newspapers and magazines with circulations of more than 15,000. If less than 20% of a publication’s circulation is in the US, offshore banks may advertise but are required to include all kinds of disclaimers telling Americans to stay away. Whether these limitations will apply to online marketing is unknown.

Offshore banks are also prohibited from mailing printed marketing materials to US prospects, conducting promotional seminars in the United States, and any other activity that is meant to “condition the US market.”

Offshore Bank Marketing – Making the Sale

As a result of the above, offshore banks have limited their internet marketing efforts to pull campaigns and SEO content creation.

When it comes time to make the sale, most foreign banks require new accounts to travel to their offices to open the account. They take a copy of your passport and your entry stamp for their files to prove you were in country when the application was submitted.

There are a few notable exceptions to this travel requirement. For example, Belize and Cook Islands allow you to open an account by courier. Their forms included statements about where you were when the board meeting authorizing the account opening took place and they expect you to enter a foreign country in these pages.

Whether these forms are sufficient for the bank to “reasonably believe” you are out of the US is up for debate. They are more likely the result of a need for these smaller jurisdictions to offer an easier path to account opening for competitive reasons rather than a solid legal solution to a complex problem. Hopefully the fact that they are “off the radar” of US regulators will cover for their willingness to take a risk in exchange for a competitive advantage.

Other form based workarounds include banks that require new accounts to sign a statement that they didn’t view the bank’s website before opening an account. Many offshore banks refuse to respond to email inquires from US persons.

Finally, some offshore banks and brokerages that refuse accounts to US individuals will accept offshore corporations held by Americans. The thought here is that the corporation is the client and not the individual. Of course, such banks will report transactions by the beneficial owner to the IRS under FATCA. The corporation might work for the SEC but does not affect tax reporting requirements to the IRS.

Offshore corporations provide excellent privacy and protection. They can manage either investments or active businesses efficiently offshore. My only word of caution is to avoid structures with nominee directors where you are required to give up control of the assets. Even when nominees are used, you must be the only signor on the offshore account.

I hope you’ve found this post on the trials and tribulations of offshore bank advertising interesting. Offshore banks must overcome a number of hurdles to continue offering services to Americans. This explains why they charge higher fees than their US counterparts who don’t need to follow any of these rules. Their operating and compliance costs per account are significant.

If you have any comments or questions on offshore banking, please send them to christian@premieroffshore.com.

Offshore Bank Internet Marketing Best Practices

Here are my suggestions to anyone responsible for advertising an offshore bank. It’s intended as a guide for bankers who already have a handle on Reg. S, FATCA, et al.

Host your website outside of the United States. All of the bank’s emails, data, and website content must be hosted outside of the United States. This should be obvious for security reasons and don’t let the less expensive and faster US based services convince you otherwise. While a US website does not constitute a US presence for tax or licensing purposes, it is one of the factors the SEC might use against you in a Reg S or marketing case.

Only advertise on websites hosted outside of the US. Potential advertising partners should have no US presence, office or mailing address, and a significant portion of their traffic should be from international readers. A good example of such a site is www.lowtax.net

No PPC targeted to the United States. If you push advertisements on the internet, you must avoid US users. Any type of PPC campaign targeting the US is sure to make you a target.

Be smart with your SEO posts. Don’t affirmatively target US persons. Write about internet banking, offshore privacy, and related matters without discussing US centric issues. When writing on FATCA, do so from the bank’s perspective (compliance) and not from the client’s point of view.

All SEO and internet work should be done outside of the United States. The last thing you need is your US SEO team to be subpoenaed and telling a court they were instructed to target US customers.

Outbound email ads are only recommended for to lists with 20% or fewer US names. A US name is a person living or present in the US. Most Americans abroad, except for active military, are fair game.

I don’t believe the maximum list size of 15,000 subscribers for print mediums will hold up in email campaigns. Any email campaign where you don’t know the demographics of the list is high risk.

Place any offerings of securities behind a password protected page accessible only after the user agrees they are not US person or that they are an accredited investor. How to confirm identity and accredited status are complex matters for internet marketers and beyond the scope of this post.

Your client should be out of the US when they sign and submit the account opening request. Forms may be submitted in person or by courier. If by courier, the city of origination on the waybill should be outside of the United States and you must put this form in the client’s file.

Here are a few options to regarding the requirement the contract be entered into abroad:

Maybe you use a form like Belize and hope for the best.
Maybe you require the customer to travel to your bank. Certain countries, such as Panama, have laws requiring an in-person visit.
Maybe you set up an unlicenced office in a city Americans can access easily.
- For east coast clients, Nassau, Bahamas offers the most direct flights from the US in the Caribbean.
- For west coast clients, it appears Los Cabos, Mexico is the most efficient option with non-stop flights from 40 US cities. Mexico City has the most flights, but that’s a much longer journey and a tough place to navigate.
- Of course, you will be prohibited from marketing to persons in the country where you have this unlicensed office.
- It doesn’t matter where the clients complete the paperwork so long as they are outside of the United States. A single office in a centrally located city could service multiple foreign banks.

The bank may only present at or sponsor conferences held outside of the US. Any display of your logo at a US event may be considered conditioning the US market. No form of advertising, including investment tombstones, are permitted in the United States.

You might work with unrelated websites to post positive articles about your offshore bank but avoid traceable affiliate programs. You may not own or control the website posting articles about your bank.

First, I’ve been writing about offshore banking for over a decade. My most recent (2015) articles on the topic are:

If you have questions on forming an offshore bank, please send them to christian@premieroffshore.com.

Offshore Banks Begin Reporting Under FATCA

03/20/2015/in Articles, Banking Offshore/by Christian Reeves

The Foreign Account Tax Compliance Act is now live and pulling in data about Americans around the globe. The FATCA international data exchange gateway opened on March 2nd and data began flowing on March 14, 2015.

The FATCA gateway connects nearly all international banks in to the IRS network. Banks will report all accounts owned and/or controlled by US persons… even large companies with one or two US shareholders are being caught up in the net.

FATCA turns offshore bankers in to unpaid IRS agents. They must now investigate all new and old accounts and, should they find an American in the mix, report all transactions to Uncle Sam. If they are uncertain, they will either report or kick you out of the bank. Fines for crossing the IRS are severe, so you can be sure you will be on the losing end of any disagreement.

Of course, this has been tough on those with American parents who’ve been living abroad for decades. These Americans by birth are being kicked out of banks, brokerages and businesses because of their heritage. For example, check out my recent post on the Mayor of London who recently got into a war of words with the IRS… he was born in the US but hasn’t been here since a he was a child.

And the same goes for Americans with bank accounts or investments abroad. We’ve had our options reduced by nearly 80%. And, when we do find a bank that will take us on, we’re hit with all kinds of fees and conditions.

How Does FATCA Affect Me?

If you’re new to the offshore game – planting your first flags abroad this year – then FATCA won’t directly affect you. It might have limited your banking options and cost you money but it does not require you to do anything…. it places no affirmative duty on you which was not there before the law was enacted.

So long as your tax person files the right forms and keeps you in compliance, FATCA is a non-issue. You were always required to report and FATCA is now there to ensure you tow the line. FATCA requires banks to report their US account holders and transactions. It does not require you to file any new or additional forms for 2015.

