President Trump’s Tax Plan and Expats
Christian Reeves

President Trump’s Tax Plan and Expats

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You’ll find a lot of partisan bickering on the web about President Trump’s tax plan. Here’s my effort to give you the facts and just the facts (a la Joe Friday of Dragnet) on how President Trump’s tax plan affects expats and Americans living abroad.

Keep in mind that this article is focused on US citizens living and working abroad. US persons who qualify for the Foreign Earned Income Exclusion in 2018. I’ll leave State tax issues and changes to the code that don’t affect expats to others.

You’ll find that Trump’s tax plan made some cuts around the margins, but didn’t include expats in the corporate tax changes. Sure, we get the 2 to 4% reduction all Americans get, but we’re not affected by changes that will save multinationals billions.

Historically, US corporations have been taxed on their worldwide income. Double tax was eliminated with the Foreign Tax Credit and they could retain earnings offshore tax-deferred. But, when earnings were repatriated, they’d be taxed at ordinary rates.

President Trump changed all of this for big corporations. He moved corporations from a worldwide tax system to a residency-based tax system (also referred to as a territorial tax system). Businesses will pay US tax on their US sourced income and zero US tax on their foreign sourced profits. Trump also closed billion-dollar loopholes like the ability to move US source income offshore with payments for intellectual property.

We had hoped that American expats would get the same benefits. That individuals would move from a worldwide tax system to a residency based system. That we would pay US tax on US income and no tax on foreign sourced gains.

This didn’t happen. American citizens living abroad are still taxed on our worldwide income. I guess we expats weren’t a large enough voting block or that we didn’t donate as much to the campaigns as the multinational corporations.

As a result, we still must look to the Foreign Earned Income Exclusion and the Foreign Tax Credit to keep Uncle Sam away from our ordinary income (wages or business income). The FEIE for 2018 increased to $104,100, up from from $102,100 in 2017. The FEIE amount for 2016 was $101,300, 2015 was $100,800, and 2014 was $99,200.

This increase is based on the annual inflation adjustment for 2017 which applies to more than 50 provisions in the US tax code. For all the details see IRS Rev. Proc. 2017-58. It does not come from Trump’s tax plan.

One aspect of Trump’s move to a residency based system affecting the FEIE is a focus on residency. That is to say, the IRS seems to be moving away from the 330-day test and towards the residency test.

The IRS has figured out that auditing expats who are using the 330-day test to qualify for the Foreign Earned Income Exclusion is very profitable. Thus, they’re putting a lot of resources into targeting this group.

As a result, I’m telling my clients to convert to the residency test and conform with how the IRS now views corporations. Become a resident of a low tax country, making that your home base, and stop using the 330-day test to qualify for the Exclusion.

From the IRS’s perspective, you can be a resident of any country you like and qualify for the Exclusion. So long as it’s your home base, where you plan to live for the foreseeable future, and you where have a residency visa, you’ll qualify for the FEIE using the residency test.

The last of those criteria, getting a residency visa, is usually the most challenging. In my experience, the easiest country to get legal residency in is Panama. Simply invest $20,000 in Panama’s Friendly Nations Reforestation Visa and you’re in.

Where most countries require you to buy real estate or invest a large amount of money to start a business, Panama allows you to invest a relatively low amount in their green initiative and receive residency. For more, see Best Panama Residency by Investment Program.

Most expats shield the majority of their ordinary income from the IRS using the FEIE or the Foreign Tax Credit. Thus, the fact that Trump lowered personal tax rates by 2% to 4% makes little difference. You don’t pay US tax on your ordinary income anyway. And, if you do, you should be operating your business through an offshore corporation.  

What does affect most expats is US tax on capital gains. This rate remains unchanged at 20% (assuming the Obamacare tax is repealed). As a result, US citizens pay US tax on all capital gains, no matter where they live and no matter where the property or asset is located. If a US citizen living in Belize sells real estate in Belize, he or she will owe 20% on long-term capital gains tax to Uncle Sam.

What will help expats is that the standard deduction doubled under Trump’s tax plan. A single filer’s deduction increases from $6,350 to $12,000. The deduction for Married and Joint Filers increases from $12,700 to $24,000.

The vast majority of US expats will save big on their US taxes because of this change. We expats rarely have a mortgage on our international properties. Therefore, we don’t deduct mortgage interest on Schedule A and thus don’t itemize. An increase in the standard deduction will go directly to our bottom line in a dollar for dollar decrease in US tax on our capital gains.

This tax break is balanced against the loss of the personal exemption.  You can no longer deduct $4,150 for each dependent. As a result, expats with large families will see an increase in tax, even considering the increase in the standard deduction.

A change that affects new expats is the loss of the moving expense deduction. When you move abroad for work, you can generally deduct all moving expenses. For most expats, this amounts to thousands of dollars in the year they leave the United States.

I hope you’ve found this article helpful. The most important takeaway for most expats using the Foreign Earned Income Exclusion is that you should spend 2018 working toward the residency test. Whether you chose Panama, Belize, Nicaragua, or elsewhere, you need to get started as soon as possible.

Why you should issue an ICO in Cayman Islands
Christian Reeves

Why you should issue an ICO in Cayman Islands

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The top two jurisdictions for ICOs in 2018 are the Cayman Islands and Switzerland. Most companies focusing on the EU and UK markets issue from in Switzerland and those from Asia and the Americans will be in Cayman. Here’s why you should issue an ICO in the Cayman Islands.