Think of it as a 1099 from your brokerage account. So long as what you report on your tax return matches up with what’s reported to the IRS, you have no problems.

Here’s to hoping your offshore bank understand FATCA and reports your transactions properly. If they make a major error, (calculate interest incorrectly or add a zero or two to the value of your account) you can expect a knock on your door from the IRS.

Who Should Be Afraid of FATCA?

If you have an unreported offshore account, then you should be very afraid of FATCA. Expect your bank to begin sending information to the IRS about you any day now and get ready for the fall out.

You will need a solid plan on how to report these accounts and should contact a tax attorney or other professional experienced in international tax matters as soon as possible.

And no, the solution is not to begin filing this year and hope no one looks at prior years. Expect IRS computers to identify those with previously unreported accounts… maybe by analyzing interest payments… maybe by auditing those who didn’t file last year but who had accounts as of January of this year… or maybe there’s a prior year check built in to the system we don’t know about.

Bottom line is that you can no longer bury your head in the sand and hope for the best. If you have unreported offshore accounts, the 2014 Offshore Voluntary Disclosure Program might be your ticket out of trouble. If not, now is the time to get right with our government… before the flood of reports through FATCA can be analyzed and the audits begin.

If you have any questions on the OVDI, or would like a referral to a tax attorney or enrolled agent, please contact us at info@premieroffshore.com. Inquires are confidential and I will direct you to a licensed professional who will understand your situation.

Russian Second Passport and Citizenship

02/19/2015/in Articles/by Christian Reeves

Russia will begin offering second passports and economic citizenship in early 2015. The law authorizing citizenship by investment was passed on June 23, 2014 and we await its implementation. Expect second passports to be issued by Russia in the next few months.

This is the first world power to offer a second passport or economic citizenship by investment. And the costs are lower than passports from Caribbean islands. Here’s what you need to know to get a second passport from Russia.

Introduction to Second Passports

Let me take a minute to review second passports with you. There are several ways one can gain citizenship, and thus a passport, from another country.

If your parents or grandparents were born in certain European countries, you might be able to get citizenship by lineage / descent.
You can move to a number of countries, live there for 7 to 10 years, and apply for citizenship.
You can usually marry a citizen and qualify for citizenship. Though, this is not always guaranteed, so read the fine print first!
You can (legally) purchase a passport from countries such as Dominica and St. Kitts.
You can make an investment in to a few countries and receive citizenship.

It’s this last option Russia is offering. Start a business, or invest in a company and bring with you a needed skill, and gain citizenship within three years. And you will get residency in the interim.

So, if you have a profitable business and dreams of “pulling a Snowden,” Russia is calling.

Visa Free Travel with a Russian Passport

We usually value a passport by the number of visa free countries it offers. Using this criteria, a second passport from Russia is one of the best.

A person traveling on a Russian passport may visit 78 countries visa free. Plus, another 35 will issue a visa upon arrival and 9 will grant an electronic visa. So, by my count, about 122 countries are easily accessible.

Some “easy access” countries are:

Brazil,
Chile,
Colombia,
Costa Rica,
Cuba,
South Korea,
Mexico,
Most of the Caribbean,
Panama and
Hong Kong.

I note that this list is based current published data (last updated Nov. 2014). I expect there will be changes in the coming months. For example, Ukraine might not allow visa free travel any longer.

Investment Requirements

Per sections 1(g) and 1(h) of the statute below, there are two paths to a second passport by investment in Russia.

The first is for the entrepreneur or self-employed individual. Move your business to Russia and, if your taxable profits from that business are 10 million rubles or more over in each of the next three years, you will earn citizenship.

The second is for a specially skilled worker who invests in to a large business. Invest 10 million rubles, own at least 10% of the total shares after the investment, with a total capitalization of at least 100 million rubles, and pay taxes of at least 6 million rubles per year for three years, and you will qualify for citizenship.

At the time of this writing (February 19, 2015), 10 million rubles is about $162,000 US dollars and 100 million rubles is about $1.6 million USD.

So, start a business in Russia that has net profits of $161,000 and you qualify for a second passport as a self employed businessman.

Otherwise, you can buy at least 10% of a business with total capital of $1.6 million and which pays $161,000 per year in taxes. This second option can be done as an investment group or as an individual. For example, you could invest $2 million and own 100% of the shares. To qualify under this section, you must also be bringing an important skill with you in to the country.

But remember, it’s not just about the investment. Your business must be profitable for the three years preceding your application for citizenship. You will need to hit the ground running and earning to hit these numbers.

I also note that one reason this is such an attractive program is the strength of the dollar vs the ruble. Don’t expect that to last for more than a couple of years. But, while it does, $161,000 compares favorably to a St. Kitts citizenship which costs anywhere from $250,000 to $450,000.

Get a Free Passport from Russia

Here’s some food for thought: One could say that the second passport and economic citizenship program offered by Russia is free. That’s right, you can get a second passport from Russia for free! In fact, you might even make a PROFIT from your new passport.

Before you assume I’ve been hitting the vodka a bit too hard, here’s my reasoning:

You will pay tax on your business profits to one country or another. The only thing certain is death and taxes. So, you can buy a second passport from St. Kitts or you can move your business to Russia, pay some of your taxes to that country, and earn a second passport on the side.

Let’s say you’re operating a successful internet based business in Silicon Valley and your total US tax obligation is 40%. If you take a salary of $300,000, you’re paying $120,000 in taxes. Bump those profits up to $1 million and you’re paying $400,000 in US taxes.

Even if you move your business offshore and qualify for the Foreign Earned Income Exclusion, only the first $100,000 is tax free. If you take $300,000 in salary, you will pay about $60,000 for the right to hold a US passport. Take $1 million and pay $300,000 (I’ve assumed State taxes don’t apply). For more on this, see my post Foreign Earned Income Exclusion 2015.

Taxes in Russia on $300,000 in salary are $39,000. Taxes on $1 million in wages is $130,000. See details below.

If you move that business to Russia and renounce your US citizenship you pay nada to Uncle Sam. Brave the Russian winter to pay less in taxes and get a passport for free!

Taxation in Russia

You may elect to be treated as a foreign national and non-tax resident of Russia during your first three years before citizenship is granted. To avoid becoming a tax resident, you shouldn’t spend more than 183 days in country during any 12 month period.

A non-resident is taxed on their Russian sourced income as follows:

Ordinary income from within Russia: 30%. If you obtain a visa as a “highly skilled specialist,” this is reduced to 13%.
Dividends from Russian companies: 15%
Gains from real estate are taxed at 30%

If you become a tax resident of Russia during those 3 years, and once you receive your passport, you’ll pay Russian tax on your worldwide income as follows:

Ordinary income: 13% – also applies to most other types of income such as short term capital gains
Dividends from Russian companies: 9%
Long term capital gains in real estate (property held for over 3 years) is tax free.

Russia operates on a flat tax. They deduct either 13% or 30% from your pay and 9% or 15% from dividend payments.

Therefore, if you give up your US citizenship and become a Russian passport holder, you’re exchanging America’s 40%+ ordinary income rate and 23.8% long term capital gain rate for Russia’s 13% flat tax and long term property exemption.

If you’re a high net worth non-resident, you might negotiate a tax contract along with your citizenship. For example, you might agree to pay $300,000 per year in taxes regardless of your worldwide income. I’ll leave this one for another day.

I hope you have found this post helpful. Please phone me at (619) 483-1708 or email Christian Reeves at info@premieroffshore.com with any questions.

Russia’s Second Passport Statute

Here is an an English translation of Russia’s second passport and economic citizenship program. The original (for those of you who can read Russian) is at http://www.consultant.ru/popular/civic/34_2.html#p172

This post covers 1(g) and 1(h) only.

1. Foreign citizens and stateless persons residing in the territory of the Russian Federation, may apply for admission to Russian citizenship in a simplified manner without observing the conditions of the period of residence specified in paragraph “a” of the first part of Article 13 of this Federal Law, if these citizens and persons:

a) were born on the territory of the RSFSR and had the nationality of the former Soviet Union;

b) are married to a citizen of the Russian Federation for at least three years;

c) are unable to work and have a capable son or daughter under the age of eighteen years and who are citizens of the Russian Federation;

d) have a child who is a citizen of the Russian Federation – in case the other parent of the child who is a citizen of the Russian Federation, died a court decision which entered into force, declared missing, incapable or limited in capacity, deprived of parental rights or restricted parental rights; (introduced by Federal Law of 28.06.2009 N 127-FZ)

e) have a son or daughter under the age of eighteen years who are citizens of the Russian Federation and the decision of the court, which entered into force, recognized as incapable or limited in capacity, – if the other parent said citizens of the Russian Federation, a citizen of the Russian Federation, has died or a court decision, which came into force, declared missing, incapable or limited in capacity, deprived of parental rights or restricted parental rights; (introduced by Federal Law of 28.06.2009 N 127-FZ)

f) received after July 1, 2002 vocational education in basic professional educational programs, state-accredited, educational and research institutions of the Russian Federation in its territory and carry out work in the Russian Federation in the aggregate not less than three years before the date of the application for admission the citizenship of the Russian Federation; (introduced by Federal Law of 23.06.2014 N 157-FZ)

g) self-employed and carry on business in the Russian Federation for at least three years preceding the year of the application for admission to citizenship of the Russian Federation, and in this period of their annual revenue from the sale of goods (works, services) as a result of doing business in established by the Government of the Russian Federation economic activities is not less than 10 million rubles; (introduced by the Federal Law of 23.06.2014 N 157-FZ)

h) are investors, whose share of the contribution in the authorized (share) capital of a Russian legal entity operating in the territory of the Russian Federation established by the Government of the Russian Federation economic activities, is not less than 10 percent. The size of the authorized (share) capital of such entity and the size of its net assets must not be less than 100 million rubles each or the amount paid by such entity tax to the budget system of the Russian Federation and mandatory insurance payments must be at least 6 million rubles a year on for at least three years from the date of investment; (introduced by Federal Law of 23.06.2014 N 157-FZ) and exercise at least three years prior to the date of the application for admission to citizenship of the Russian Federation labor activity in the Russian Federation in the profession (specialty positions) included in the list of professions (specialties, positions) of foreign nationals – qualified professionals who are entitled to receive Russian citizenship in a simplified manner approved by the federal executive authority responsible for the formulation and implementation of public policy and legal regulation in the sphere of employment and unemployment. (“And” introduced by the Federal Law of 23.06.2014 N 157-FZ)

2. Foreign citizens and stateless persons permanently residing lawfully in the territory of the Russian Federation, recognized native Russian speakers in accordance with Article 33.1 of this Federal Law, may apply for admission to the citizenship of the Russian Federation under the simplified procedure, provided that the said citizens and persons:

a) undertake to comply with the Constitution of the Russian Federation and the legislation of the Russian Federation;

b) have a legitimate source of livelihood;

c) abandoned their existing foreign citizenship. Renunciation of citizenship of a foreign state is not required if provided for by international treaty of the Russian Federation or if the renunciation of citizenship of a foreign country is not possible through no fault on behalf of causes. (Federal Law of 23.6.2014 N 157-FZ , from 14.10.2014 N 307-FZ )

3. Disabled foreign citizens and stateless persons who arrived in the Russian Federation from countries that were part of the Soviet Union, and the registered place of residence in the Russian Federation as of July 1, 2002, may apply for admission to the citizenship of the Russian Federation in the simplified order without complying with the conditions of the period of residence in the territory of the Russian Federation specified in paragraph “a” of the first part of Article 13 of this Federal Law, and without presenting a residence permit.

4. Foreign citizens and stateless persons who had citizenship of the USSR, arrived in the Russian Federation from countries that were part of the Soviet Union, and the registered place of residence in the Russian Federation as of July 1, 2002 or to obtain a temporary residence permit in the Russian Federation or residence permit shall be adopted Russian citizenship in a simplified manner without observing the conditions stipulated in paragraphs “a”, “c” and “d” of the first part of Article 13 of this Federal Law, if they are before 1 July 2009, stated their wish to acquire citizenship the Russian Federation. (Federal Law of 03.01.2006 N 5-FZ , from 01.12.2007 N 296-FZ , from 30.12.2008 N 301-FZ )

5. In the citizenship of the Russian Federation shall be adopted in a simplified manner without observing the conditions stipulated in paragraphs “a”, “c”, “d” and “e” of the first part of Article 13 of this Federal Law, and without presenting a residence permit veterans of Great Patriotic War had the nationality of the former Soviet Union and residing in the territory of the Russian Federation.

6. The citizenship of the Russian Federation shall be adopted in a simplified manner without observing the conditions stipulated by the first part of Article 13 of this Federal Law, the child and the incapable person who are foreign nationals or stateless persons:

a) a child, one of whose parents is a citizen of the Russian Federation – at the request of the parents and with the consent of the other parent on the child’s acquisition of citizenship of the Russian Federation. Such consent is not required if the child resides in the territory of the Russian Federation;

b) the child, a single parent is a citizen of the Russian Federation – at the request of the parent;

c) a child or incapable person under guardianship or custody of a citizen of the Russian Federation, except as provided for by Part 1 of Article 13 of the Federal Law of April 24, 2008 N 48-FZ “On guardianship” (hereinafter – the Federal Law “On guardianship “) – at the request of a guardian or trustee; (Federal Law of 20.04.2014 N 72-FZ)

d) a child placed under supervision in the Russian organization for orphans and children left without parental care, except as provided by paragraph 2 of Article 155.1 of the Family Code of the Russian Federation – at the request of the head of the Russian organization that placed the child; (introduced by Federal law from 20.04.2014 N 72-FZ)

d) incapable person placed under supervision in the Russian educational organizations, medical organizations, organizations providing social services, or another Russian company, except as provided by Part 4 of Article 11 of the Federal Law “On guardianship” – at the request of the head of the Russian organization that is placed incapable person.

International Money Lending License

02/15/2015/in Articles, Banking Offshore/by Christian Reeves

The international money lending license came into its own in 2010 when the US began pushing out payday and other lenders of last resort. A number of offshore jurisdictions welcomed them with open arms and the battle with American regulators was on.

By 2012, many of these lenders moved from offshore licenses to those issued by US Indian tribes. For example, Integrity Payday Loans got in trouble with a few US states operating as a Nevis company. They became “ a tribal lending entity wholly owned by the Flandreau Santee Sioux Tribe, a federally recognized Indian tribe that operates and makes loans within the Tribe’s reservation. All loans are subject exclusively to the laws and jurisdiction of the Flandreau Santee Sioux Tribe.”