I chose Cayman to write about because it’s the jurisdiction of the largest ICO in history. As reported in Business Insider on December 20, 2017, Block.one, a software startup registered in the Cayman Islands had sold $700 from tokens, called EOS, in an initial coin offering. The Block.one ICO is still the largest ICO ever.

I also recommend Cayman because of the connections to China. When a large Chinese company, such as Alibaba, issues an IPO in the United States, they do it through a Cayman Islands subsidiary. It’s natural for these companies to issue through Cayman.

Let me start by noting that all ICOs from the Cayman Islands will be regulated. As such, they must comply with international laws.

  • That this article is focused on ICOs. Cayman is also the preeminent jurisdiction for cryptocurrency funds, that’s a story for another day.

For example, if you want to sell into the United States market, you must follow all SEC rules. For most, this means offering only to accredited investors and enforcing a lockup period. For others, this will mean registering in the US, much like an IPO. The Cayman Islands will expel any company that doesn’t follow international laws.

In this article, I am focused on ICOs where the buyers receive a share of the profits of the business. A form of business funding that the SEC and others consider the equivalent of selling shares.

An ICO is an alternative method of fundraising for a project on the blockchain or startup business. Tokens, which give the buyer some share of the business, or the profits of the business, is exchanged for fiat currency.

In contrast, a use token gives the buyer a right to a product or to use the service. For example, if Uber had sold tokens to raise money, those tokens would give buyers a certain number of rides on the service.

A use token is not a regulated investment while an ICO is akin to selling shares of stock and treated as an IPO in most countries. Most ICOs have been pushed offshore while the sale of use tokens can be done from the United States.

ICOs have flourished in Cayman, even though the government has yet to issue regulations or guidance. In contrast, it seems that Switzerland will issue regulations in the near future.

In my opinion, Cayman is one of the two a hotspots for quality ICOs because of its long history as a leading international finance center. The government and regulators are seen as top notch… business friendly with an eye to compliance and global acceptance. Regulators are sure to support this business-friendly climate while safeguarding the reputation of the jurisdiction by meeting international KYC, AML and compliance standards.

When planning an ICO in the Cayman Islands, your council must consider the following statutes:

  • The Money Services Law
  • The Securities Investment Business Law
  • The Proceeds of Crime Law, Anti-Money Laundering Regulations and existing guidance notes
  • The Mutual Funds Law (applicable to cryptocurrency funds)
  • FATCA and the Common Reporting Standards
  • Beneficial Ownership Regime
  • Electronic Transactions Law

The focus of Cayman regulators will be in KYC and AML compliance, as well as watching out for Securities issues (for example offering tokens in the US to non-accredited investors). The bottom line is that regulators are looking for anything that could give the island a black eye on the world stage.

For these reasons, Cayman is competing with Switzerland for the top crypto ICO jurisdiction. Note that I’m talking about where the ICO is issued and not where the business is operated from. Very few, if any, ICOs operate from Cayman. The only exceptions might be those in the tax-free zone. For more on tech startups operating from Cayman, see: Move Your Internet Business to Cayman Islands Tax Free.

Even Cayman cryptocurrency funds are being run from outside. The best tax system for Cayman crypto funds is to operate as an Act 273 International Financial Entity in Puerto Rico. But, because of the startup costs, this is limited to larger funds. Setup might cost $150,000 and capital required is $550,000.

Most of our clients in Cayman use a two company structure. One in their low tax and low-cost country of operations (such as Panama or Mexico) and one in their country if issuance (Cayman Islands). Those in Mexico typically add a company in a low tax country like Panama to manage their Mexican tax issues.  

ICO issuers often exclude buyers from their country of operation. For example, a business issuing from Cayman and operating from Panama might not sell tokens to citizens or residents of Panama. When operating from Mexico, they might only offer tokens to accredited investors (any person with annual investments in securities of $458,000 USD or with an annual income of $152,000 USD). For more on Mexico, see: Fintech and Cryptocurrency Law in Mexico.

URGENT NOTE: Before you consider an ICO in the Cayman Islands, please read through this post: The Offshore ICO Scam and Cayman Islands Corporations.

I hope you’ve found this article on why you should issue an ICO from the Cayman Islands to be helpful. For more information on issuing anICO from Cayman or Switzerland, please contact me at info@premieroffshore.com or call us at (619) 483-1708. We’ll be happy to assist you to build your structure, draft your offer documents, and issue the ICO from a top jurisdiction,

Where can I travel without a passport?
Christian Reeves

Where can I travel without a passport?

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The US IRS will begin certifying tax debts on January 22, 2018. If you have a “seriously delinquent” tax debt, your passport can be revoked. Likewise, the government can refuse to renew your passport if you owe more than $50,000. Here’s where you can travel without a passport after it’s been revoked by the IRS.

I’ve been writing about this since December 2015, and it’s finally come to pass. The IRS will begin targeting American expats who haven’t paid their taxes in the next few days. Once your passport is gone, your travel options will be greatly reduced.

Before I get to where you can travel without a passport, let’s consider the situation for a minute.

I suggest that this bill targets Americans living abroad because, unless you have a second passport in hand, the loss of your US passport will force you back to the United States to deal with the IRS. For most Americans living in the US, the loss of their “travel privileges” is of little concern.  The ones who will be hit the hardest will be Americans living, working, and doing business abroad.