With high risk lenders fleeing for greener pastures, offshore lending, like offshore banking post FATCA, has gone mainstream. These licenses are now used by everyone from multinationals to green energy companies, such as solar loan and lease providers to fund operations and manage their worldwide tax obligations. Where payday lenders were looking to hide, the new trend is towards those looking to operate more efficiently, make use of their offshore retained earnings, bring in foreign investors, and comply with US tax reporting obligations.

Offshore Licensing Options

There are only a few ways to accomplish these goals. You can form an international bank, a captive bank, a Panama financial services company, or operate under an international money lending license.

A international money lending license is also an alternative to a fulling licensed bank. An offshore banking license is a major undertaking requiring significant capital and backend compliance. A Panama financial services company has it’s uses, but it may not offer loans. An offshore lending license is the most efficient option for a company looking to make loans within a group of companies, or to the general public (excluding residents of its issuing country), but not offer other traditional banking services (deposit taking, investments, etc.)

A money lender can be setup in a matters of weeks and at a fraction of the cost of an offshore bank. Also, corporate capital, costs of operation, and government oversight are significantly reduced.

For more information on a fully licensed bank, see my 2015 post: Best Offshore Banking License Jurisdictions.

There are several countries offering international money lending licenses. I will focus Belize below, but a proper analysis of your needs, number of investors, number and size of your loans, and your business model, should be undertaken before selecting a jurisdiction.

Belize International Money Lending License

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

A company operating under an international lending license in Belize may lend up to $5,000 per transaction and was originally written by politicians for payday lenders. Loans by an international money lender must have an initial repayment period of less than one year and shall not be secured by title to real property, a motor vehicle, tangible personal property, or any other type of collateral other than the Loan Agreement and ACH authorization agreement. Also, loans made under this license shall be made to consumers for household purposes and personal expenses only (and not for commercial purposes).

In other words, you may offer short term unsecured loans of less than $5,000 to individuals, but not businesses.

A Belize international money lending license require capital of $50,000. This amount may be increased by the IFSC depending on your business model and history. Capital reserve ratios and applicable discounts apply. The application process runs about 3 months. A complete business plan with financial projections and a proven track record in your market niche are required.

A Belize money brokering license might be a workaround to the maximum amount and term of the international money lending license. If the money being lent is coming from shareholders / partners in the business, rather than outside investors, Belize might allow you to broker the loans from your partners to your clients.

I say “might” because there are no businesses currently operating in this manner under the money brokering license. In fact, there is only one license currently active in Belize. I suggest such an application should be from a more “traditional” business, such as solar panel loans, rather than a higher risk category like payday advances.

Another, more common use of the money brokering license is to broker loans from Belize banks to your clients, earning a commission on each.

Other Offshore Licensing Jurisdictions

Another alternative to the Belize international money lending license is the British Virgin Islands Financing and Money Services License. This allows you to conduct any size lending business with persons resident in BVI and abroad. There is no maximum loan amount in the BVI statute.

For more information, see: British Virgin Islands Financing and Money Services License

Note that any regulated lending business will need to follow strict capital reserve and ratio requirements. Audited financial statements are due annually, and some jurisdictions require quarterly reporting.

The above describes international lending licenses. I suggest that the best license for an offshore leasing company is the Panama Financial Services License, which I will cover in another post.

Raising Money for an Offshore Lending Business

If you wish to raise capital for your offshore lending business, you will need a master-feeder offshore fund or similar structure. This is because your lending license does not allow you to take deposits from people other than partners in the business. Nor does it allow you to solicit investors.

With an offshore master-feeder fund, accredited or super accredited investors (as defined by the US SEC) may invest in your US entity and non-US persons and US tax exempt investors (IRAs, etc.) may invest in your foreign entity. Both of these feed into the master fund, which in turn invests in to your offshore lending company.

By linking a master-feeder fund to an international lending license, you can raise unlimited amounts of capital while minimizing compliance costs and regulatory oversight. You might find it advantageous to operate a fund in a jurisdiction separate from the lending company. For example, the fund could be in Cayman or Belize with the lender domiciled in BVI.

Raising capital through a fund allows you to earn a commission on the appreciation in the fund and from the primary lending business. Typical master-feeder funds earn 2% of the money under management and 20% of the appreciation after a hurdle rate ( LIBOR+2 or some similar published rate).

Conclusion

In 2015, the world of offshore licensed entities is as complex as it is diverse. Careful consideration of the available licenses and your business model must be undertaken before selecting a jurisdiction. Each country and license type is intended for a specific use and capital ratios and regulations vary widely.

Add to this FATCA, IRS reporting, tax compliance, SEC issues, and anti-money laundering statutes, and you will find that going offshore with a licensed lending company requires the support of a professional experienced in both US and international regulations.

I hope this article has beens helpful. For more information on an international money lending license, an international banking license, or an offshore master-feeder fund, please phone me at (619) 483-1708 or email Christian Reeves at info@premieroffshore.com.

Best Offshore Bank License Jurisdictions

02/11/2015/0 Comments/in Articles, Banking Offshore/by Christian Reeves

The offshore banking license industry was knocked down by FATCA, but it’s back on its feet and carrying on. Below are my best offshore banking license jurisdictions for 2015. You might also like to read my 5 Best Offshore Bank Licenses for 2017.

Please let me start with a little history.

International Banking is Still Alive

From 2012 through 2014, the offshore banking license industry was on life support. To be honest, I pronounced it dead in mid 2012 in an article titled Offshore Bank Licenses Go the Way of the Dodo. Fortunately I was wrong and international banking making a comeback.

Beginning in 2012, the US IRS declared war on offshore banks, shutting the small ones down and extracting millions in tribute from those large enough to pay.

Fines are still being levied on those with unreported US accounts. For example, the US and UK authorities announced plans to hit HSBC Switzerland in February of 2015.

Piling on, the US Congress passed the Foreign Account and Tax Compliance Act (FATCA) that requires all international banks to report US account holders each year. Basically, this law turned offshore bankers in to unpaid IRS agents.

Well, FATCA was delayed for years and no one had any idea how it would be implemented. This uncertainty made it nearly impossible to acquire a new offshore banking license and, if one was granted, you had little chance of getting a correspondent account.

Bottom line, no one was willing to take a chance on a new bank. They were busy cleaning up (or hiding) past sins and did not want to deal with a startup.

Now, in 2015, the war is over, the smoke has cleared, and the bodies of those unable to pay the ransom have been removed from the battlefield. The IRS came out victorious and just about every bank in the world has signed on to FATCA.

With uncertainty behind us, new formations are beginning to pick up. Of course, these new banks will find it a very different world… one where they must be responsible global citizens.

Note: This article is from 2015. You might also like to read my 5 Best Offshore Bank Licenses for 2017.

Best Offshore Banking License Jurisdictions

In my experience, the best offshore banking license jurisdictions are:

Andorra
Anguilla
Bahamas
Barbados
Bermuda
Belize
Cayman
Dominica
Lebanon
Luxembourg
Montserrat
Seychelles
St. Kitts & Nevis
St. Vincent & the Grenadines
Vanuatu (Republic of)

Each of these countries specializes in a different form of international banking license… is focused on a specific target market. Here are a few tips on selecting the best offshore banking jurisdiction.

When I analyze a jurisdiction, and compare it with a client’s objectives, I often start with the reserve capital. Some statutes require $500,000 to $3 million for a captive bank license and $1 million to $7 million in capital is standard for a small international bank. Jurisdictions like Panama and Luxembourg may require $30 million for a general license .

To further narrow down your choices, here are a few things to consider:

Andorra and Luxembourg issue licenses to large private banks.
The Cayman Islands prefers investment advisory and captive banks.
Vanuatu is a common jurisdiction for captives with on European parent companies.
St. Kitts and Dominica licenses link the bank in to the Eastern Caribbean region, which means they operate under a regional central bank.
Belize might be the preferred jurisdiction for a deposit taking bank, but it’s high capital ratios need to be accounted for.
Many international banks are domiciled in Panama because of the lower labor costs, top tier connectivity, availability of executive visas, and the world class reputation.

Types of Offshore Banking Licenses

Captive Bank: A bank with a captive license may only do business with those named in the license. So, each client / owner of the bank must be approved by the central bank. Captive offshore banks are typically used by large family offices, groups of wealthy individuals (say 10 to 15 partners), or multinational corporations, to manage their lending and worldwide tax obligations. A captive bank may not market its services to the general public.

International Bank: The license we most commonly associated with the offshore industry is the international banking license. This allows you to conduct all types of banking business with cutomers outside of your country of issuance. For example, if you operate an international bank in Belize, you may do business with anyone except Belize citizens and residents.

General Bank: A general license allows you to conduct business with both local and international clients. Of course, central banks want to protect their citizens first, thus capital requirements and regulation of generally licensed banks are tighter than international banks.

Purchase of an Existing Offshore Banking License

From time to time, captive and international banking licenses become available. Usually licenses are sold by operators who went through the process and lost their funding somewhere along the way.

I would like to point out that each owner of a bank must be approved by the regulatory authority. That is to say, you don’t just take over a license and begin operating. The new ownership group will need to go through an extensive background check, a new business plan approved, and personal financial statements must be provided. Expect this process to take several months.

To account for this delay and potential risk, you need to run the purchase of an existing offshore banking license through an escrow agent. Condition a portion of the purchase price (usually 25% to 50%) on the approval of the central bank

Services Offered

Note that the usual formation and licensing costs for an international bank are $175,000 to $650,000 depending on the jurisdiction, the quality of your business plan, whether you already have a license from another jurisdiction, and the bonafides of the partners..

To apply, a detailed business plan, KYC and anti money laundering docs, and a well qualified board of directors will be required… all of which we can assist with.

I hope you have found this post on international banking licenses helpful. If you would like assistance in identifying a jurisdiction, searching for a new license, negotiating the takeover of an operating bank, or forming a new offshore bank, please phone me at (619) 483-1708 or send an email to Christian Reeves at info@premieroffshore.com.

My other recent articles on the topic are:

Top 5 Offshore Bank Licenses for 2017
Lowest Cost Offshore Bank License is Puerto Rico
Offshore Bank Advertising Rules (a review of Reg. S)
Offshore Banking Licenses (on lowtax.net)
Capital Reserve Requirements (on lowtax.net)
Correspondent Accounts for Offshore Banks (on escapeartist.com)
Best Offshore Banking Jurisdictions

De ce pornografia nu ar trebui să fie singura ta plăcere

11/29/2014/in Articles/by design

Pornografia poate fi o modalitate excelentă de a pune cuplurile pe aceeași pagină despre fanteziile sexuale și de a-i încuraja să încerce lucruri noi în pat.

Cu toate acestea, este important să ne amintim că pornografia nu ar trebui să fie niciodată singura sursă de plăcere.

Videoclipurile cu sex mai sigur de la GMHC au căutat să redirecționeze dorința către o nouă tehnologie de reducere a riscurilor. Majoritatea au prezentat actori amatori, în conformitate cu angajamentul lui Bordowitz față de un etos al „pornografiei oamenilor”.
1. Este o formă de auto-plăcere

Mulți oameni se bucură de vizionarea videoclipurilor porno pentru că pot fi o formă de auto-plăcere. Sunt o modalitate prin care oamenii se pot răsfăța cu fantezii și fantezează despre propriile plăceri sexuale. Este important să ne amintim, totuși, că aceste videoclipuri nu sunt menite să reprezinte viața sexuală reală. Sunt puse în scenă și editate pentru a face modelele să pară sexy. Ele pot fi, de asemenea, deranjante pentru unii oameni, deoarece arată acte care nu sunt potrivite în lumea reală.

În timp ce fotografiile cu pula sunt grozave pentru a le trimite persoanelor pe care le cunoști bine, videoclipurile cu masturbare sunt mai intime. Acest lucru se datorează faptului că sexul poate fi comunicat doar prin mai mult decât prin ochi. Sunetul gemetelor unei persoane poate fi la fel de erotic ca un nud frontal complet.
2. Este o formă de masturbare

Pornografia este o formă de masturbare care vă poate oferi plăcere. Este o modalitate grozavă de a-ți explora sexualitatea și fanteziile fără să-ți faci griji pentru sarcină, ITS sau pentru a-ți face plăcere partenerului. De asemenea, te ajută să dormi mai bine, îți îmbunătățește stima de sine și imaginea corporală și reduce stresul și depresia.

Din păcate, porno poate duce la o dependență, mai ales cu disponibilitatea ușoară a acesteia pe internet. Vizionarea pornografiei pentru perioade lungi de timp poate suprastimula calea recompensei și poate provoca o poftă mare pentru aceasta.

În plus, vizionarea pornografiei te poate face să obiectivezi oamenii și să-i tratezi ca pe niște obiecte pentru sex. Acest lucru poate avea un impact negativ asupra relațiilor tale și chiar le poate face toxice. Din fericire, există modalități de a întrerupe acest ciclu, inclusiv utilizarea unei aplicații de oprire a sexului precum BlockerX.
3. Este o formă de educație

Pentru mulți adulți, pornografia a devenit o formă de educație și formare sexuală. Cu toate acestea, marea majoritate a pornografiei de masă nu este educație sexuală reală.

Acesta este motivul pentru care Pornhub a lansat o nouă serie de filme porno numită „Real Sex Education”.

Primele 11 videoclipuri din serie prezintă o varietate de subiecte, inclusiv comunicarea, eticheta sexuală și ITS. Fiecare videoclip este povestit de un terapeut sexual autorizat și folosește anatomia reală pentru a explica conținutul.

Adolescenții apelează la TikTok ca sursă de educație sexuală, dar cercetătorii avertizează că ar putea primi informații greșite. Un studiu publicat anul acesta în Health Promotion Practice a constatat că adolescenții care folosesc platforma de social media pot fi expuși unui „curriculum de educație sexuală diferit de cel predat acasă, cabinete medicale și școli.
5. Este o formă de divertisment

Pe lângă faptul că este distractivă, media pornografică oferă o varietate de fantezii sexuale pentru adulți. De la femei care se prăjesc pe prăjituri până la grupuri în trei, există o mare varietate de dorințe sexuale care pot fi îndeplinite cu un clic de mouse.

Pornografia poate, de asemenea, să normalizeze fetișurile sexuale și să reducă stigmatizarea, arătându-le potențialilor că dorințele lor sunt legitime.