This is especially true for expats who don’t have permanent residency in a foreign country. If you’re traveling as a tourist, you’ll be forced back to the United States in a few days or months. If you’re a temporary resident, you’ll be required to return and account to the IRS when your temporary status expires. You won’t be able to apply for permanent residency status if your US passport has been revoked.

If you have a permanent residency visa, you should be able to remain in your country of residency. You won’t be able to travel or leave your country of residence without a valid passport. However, the IRS can’t easily force you home unless you lose your permanent visa status.

If you think you’ll have a tax issue in the future, or can keep the IRS at bay with an Offer in Compromise, you might apply for residency in a country like Panama. All you need to qualify is an investment of in this country’s friendly nations reforestation visa program. While there are many countries where you can get residency, Panama is the lowest cost quality jurisdiction for those from a friendly nation.

Of course, the question of where you can travel without a passport becomes mute if you purchase a second passport. So long as you have a valid travel document from a country like St. Lucia, the IRS can’t force you back by revoking your US passport.

But, once your US passport has been revoked, and you’re back in the United States, where you can travel without a passport? The following is based on a decade of experience. This article is not a statement of the law, but rather how things work at the border.

First, you won’t be able to fly to any country without a passport. No airline will risk allowing you to fly if you don’t have a passport. Remember that the airline is responsible for returning you to your home country if you’re denied entry.

So, that means you have only two options of where to travel without a passport. You can drive to Canada or Mexico. Because Canada can be quite picky about whom they let in, the safest port of entry is Mexico.

If you travel within the Border Zone (usually up to 20 kilometers south of the US – Mexico Border) or the Free Trade Zone (including the Baja California Peninsula and the Sonora Free Trade Zone) no passport will be required by Mexico. However, if you wish to pass these zones, you’ll need a passport and, if you’re driving a US car, your auto will need a permit.

The maximum period of time you’re supposed to stay in Mexico without a formal visa is six months. However, when you arrive by land, there’s no entry stamp and no way for the government to know how long you’ve been in the country. In my experience, so long as you don’t cause any trouble, the Mexican government won’t bother you.

In order to return to the United States, you’ll need a valid US ID and your birth certificate. While many websites say you need a US passport, including official government sites, I’ve asked immigration officers and they say you can pass with a birth certificate and photo ID. The last time I inquired was 2 days ago, so this is recent information.

By the way, I’m assuming that the US IRS will revoke all travel documents if you owe more than $50,000. This means the loss of your US passport, your US passport card, and your SENTRI card. US passport cards and SENTRI cards are only valid at land crossings (Mexico and Canada).

I haven’t seen any statements by the IRS or immigration on passport and SENTRI cards. It’s possible they would remain in effect if you lost your passport.

With that said, I don’t see any practical reason a US person couldn’t drive from San Diego to Tijuana and live in Baja indefinitely without a passport. Your chances of having a problem with Mexican authorities is low and you should be able to return to the US occasionally without a passport.

Where you’ll have issues is opening a local bank account and getting an apartment lease. It would be best if you can get these done before losing your US passport.

With all of that said, the best place you can travel without a passport is Northern Mexico. Again, this is 20 kilometers south of the US – Mexico Border and Baja California. All of my experience has been in Baja, from Mexicali to Tijuana and Playas to Ensenada. In 10 years of travel in Northern Mexico, I’ve never once been asked for a passport.

I hope you’ve found this article on where you can travel without a passport to be helpful. For information on setting up an offshore structure while you still have your passport, or with Panama residency or purchasing a second passport, please contact us at info@premieroffshore.com or call us at (619) 483-1708.

Take your IRA offshore and invest in cryptocurrency
Christian Reeves

Take your IRA offshore and invest in cryptocurrency

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I expect cryptocurrency to remain a hot IRA investment in 2018. Almost every call we get these days is about investing in cryptocurrency offshore. Clients want to manage their crypto offshore in private and avoid the IRS audits we all know are coming. So, here’s how to take your IRA offshore and invest in cryptocurrency.

When I talk about cryptocurrency, I don’t mean only bitcoin and ethereum. What’s hot are all the altcoins and forks. Altcoins like AAC, ACT, Bitcoin Cash, Monero, Ardor, sia coin, and others. And, we see about 20 forks coming in 2018. A few exchanges, such as OurDax.com, guarantee that they’ll pass along all of these forks to their users.

The best way to avoid IRS audits of your crypto account, and the coming war in the United States, is to setup your account offshore. The way to gain access to the best trading platforms is through an offshore company. The best way to gain access to altcoins and forks is to take your IRA offshore and invest in cryptocurrency. The way to participate in top ICOs is to invest through an offshore structure.

So, here’s how to take your IRA offshore.

The first step is to move your account(s) to a custodian that allows for international investments. This is usually a US custodian that supports offshore LLCs like Midland IRA or Entrust. The most popular custodian for crypto investors is Midland, but there are several which offer this service. Neither of these companies is associated with Premier.

The reason I say you’ll probably need to move to a new custodian is that none of the big firms support offshore investments. The big guys, like Fidelity and Merrill Lynch, make their money by selling you their investments. When you go offshore, the custodian no longer is in control and doesn’t earn a commission on your trades.

And not all self-directed custodians allow for international investments. Firms like IRA Services in California allow US LLCs but not offshore LLCs. In order to move your retirement account out of the United States, you need a US custodian that is experienced in offshore structures.

Once your account is with the right custodian, we can form your offshore IRA LLC. We will work with you to select the best jurisdiction, form the company, draft the operating agreement and other documents, and open your bank and/or crypto accounts.