De exemplu, un studiu a constatat că vizionarea pornografiei a redus nivelul de cortizol al bărbaților, ceea ce i-a ajutat să aibă rezultate mai bune în problemele de matematică.

Cu toate acestea, multe site-uri web pornografice mainstream prezintă mesaje misogine și sunt adresate privirii masculine. Site-uri cu pornografie etică precum Make Love Not Porn prezintă „sexul real în toată umanitatea sa glorioasă, prostească, frumoasă, dezordonată și liniștitoare”. Site-ul acceptă trimiteri de spectatori pentru videoclipuri erotice și plătește artiștii în funcție de cât de mult sunt vizionați.

How to Finance Real Estate Overseas

11/24/2014/0 Comments/in Articles/by Christian Reeves

To finance real estate overseas you must jump through all kinds of hoops and apply to multiple lenders in hopes of getting a decent rate. Compared to applying for a mortgage in the U.S., the battle to finance real estate overseas can seem confusing at best and silly at worst.

First, lets talk about why it’s so challenging for us to finance real estate overseas. When you’re an American investing in a foreign land, you have two strikes against you. We’re persona non grata in many countries around the world. The U.S. IRS has made it nearly impossible for us to open bank, brokerage, or escrow account. All institutions and firms that handle money are wary and weary of doing business with Americans.

And, we rarely have significant ties to the country where we want to purchase property. We have no credit history, nothing for a bank to latch on to if we default, and are as such considered a high credit risk. The only asset the lender is likely to have access to is the property.

Financing real estate overseas is like borrowing in the U.S. with a zero credit score and on a nonrecourse loan. If you are lucky enough to find a bank and escrow agent willing to take on American clients, the due diligence will be stringent and the interest rate high.

How high you ask? In most parts of Latin America, you’re looking at 6% to 12%, with the average being closer to 10%. And that’s the rate you might expect on a 50% loan to value. If you want to borrow 75% of the value of the property, that last quarter of the purchase price might cost you 20% or more.

Still Want to Finance Real Estate Overseas?

Ok, I bet many stopped reading a while back. Those of you still with me probably have had some experience offshore and knew going in that it can be expensive to finance real estate overseas. Here is what you’ve been waiting for. Some of these ideas are obvious, and some require a bit more planning.

Pull equity from your U.S. home. Your most friendly partner will always be your U.S. real estate. You might get a second mortgage at 2.8% APR, just a fraction of what you will pay overseas. If you have equity in your home, this might be your first best hope to buy real estate overseas. Of course, the days of no document loans are gone, but this is still a viable option for many.

Some banks lend to Americans no matter where the property is located. There are a few U.S. banks, and even fewer offshore banks, that will lend to Americans investing overseas. The international bank I recommend is Caye Bank in Belize. They offer financing for overseas real estate in a number of markets.

Another bank that finances offshore real estate, and is just a bit bigger than Caye, is HSBC. Their international division will lend against real estate in many countries, especially in Asia. Click here for more information on the international division of HSBC.

Use a private lender to finance your overseas dreams. There are private or hard money lenders focused on overseas real estate. If you’ve opened an offshore company, have a foreign trustee for your asset protection trust, or have a relationship with an offshore bank, ask about private financing. You’ll be surprised how many lenders want to diversify into these markets.

Please note that this is for information purposes only. Premier Offshore is not a lender nor do we provide introductions to lenders.

Negotiate with the seller. Seller financed real estate is rare in the U.S. but common offshore. Because credit ratings and the MLS system are nonexistent in most countries, mortgages are hard to come by for foreigners and locals alike. For this reason, seller financing is common.

Seller financed overseas real estate might mean you are paying the owner directly, in a rent-to-own situation, or taking over the existing mortgage with the original owner as co-signor. If you pay off the debt, the property reverts to you. If you default, the seller steps in and makes payments, taking back the home.

Developer or builder financing on new overseas real estate. Just about every major new development, including condos, single family homes, and resort investments, offer financing. Many of these options are funded by the builder and offer better terms than local banks. They want you to buy in to their project so they’ve worked the market to offer the most competitive rates available.

One of my favorite developers is ECI. They have great financing options along with unique projects in some cool areas. For more information, see ECI Development.

Buy offshore real estate in your IRA. Yes, you can buy overseas real estate in your U.S. retirement account. The most efficient way to do this is to form an offshore IRA LLC or Foundation (if buying in Panama), transferring your retirement account into that entity, and then making the investment.

More on Overseas Real Estate in Your IRA

And here is some good news. You don’t need to report offshore bank accounts or investments to the IRS if they are within your retirement account. IRA investments are exempt from FBAR, Form 5471, and related offshore reporting requirements. You need only inform your U.S. custodian of their value at the end of they year and he or she will handle any filings.

Of course, there are rules for buying overseas real estate in your retirement account.

First, you can’t live in the property…even for one day. It must be an investment or rental property. You can’t rent it from your IRA and may not have any personal gain from the property. All benefit are to accrue to the IRA and not you personally.

Second, if you borrow money to buy the property, you can’t pledge your IRA assets, or sign a personal guarantee, to secure the loan. That is to say, if you buy overseas real estate in your retirement account with a mortgage, you must use an unsecured loan…a mortgage backed only by the property. Such arrangements are more common overseas than they are in the U.S. and typically mean you won’t get more than a 50% LTV.

Also, if you use a mortgage, you might benefit from an advanced structure called a UBIT Blocker. See: Eliminate UBIT in Your IRA by Investing Offshore.

To peruse my various articles on buying foreign real estate in your IRA, or the tax consequences of investing in overseas real estate, please click here.

Please note that we at Premier Offshore do not offer loans. Since the posting of this article, it has become very difficult to get loans outside of the Untied States. If you would like to finance property in Belize, Costa Rica, Panama, or Nicaragua, I suggest you contact Caye Bank in Belize. This is the only lender we are working with in 2016.

Aged Population to Stress the Economy

11/21/2014/0 Comments/in Articles, My Thoughts/by Christian Reeves

Aged populations will be the norm by 2020, placing a great deal of stress on world wide economic systems, especially those founded on government backed treasuries and bonds. Other areas of weakness will be Social Security and Medicare. As our population ages, we can expect higher taxes on our IRA and passive investments. Here’s why the average age of our population matters and how to protect yourself.

Definition: An aged population is a country where 7% or more of the population is 65 or older. A super-aged society has 20% or more of its citizens over 65. We assume people will retire at 65.

Over the next 6 years, the number of super-aged societies will increase from 3 to 20. According to an August 6th report from Moody’s, this nearly seven fold increase will place a great deal of stress on our economy and the United States dollar.

Here’s Why Aged Population Matters

Studies have shown that, as a population ages, the demand for treasuries and bonds increase. The higher the average age, the higher the reliance on fixed income government backed instruments. The bottom line is that pensioners go for fixed income instruments as “safer” than stocks and real estate.

Large changes in behavior move markets. Higher demand for fixed income investments will push prices down. But, the U.S. is now returning about 2%, and 45% of the world markets are returning 1% or less on their government backed fixed income instruments. There’s just no where for these markets to go.

But I’m getting ahead of myself. Let me take a step back and explain.

Of the developed nations, most of the European Union is aged. Also, the United States, Canada, and Australia have aged populations. The super-aged nations are Germany (with returns on bonds of 1% or less), Italy, and Japan. Japan has the oldest average population in the world.

By 2015, Finland and Greece (a model of financial stability) will join the group of super-aged nations. The Netherlands, Portugal, Slovenia and Sweden will arrive at the party by 2020. Eleven more countries will pile on by 2025.

Of the developing nations, or the BRICS, Russia, Brazil, and China are all aged. None are at risk of becoming super-aged.

These changes have a profound effect on our economy. For example, Moodys found that world savings declines by .5% to 1.2% for each 1% increase in the aged population. That is to say, for every 1% increase in those 65 or older, we see a .5% to 1.2% decrease in total savings.

As retirees begin to deplete their IRA accounts, and live on their savings rather than saving and spending their salaries, the average level of savings decreases. When countries become aged or super-aged, the result can stress the market.

When you combine this with lower returns on treasures and fixed income instruments (bonds for example), we can expect the level of savings to decrease at a faster rate. As returns decrease, retirees will need to reduce their expenses (quality of life) and increase their rate of withdrawal.

Let’s look at another statistic…yes, I’m in a numbered state of mind today.

The “support ratio” is the number of eligible adults expected to be working. These working adults are paying in to the system and keeping the system afloat. As the average age of the population increases, the number of workers paying in to the system decreases, further straining an already dire situation.

The lowest support ratio is found in Japan. This country has 48.7 persons aged 65 or over for every 100 eligible worker in the 15 to 65 age range. By 2020 the burden of 1 retiree will be carried by only 2 workers. A ratio that many believe to be unsustainable.

Thirteen European countries, including Sweden and Germany, will have ratios between 2.7 to 1 and 3.3 to 1 by 2020. Canada is currently at 3.6 to 1 and the United States is at 3.9 to 1. In Asia, South Korea is 4.6 to 1 and China is 6:1.

Note that these numbers count eligible workers, not the actual number of people in the workforce. The higher a country’s unemployment rate, the greater the threat.

Nations in current financial crisis with extremely high unemployment rates are under more immediate pressure than those with lower unemployment. Greece and Portugal have more pressing concerns with their aged populations than does Germany or Japan.

The United States is hiding the truth in its unemployment statistics. While the rate seems to be improving, we don’t know how many workers have simply stopped looking for work and therefore are no longer considered unemployed. We do know the U.S. has a 62% labor participation rate. If applied to our support ratio, it could move from 3.9 to 1 to 2.2 to 1 (though, this is a mixed bag and like comparing apples to mangos).

What does all this mean to you?

We can expect even higher taxes on capital gains and retirement account distributions.
The nationalizing of the retirement account system to cover debts from Social Security becomes more likely.
The age of retirement may be increased.
The assets within your IRA will become targets of the IRS and other cash strapped agencies. Remember that the IRS may seize your retirement account and State laws, such as homestead exemptions, don’t protect you.
As the government continues to focus on controlling capital, limitations on IRAs will increase. Most believe the right to take your IRA offshore will be eliminated.

The bottom line is that retirees will be required to make even greater sacrifices to keep the U.S. financial system afloat. It will fall upon you to keep the economy together. We don’t know exactly what form these forced contributions will take, but we know they are coming.

I hope you have found this post on our aged population thought provoking. For information on how to take your IRA offshore, or for questions on any article on this site, please send an email at info@premieroffshore.com

The IRS Data Collection Machine

11/19/2014/0 Comments/in Articles/by Christian Reeves

Much like the NSA, the IRS data collection machine is building a file on all Americans. It’s online now and will be ready to use in all audits within one year.

The IRS collects more useful data on you than does the NSA and will begin making it available to auditors shortly. Some IRS data collection methods, such as grabbing Facebook posts and bank records before beginning an audit are already common practice.

Historically, the IRS relied on Americans to self report, and matched those tax returns to forms from U.S. employers, mortgage companies, and banks. If your 1040 tax return didn’t match your W-2 wage statement, or 1099a (stock trades and independent contractors), bank interest income, property tax and mortgage interest reports, sale of real estate, K-1s from partnerships, etc., then you would receive a letter from the IRS. You would either be told to send in more money because your tax return didn’t match what the IRS computers say you owe (called a change report), or you would be audited.

Beginning in 2014, the IRS will get much of this same information from foreign banks and brokerages. If you have a bank account or investments offshore, expect that your institution will be reporting to the IRS. (Search FATCA for more information).

In addition, the IRS has been building backdoors in to most email systems and social media companies. The great collector is amassing enormous amounts of data on you, your friends, your income and assets, and your travel. You can be certain that these IRS data collection tools will be used against you in future audits.

I also believe this IRS data collection system will be used to target individuals and companies. Maybe groups will be selected for audit because their online activities show they are likely to have unreported income, or maybe individuals and charities will be selected based on political affiliation. No matter how it’s used, these new IRS data collection tools put you at a significant disadvantage.

Of course, the IRS says they don’t use “big data” to target or select individuals for audit. They claim it’s used in micro analysis only. IRS data collection is used to “estimate the U.S. tax gap, predict identity theft, and find refund fraud” (according to the IRS data collection office).

* The tax gap is the difference between how much is owed and how much is collected by the IRS.

Whether or not you believe the IRS, they are hoovering up data on Americans like the NSA. Though, the IRS is going after more actionable data. Information that can be used against individuals in an audit. So far, it has been shown that the IRS is collecting the following:

Phone bills,
Credit card statements,
Bank statements (not just interest income or 1099s, but complete copies of your bank statements),
Hotel, air and other travel information,
Copies of contracts,
Facebook, Twitter, eBay, Google, and all social media accounts,
Skype history, including chat and location data, and
All email systems including Google.

No matter what you may hear in the press, the IRS often comes armed with one or more of these items in large audits. I have personally been involved in cases where travel records, bank statements, Facebook and Skype activity, and email hacking have been used by the IRS against the taxpayer.

One tip you might find helpful for email: Google and others backup messages for about 9 months after you delete them. If you use a U.S. email service, deleting messages right before the hammer comes down is not helpful.

As for Skype, it’s often used to track your phone calls and chats. I have also see it used to track you. When you login, Skype keeps a record of your IP address. With this, the IRS knows where you are in the world. For example, I have seen Skype records used to prove someone was in Panama.

This is all to say that the IRS is currently collecting massive amounts of data on U.S. persons and putting it to use far more effectively than the NSA. Expect IRS data collection to be used to find targets and during the audit process. If you are currently being audited, assume the IRS has access to all of your emails and social media accounts.

Have you been making calls to offshore banks? Then you might become a target. Have you traveled to St. Kitts and Nevis recently? What about Hong Kong? Your travel logs may soon be compared to your U.S. tax return and your FBAR. If you’ve been to Hong Kong on business, but never disclosed any assets, banks, or income from there, you may be a prime audit candidate.

I believe these IRS data collection tools are an egregious breach of our personal privacy. A government agency is collecting data to be used in civil or criminal cases without court oversight or a warrant. Add to this the fact that the IRS has been hacked on multiple occasions and frequently shares its data with 3rd party contractors and collection agencies, and you see the risk of identity theft or harassment.

And these IRS data collection systems are unnecessary. 98% of the revenues collected by the IRS come in from voluntary filings. Does plugging a 2% gap warrant such draconian measures?