In most cases, we’ll open both a bank account and a crypto account. You will sell your US investments and transfer cash offshore. It’s rare that a US custodian allows for like-kind exchanges. Though, we have seen some with self-directed accounts move offshore by transferring crypto, thereby avoiding tax on the sale.

Once your IRA LLC is set up and funded, you can trade cryptocurrency in private. You’ll also have access to a number of smaller altcoins that are not available in the United States.

The same goes for ICOs. The US SEC has pushed most ICOs out of the country. Only the very largest and best-funded companies can issue a US compliant ICO. This means that US ICOs will be from companies that have already gone through many rounds of funding, with venture capitalists taking big bites of the pie.

If you want to invest in a true startup, then you need to do so offshore. If you want to invest as a VC, and get in on the ground floor, you need to invest offshore using an IRA LLC.

And, of course, you’re not limited to investing in cryptocurrency. You can buy gold, hold multiple currencies, invest in foreign real estate, and just about anything else you wish. You must follow all US IRA rules, but you’re in control and you select the investments that fit your risk tolerance.

Note that you can’t buy a house and live in it with retirement money. You can invest in rental properties, with the rental profits and gains flowing back into your retirement account. For more on this, see: Can I buy foreign real estate with my IRA?

One popular hedge offshore is to purchase physical gold in your IRA. You can buy gold through a bank, such as Caye Bank in Belize, and hold it as a hedge against crypto and fiat currencies.

And some banks, such as Caye, allow you to borrow against your physical gold. We have clients purchasing gold and borrowing against it to trade crypto. For more on the rules around buying gold with your retirement account, see: IRA Gold Rules.

But, watch out for IRA lending rules and UBIT. When you borrow in an IRA, you must use a non-recourse loan. Also, Unrelated Business Income Tax can apply if you don’t have a UBIT blocker corporation in place.  For these reasons, I recommend that only the most sophisticated IRA investors use leverage in their account.

The bottom line is that taking your IRA offshore will give you access to the best altcoins, ICOs, forks (IFOs), exchanges, and high yield investments. Add to this the max privacy and asset protection you get, and you see why offshore IRA LLCs are so hot in 2018.

I hope you’ve found this article on why you should take your IRA offshore to invest in cryptocurrency to be helpful. For more information, please contact us at info@premieroffshore.com or call us at (619) 483-1708 for a confidential consultation.

mexico banking license
Christian Reeves

Capital Requirements for a Banking License in Mexico

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When applying for a new banking license, you must have a certain amount of capital. This article is on the capital requirements to apply for a banking license in Mexico. Note that this is the amount of cash you need to have to apply for the license. To operate the bank, you must maintain an 8.5% reserve and a 2.5% reserve in Mexico.

The amount of capital required for a banking license varies greatly from country to country. The lowest capital amount for a respected jurisdiction is the US territory of Puerto Rico. An international banking license in Puerto Rico required $550,000 in capital. $250,000 in paid-in capital and $300.000 in a CD held in a local bank.

In the Caribbean, most jurisdictions require $1 million to $5 million in capital. This is one of the reasons Puerto Rico issued 24 licenses last year and Caribbean financial centers issued 1 or 2 depending on the country.

For more information, you can read my 300 page Offshore Bank License Guide on Amazon Kindle.

Without any more adieu, here are the capital requirements for a banking license in Mexico.

A. A required minimum capital of $27.5 million USD for banks that carry out the following activities:

  • Take deposits
  • Take loans
  • Issue debt
  • Issue subordinated debt
  • Make deposits in foreign financial institutions
  • Grant loans and debt purchase transactions
  • Act as guarantor
  • Issue third party letters of credit
  • Carry out transactions involving securities
  • Issue convertible debt
  • Carry out commercial transactions
  • Trade gold, silver and foreign currency
  • Offer security deposit boxes
  • Issue letters of credit
  • Act as trustee
  • Offer escrow accounts
  • Act as agent for bondholders
  • Act as payment agent for security issuers
  • Offer bookkeeping services
  • Act as estate trustee
  • Act as agent in a bankruptcy procedure
  • Offer appraisals
  • Purchase and sale of real estate for the bank´s use
  • Leasing transactions
  • Derivatives transactions
  • Factoring transactions
  • Offer payment mechanisms

B. A required minimum capital of $16.5 million USD for banks that carry out the following activities:

  • Take deposits
  • Take loans
  • Issue debt
  • Issue subordinated debt
  • Make deposits in foreign financial institutions
  • Grant loans and debt purchase transactions
  • Act as guarantor
  • Issue third party letters of credit
  • Carry out commercial transactions
  • Purchase and sale of real estate for the bank´s use
  • Leasing transactions
  • Derivatives transactions

C. A required minimum capital of $11 million USD for banks in the following categories:

I. Banks that carry out transactions only with Institutional Investors (as defined below), Qualified Investors (as defined below) or legal entities:

  • Take deposits
  • Take loans
  • Issue subordinated debt
  • Offer escrow accounts

II. Banks that carry out the following activities:

  • Make deposits in foreign financial institutions
  • Carry out transactions involving securities
  • Issue convertible debt
  • Carry out commercial transactions
  • Trade gold, silver and foreign currency
  • Act as trustee
  • Act as agent for bondholders
  • Act as payment agent for security issuers
  • Offer bookkeeping services
  • Act as estate trustee
  • Act as agent in a bankruptcy procedure
  • Offer appraisals
  • Purchase and sale of real estate for the bank´s use
  • Offer payment mechanisms for the bank´s use

III. Banks that carry out any of the following transactions with authorized payment mechanisms:

1. Transactions involving:

  • Deposits
  • Loans
  • Deposits in foreign financial institutions
  • Grant loans and debt purchase transactions with other financial institutions
  • Transactions involving government or bank bonds
  • Transactions with foreign currency:
  • Commercial transactions
  • Trade gold, silver and foreign currency.