Prepare for an Offshore IRS Audit

11/17/2014/0 Comments/in Articles/by Christian Reeves

There’s no worse feeling in the world than coming home to a letter from the IRS telling you that you are being audited … until you get notice of an offshore IRS audit. No matter how organized you are, you should fear the great IRS. If you have unreported accounts or become the subject of an offshore IRS audit, you need to take steps to protect yourself.

In this article, I’ll explain what you can do to prepare for an offshore IRS audit. If the collector is closing in, you have options. If the government isn’t at your door today, use these tips to structure your offshore affairs before trouble finds you.

First, you need to figure out how scared you should be. If you have an unreported offshore account or offshore company, you should be very afraid … a 10 out of 10. If you had more than $10,000 in an offshore account, even for one day, you face serious risk if you didn’t file an FBAR.

If you used an offshore incorporator to form your offshore company that doesn’t provide U.S. tax compliance, you should be concerned … anywhere from a 5 to 8 out of 10. This is because you might have failed to file a form or two. Even if you submitted the Foreign Bank Account Report (FBAR) and paid tax, you could be facing hundreds of thousands of dollars in penalties for not reporting the structure.

Second, you need to determine your risks. Are there any unfiled returns or forms? Any unreported income the auditor might find? Have you underrated your income or overstated your expenses? Are your records well organized and ready for an offshore IRS audit? If they are all stuffed in to the shoebox under your bed, the answer is no!

Finally, I strongly recommend you get help when facing offshore IRS audit. Only an experienced professional is capable of identifying these risks and determining how likely they are to come to light in the exam.

While I certainly appreciate your perusing this site, and my many articles on offshore filing, I am writing on their general use. When facing someone from the government whose only mission in life is to take what you have, you should hire a professional, even a tax attorney, to represent you. He or she will analyze your specific situation, identify weaknesses, and develop a comprehensive plan to deal with the offshore IRS audit.

Even if you think your risks are minimal, or you don’t have the money to hire a tax lawyer, at least consult a professional. Let them review the audit request, and consider your situation. Find out if they believe you can handle the agent on your own. This might cost a few hundred dollars, but will give you peace of mind. Be honest and tell them all the good or bad during the consultation.

Prepare for an Offshore IRS Audit

Whether you’re going in to battle alone, or with a tax lawyer by your side, here are my recommendations on how to prepare for an IRS audit that includes offshore transactions or international investments.

Don’t be a snitch! Never volunteer information in an IRS audit and this goes double in an offshore IRS audit. The agent is NOT your friend. He’s there to find errors and extract a penalty for those mistakes. While you must always be honest, only answer questions that are asked. Never volunteer new information or expand on a subject beyond the question. You might think you are helping, but you’re just making things worse.

The same goes for documents. Never give more paper than is requested. You might think it shows good faith, and you’d be wrong again. More documentation just gives them more ammunition. More chances to find an error or a discrepancy.

If you take my message to heart and hire a tax professional to do battle with the IRS, you might never speak to the agent. When I was representing clients in offshore IRS audits, I never let the agent get near them. All communications went through me and me alone. I minimized the information exchanged and did my best to keep the auditor focused on areas that were our strengths … and away from those that were of concern.

Review your bank statements. Go through your bank statements and understand each and every deposit. Those that are income should be identified as such. Those that are nontaxable, such as loans and gifts, should have supporting documents. The first line of attack in an offshore IRS audit is the bank statement, so be ready to prove up all nontaxable items.

At the same time, identify and find documentation for all business expenses. If you deducted it, have an invoice or receipt ready to go. Never be caught off guard when the agent asks, “What’s this payment for?” Have an answer with proof ready.

Remember that, so long as you are a U.S. citizen, the IRS has a right to audit your offshore company and international business activities. Therefore, you must maintain records of income and expenses for offshore transactions just as you would for a U.S. based business.

I understand that sometimes practices in foreign countries conflict with your desire to document expenses. For example, it is common to pay employees in cash in South America, but it’s hard to prove this as an expense to the IRS.

What I’ve found successful in offshore IRS audits is a log book. Keep a book of each cash payment including the date, employee (independent contractor), brief job description, amount, and their signature. So long as you keep a signed log, cash payments will usually be accepted by the IRS.

Don’t file a tax return during an offshore IRS audit. If you file new or delinquent returns during an exam, the audit will usually expand to add those years. If you file a return claiming foreign sourced income during an audit, you might be admitting to a crime … something you should never do. If your audit is going on around April 15, get an extension for last year’s return until October 15.

If you have unfiled returns, the agent will probably ask you to file them with him. Assume they’ll be audited and be prepared to prove each item. If you have unfiled returns and offshore issues, see Rule 1: Hire a Professional Immediately.

Foreign Earned Income Exclusion (FEIE): If you are living and working abroad, and qualify for the FEIE, you can earn nearly $100,000 per year tax free in a salary. However, if you don’t file a return, and get mixed up in to an offshore IRS audit, you can lose the FEIE entirely. That’s right, if you don’t take the FEIE you can lose it if you’re audited. If the IRS hasn’t contacted you yet, remember, use it or lose it and file as soon as possible.

Get your records in order. Begin to get your documents and supporting proof together the day you receive the IRS letter. Don’t delay and don’t put it off. I can’t tell you how many people hide their heads in the sand for weeks after receiving an offshore IRS audit notice. Don’t waste a minute. Get ready to meet the enemy in combat as soon as possible. The day of reckoning is coming and you are well behind in the count. You need every second to get ready.

It will take longer to organize your paperwork than you expect. Also, being proactive will give you time to develop a plan of defense and order any missing documents from banks, brokerages, etc. Remember that you never want to answer a question with “I don’t know.” You need to be ready and organized on day 1 to show you’re not the easy target the auditor is looking for … not a pushover who’ll go quietly, but rather someone who’s prepared and knows his rights.

* Note that all records must be printed. The IRS auditor won’t accept electronic files.

Try to be nice. Even if you have to fake it, be nice and courteous. Most IRS auditors are just doing their jobs … which, unfortunately, is to separate you from your money. They view you as one of their 100+ cases. Don’t be rude or do anything to get on their bad side. Remain one of 100. There is no reason to draw their ire or special attention.

If you are unable to deal professionally with an offshore IRS audit, don’t get involved and see rule 1 again. Hire a professional and stay out of the room. One of a tax lawyer’s more important skills is to treat the auditor with respect and direct them away from areas of concern.

Have a payment plan in mind. If you think the auditor will find your undocumented expenses or unreported income, have a plan to deal with the resulting tax bill. If offshore IRS audit will result in a balance due, you need to be ready to pay up. If you can’t pay now, have installment agreement ready.

For more information on setting up a payment plan, I suggest you read through www.taxdebtrelief247.com. This blog has quite a bit of quality information on how to deal with the collection division of the IRS.

I also recommend How to Settle with the IRS by Goldstein and Ofstein, and Stand Up to the IRS by Frederick Daily. Both of these books are available on Amazon.

You can find my book on international tax and business for American expats on this site (see the bookstore). It includes detailed information on battling the IRS in an offshore audit and settling with collections.

I hope you have found this post on offshore IRS audits helpful. Feel free to email me at info@premieroffshore.com with any questions or suggestions. If you require a tax attorney experienced in these matters, I will be happy to provide you with a referral.