D. A required minimum capital of $27.5 million USD for banks that carry out a mix of the transactions listed above that does not fit in any of the aforementioned categories.

Definitions

Institutional Investor: Insurance companies, investment funds or pension funds.

Qualified Investor: Any person with annual investments in securities of $458,000 USD or with an annual income of $152,000 USD.

Conclusion

I hope you’ve found this article helpful. For more information on setting up an international bank, please contact me at info@premieroffshore.com or call us at (619) 483-1708.

You can also read my 300-page book on the topic on Amazon Kindle. Click here to go to Amazon’s site.

Cryptocurrency Mexico
Christian Reeves

Fintech and Cryptocurrency Law in Mexico

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As other countries wait for government officials to dictate what happens with cryptocurrency and Fintech Companies, Mexico just took a big step forward. After making several adjustments to the proposed bill, Mexican senators finally approved with 102 votes in favor and none against a law that regulates financial technology companies in Mexico. Delegates still need to vote to approve the measure, but this is a major step forward.  

Mexico has a lot to gain with the approval of the Fintech and Cryptocurrency Law and the mainstream adoption of bitcoin. About 44% of the Mexican population doesn’t have a bank account due to the mistrust that exists between citizens and financial institutions. That’s 29 million Mexicans that don’t have a bank account and live on cash.

The transparency that comes with cryptocurrency transactions might fix this problem. If the bill becomes law, and it’s not there yet, it will create a Fintech solution for the unbankable. Let’s take a moment to take a look at some of the most interesting key aspects of Mexico’s Fintech Law.

One of the main points of the Fintech Law is to increase the level of financial inclusion throughout the country, promote competition and provide legal certainty to participants in the sector, contributing to the improvement of the national financial system. There are over 158 Fintech companies in Mexico that will benefit from having an established framework from which to operate.

This is especially true for cryptocurrency exchanges. They require specific laws and quality regulation. In order to maintain banking and other relationships, cryptocurrency exchanges need to be in a regulated environment where their business partners know what to expect and that the exchange is operating within a specific legal framework.

When cryptocurrency exchanges began offshore a few years back, most were looking for countries with no regulation. Exchanges thought they could operate outside of the KYC, AML and compliance systems.

These exchanges quickly found it was impossible to get correspondent banking relationships. Also, it was difficult to transfer crypto from an unregulated exchange to a regulated exchange in a quality jurisdiction such as the United States.

As a result, international cryptocurrency exchanges began seeking countries with specific cryptocurrency laws and regulations. When operating from within these boundaries, the exchange has access to banks and other providers. Outside of the system, clients have no way to convert their bitcoin to FIAT money.

Today, these countries are Mexico in the Latin American region and Switzerland in the European region.

Article 36 of the Fintech and Cryptocurrency Law details the requirements that will be needed for a cryptocurrency exchange to be granted authorization to operate. The exchange will have to set a minimum capital to perform their activities in agreement with the provisions issued by the Comisión Nacional Bancaria y de Valores (CNBV).  The minimum capital may vary depending on the type of activities they perform and the financial risk they face can be read in the Fintech Law bill that was approved by Senate. The amount of capital has not yet been determined.

In order for a Fintech or Cryptocurrency Exchange to start operating, they must be authorized by the CNBV, be a Limited Liability Company, and have a domicile in Mexico. They must also have a corporate governance structure, operating systems, keep their accounting logs up to date, have a strong security system, as well as offices and operating and compliance manuals.

The bill permits banks and cryptocurrency exchanges to share their applications or technological interfaces, called API (Application Programming Interface), without violating the financial secrecy that is key for its function.

CNBV must receive authorization from the Bank of Mexico to approve a Fintech company, to give legality to its operations. A Fintech company in Mexico must inform their clients about the volatility and unpredictability of virtual assets, the risks of fraud, and that transactions may be reversed by governing bodies.

The Fintech Companies must inform their clients of the risk involved receive a signed contract from their clients indicating they understand. The law specifies that the government will not be responsible for any sort of financial reimbursement to users in the event of fraud, so businesses will be required to communicate this on their website and disclose this before entering into a contract with them.

A Financial Technology Council will be created that consists of 12 members, which will include representatives of the CNBV, the tax authority, and Banxico. Their goal will be to encourage the exchange of opinions and solve any problems that occur with the Fintech and Cryptocurrency Exchange Companies. They will meet at least once a year.

Article 44 of the Fintech Law, which refers to the limits that the authorities should set for this type of platform, states that limits in which these companies may operate will differ based on the type of client, type of project, type of transaction and when established by the CNBV or the Bank of Mexico will have to take into consideration at least the regulation of other figures of the financial system subject to compliance with established principles in this Law and the protection of the interests of investors.

So, like Switzerland, Mexico is building an efficient cryptocurrency law that will protect investors and allow the business to grow. The negative with Mexico is their corporate tax rate of 30%. With changes to the US system, Mexico now has one of the highest tax rates in the region.

In order to reduce tax in Mexico, you might set up an offshore division and minimize income into the country. However, international transfer pricing and audit rules are very strict in Mexico, so be careful where you incorporate.

For example, it’s nearly impossible to get a deduction approved for a payment to a tax haven such as Panama. While the US treats all counties the same, Mexico is known to disallow expenses to tax havens.

Possibly the best option for a large exchange is a license in Mexico and your primary operations in the US territory of Puerto Rico. The Mexican office would handle marketing and support, and operations would be done from Puerto Rico.

Income sourced to Puerto Rico will be taxed at 4%. If the owners of the exchange are foreign persons (not US persons), dividends paid from Puerto Rico will be tax free. If the owners are US citizens and residents of Puerto Rico, dividends will be tax free under Act 22.

For more on Puerto Rico for cryptocurrency, see: Tax efficient structure for US cryptocurrency exchange.

For more on Puerto Rico’s many tax incentives, see: A Detailed Analysis of Puerto Rico’s Tax Incentive Programs.

I hope you’ve found this article on fintech and cryptocurrency law in Mexico to be helpful. For more information on setting up an exchange, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

cryptocurrency exchange tax
Christian Reeves

Tax efficient structure for US cryptocurrency exchange

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Here’s how to cut your corporate tax rate for a US cryptocurrency exchange to 4%. If you’re operating a licensed exchange in the United States, and you’re willing to move some or all of your employees, we can get your corporate tax rate down to 4%.

This article considers a tax efficient structure for US cryptocurrency exchange and is meant for larger exchanges licensed in the United States. It can also apply to international exchanges that require a US presence and US banking services. The 4% rate is a great offer compared to Switzerland and 12.43% in Zug and higher in other cantons.

Note that this tax-efficient structure for crypto exchange doesn’t replace your US licenses. It’s an add-on to your current structure that allows you to pay only 4% tax on corporate profits. Nor does it change any of your compliance or regulatory requirements.

This 4% tax rate applies to corporate tax reportable in your state of operation. For example, let’s say your headquarters is in California and this is where all of your employees are located. Move this headquarters, including all the employees, and you can exchange the combined Federal and state rates of 30%+ (21% federal and 8.84% for a c-corp or 10.84% for a financial c-corp in California) for 4%.

If you’re paying tax in the states where you’re licensed but don’t have employees, these taxes will remain the same. They’re based on being licensed in the state and not corporate income from work performed in California (your state of operation).

Without any more ado, here’s how to create a tax efficient structure for a US cryptocurrency exchange and pay only 4% in corporate income tax:

Move your business to the US territory of Puerto Rico and operate under the International Financial Entity license, or Act 273. Your corporate profits sourced to Puerto Rico will be taxed at 4% and not taxed in the United States. This is not corporate tax deferral available offshore… this is a corporate tax rate of 4% replacing a US rate of 30%.

Income is “sourced to Puerto Rico” if it’s earned from work performed in the territory. Likewise, income is sourced to the United States, and taxable there, if earned from work performed in the US.

For example, if half of your workforce is in California and half is in Puerto Rico, about half of your income might be attributable to Puerto Rico. Thus, 50% would be taxable at 4% and 50% at 30%.

If you move your business and all employees to Puerto Rico, sourcing is a simple matter… all corporate profits will be sourced to the island and taxed at 4%. When you split work between the US and PR, a transfer pricing study and in-depth analysis are required.

  • In practice, sourcing of income will look and the quality of work performed in CA vs PR and is much more complex than this example.
  • For more on sourcing, see: What is Puerto Rico Sourced Income for an Act 20 Business. This post is about Act 20 and not 273, but the sourcing concept is the same.

The corporate profits of your cryptocurrency exchange operated from Puerto Rico will be taxed at 4%. Dividends from the Puerto Rico company to a foreign corporation or non-US person are tax-free. Likewise, dividends from your Act 273 business to a resident of Puerto Rico who qualifies for Act 22 are tax-free. Dividends from the International Financial Entity to persons in the United States will be taxed in the United States.

That is to say, US persons can move to Puerto Rico, qualify under Act 22, and pay zero US tax on dividends from an Act 273 cryptocurrency exchange. You will pay PR tax on the salary you take out of the business and zero on dividend distributions. Shareholders that live in the US will pay US tax on dividend distributions.

For more on Puerto Rico’s various tax incentives, see: A Detailed Analysis of Puerto Rico’s Tax Incentive Programs.

To set up in Puerto Rico under Act 273, you will need the following:

  1. Puerto Rico corporation with $250,000 paid-in capital and a CD for $300,000, for a total of $550,000 in capital.
  2. Minimum of 5 employees on the island.
  3. Detailed business plan with projections, operating manuals, and KYC, BSA and AML documentation.
  4. Resumes and financial reports on all key employees.

With this documentation, we can apply for an International Financial Entity license for your cryptocurrency exchange. You will be granted a permit to organize and given time to build out an office, IT systems, hire your employees, etc.

When you’re ready to go live, you will give notice to government regulators. They’ll come out and review your systems and documents. When you pass the audit, you’ll be given a permit to operate.

An Act 273 license will allow you to move the operation of your cryptocurrency exchange to Puerto Rico and exchange your 30% tax rate for a 4% tax rate.  

I hope you’ve found this article on a tax-efficient structure for US cryptocurrency exchange to be helpful. For more on International Financial Entities, see my 300-page book on Amazon.

An IFE license can be used to set up many different businesses. In addition to a tax-efficient cryptocurrency exchange, an IFE license could be used to operate an international bank, family office, brokerage and FX firm, etc. My book is focused on the international banking components of the IFE, but you will find it useful for a cryptocurrency exchange.

For more on building an International Financial Entity in Puerto Rico, you can reach me at info@premieroffshore.com or call us at (619) 483-1708. We’ll be happy to assist you to redomicile your exchange to Puerto Rico and offer a turn-key solution for Act 273 exchange.

IRA Rules Premier
Christian Reeves

IRA Rules and Prohibited Transactions for Offshore IRA LLCs

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When you take your IRA out of the United States and invest it into an offshore IRA LLC, you become the custodian for the account. In this capacity, you’re responsible for following all US IRA rules. Here are the basic IRA rules and prohibited transactions you must watch out for when you operate an offshore IRA LLC.

First, a few comments on the process of taking your IRA offshore. This will give you some background on why these rules apply.

You can move any vested IRA or 401-K out of the United States. Likewise, if you can convert a defined benefit plan into an IRA, you can move that offshore.

The first step in this process is forming an offshore IRA LLC in a zero tax max privacy asset protection country. Most popular are Nevis, Belize, Cook Islands and Seychelles. These are the top asset protection jurisdictions with single member LLC statutes.

With the LLC up and running, we open an offshore bank account in the name of the LLC and your US custodian transfers your cash into that account. You’re the signer on the account and in control of all investments and transactions. Your custodian has no access to the offshore bank account and does not get involved in your investment decisions.

For more on this process, see: Here’s how to take your IRA offshore in 6 steps

As the manager of the LLC, and the person responsible for making investment decisions for the IRA, you’re in total control. You’re basically the investment advisor to the IRA and, as such, must always act in the best interest of the account. That is to say, you’re jobs are to 1) increase the value of the account and 2) protect the account. You are not allowed not to personally benefit from this position.

The two main risk areas for an IRA investment advisor are 1) prohibited transactions and 2) prohibited investments.

Failure to follow these rules can result in your IRA being dissolved and major taxes and penalties being applied. Per the IRS website, “…if an IRA owner or his or her beneficiaries engage in a prohibited transaction in connection with an IRA account at any time during the year, the account stops being an IRA as of the first day of that year. The effect of this is the account is treated as distributing all its assets to the IRA owner at their fair market values on the first day of the year. If the total of those values is more than the basis in the IRA, the IRA owner will have a taxable gain that is includible in his or her income.”

Prohibited Transactions in an Offshore IRA LLC

Generally, a prohibited transaction in an IRA is any improper use of an IRA account by the owner, investment advisor, his or her beneficiary, or any disqualified person. Disqualified persons include you and your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).

The following are examples of prohibited transactions with an IRA.

  • Borrowing money from it
  • Selling property to it
  • Using it as security for a loan
  • Buying property for personal use (present or future) with IRA funds

Prohibited Investments in an Offshore IRA LLC

Your offshore IRA LLC is not allowed to invest in life insurance or collectibles. If you get caught buying prohibited investments, the amount invested is considered distributed in the year invested and you may have to pay a 10% additional tax on early distributions.

Here are some examples of collectibles:

  • Artwork,
  • Rugs,
  • Antiques,
  • Metals – with exceptions for certain kinds of bullion,
  • Gems,
  • Stamps,
  • Coins – (but there are exceptions for certain coins),
  • Alcoholic beverages, and
  • Certain other tangible personal property.

For more on gold, see: IRA Gold Rules

The logic behind prohibited investments is similar to that of prohibited transactions. You could buy artwork, rugs, or antiques and display them in your home. You would then be getting a personal benefit from those investments.

I hope you’ve found this article on the basic IRA rules and prohibited transactions you must watch out for when you operate an offshore IRA LLC to be helpful. For assistance in taking your IRA offshore, you can reach me at info@premieroffshore.com or (619) 483-1708. 

take your IRA offshore
Christian Reeves

Take your IRA offshore to invest in ICOs and Bitcoin

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The United States has forced most ICOs out and will launch an all out attack on Bitcoin in 2018. If you want to hold Bitcoin in your IRA, you should first move your retirement account offshore. Here’s how and why to take your IRA offshore and invest in ICOs and Bitcoin in 2018.

In 2017, the US Securities and Exchange Commission ruled that ICOs were investments akin to traditional Initial Public Offerings. This determination means that the SEC has authority over ICOs and that ICOs must follow the same rules as an IPO.

This also means that the legal and compliance costs to issue an ICO are about the same as they are for an IPO. While a boon for lawyers and CPAs, these costs mean that smaller high value, and early stage ICOs will never see the light of day in the United States.

ICOs have two options in 2018: 1) go through several rounds of funding (angel plus 2 or 3 rounds of VC) before going public, or 2) move offshore and don’t market in the United States.

VCs are sure to have stripped out most of the pure “startup value” from these ICOs by the time of the offering. Plus, adding hundreds of thousands of dollars, or even a million or more, to the startup costs, means only the largest ICOs will get to market.

Of course, coming into a deal in the late rounds is safer, but most ICO investors are looking for looking for a clean deal. One of the primary objectives of the ICO model was to avoid the costs and greed of angels and VCs.

The SEC will push early stage ICOs out of the United States in 2018. Look for the best ICOs to be offered in Mexico and offshore in jurisdictions like St. Lucia, Dominica, Cayman, Jersey and Guernsey.

At the same time, the IRS is doing it’s best to push high net worth investors offshore. The Service is planning all out assault on Bitcoin in 2018, with most of the early targets coming from Coinbase. This site will be turning over more than 14,000 clients to the IRS in 2018 and the audits will begin.

Because the best way to eliminate US tax on your Bitcoin trades is to buy in your IRA, a lot of investors are creating digital IRAs. I expect this trend to hold and increase in 2018.

There are two ways to create a digital IRA. You can setup a self directed account in the US with a custodian that allows you to invest in Bitcoin, or you can setup an offshore IRA LLC. With a self directed account, you’re limited to US investments and the account is under the control of the custodian. With an offshore IRA LLC, the account is out of the US and is under your control.

There is one way to protect your IRA from government overreach – move your retirement account offshore and into an offshore IRA LLC. For more on buying Bitcoin in an IRA, see: Protect your IRA by moving it onto the blockchain.

As I said above, to buy crypto in the United States, you need a self directed IRA. To take your retirement account offshore, you need to add an offshore IRA LLC to this self directed account. Your custodian invests your IRA into an LLC incorporated in Belize, Cook Islands, Nevis, or some other tax free jurisdiction, and appoints you as the manager of this LLC.

With a self directed account, your custodian follows your investment instructions, but he or she has the ultimate say on how the account is invested. Most custodians don’t allow for offshore investments in a self directed account because they can’t or won’t do the due diligence necessary to review those transactions.

Because a US custodian can be held liable if your investments go south, they avoid risk. To eliminate this liability, you form an LLC and the custodian transfers funds to that structure. What happens from here is totally up to you. The liability and decision making is transferred from the custodian to you, the account owner, with an offshore IRA LLC.

The steps to take your IRA offshore are as follows:

First, you can only move a vested account offshore. A vested account is usually one from a previous employer. When you change jobs, or retire, your IRA account vests and you can move it to a new custodian… one that allows for the offshore IRA LLC structure.

Once you’re account is with a friendly custodian, we can form your offshore IRA LLC. This is a single member LLC where the member of the LLC is your retirement account. That is to say, the owner of the LLC is your IRA.

  • Note that a husband and wife can use the same LLC. You can move multiple accounts into a single LLC structure.

Next, the LLC appoints you as the manager of the structure. Again, the IRA is the owner of the LLC and you are the manager. In this capacity, you have total control over the bank accounts, crypto wallets, and investments.

Once the LLC and bank accounts are in place, the US custodian transfers the cash from your IRA to the international bank. You generally can’t transfer stocks or other assets offshore (like kind transfers). You should be moving US dollars into an offshore account.

Finally, you move those dollars into an international crypto trading platform. Now you have control over the account and are the investment manager of the LLC. As such, you must follow all US IRA rules and always act in the best interest of the account, just as a professional investment advisor would.

I hope you’ve found this article on taking your IRA offshore to invest in ICOs and Bitcoin to be helpful. For more information on moving your retirement account offshore, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

Residency in Mexico
Christian Reeves

The easy path to residency in Mexico

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If you wish to live and work in a country in Latin America, Mexico might be your best option. It’s proximity to the United States and its high ranking schools make it one of the most competitive economic countries in Latin America. Mexico also has one of the most relaxed immigration systems compared to the rest of the world. In some cases you don’t even need to leave home to become a Mexican resident.  

All you need to start the process to become a temporary Mexican resident is an active visa and a job offer from a business in Mexico. You or your attorney will file your residency application with the Instituto Nacional de Migracion (INM), which is a unit of the government of Mexico under the Secretariat of the Interior that controls and supervises migration in the country.

Here’s a list follow a list of requirements to become a residency of Mexico.

Requirements for a Work Visa and Residency in Mexico

  1. Copies of your identification and passport. Proof that you are not in the process of obtaining a temporary work visa or a permanent residency – meaning that you can’t have two applications going on at the same time.
  2. An original copy of the job offer with the company letterhead featuring a description of the functions that you will be performing within the company, the legal address of the business hiring you, and your salary.
  3. Copy of the registration document you submitted to the Institute.

The temporary work visa or temporary Mexican residency is only given if you have a job offer in which your education and skills match the description given by the employer. This needs to be in accordance with the stipulations and rules governed by the Sistema Nacional de Clasificación de Ocupaciones.

This process usually takes 30 days to complete, after which authorities will send you a notification confirming that you have 15 days to come to the Mexican Consulate in your country to receive your visa. The issuing of the visa usually takes two business days.

After this you’re legally allowed to work and live in Mexico. The Mexican government prohibits anyone being a Mexican temporary resident to vote or to influence local, state, or federal elections. The visa lasts 4 years since the day of issuance and after your period of temporary residency you qualify to become a Permanent Mexican Resident.

Temporary Residency through Investment

In order to obtain a temporary residency through investment you need to accredit your investment done in Mexico through a series of documents.

  1. You need the original document and a copy of the Mexican company’s structure detailing your involvement in the company and how your investment is being used.
  2. Original and copy of the document proving the ownership of personal property or fixed assets in favor of the foreign legal entity.
  3. Original and copy of the documentation that accredits the development of economic or business activities in the national territory, which may be accredited, but not limited to, contracts, service orders, invoices, receipts, business plans, licenses or permits, and a certificate issued by the Mexican Institute of Social Security (IMSS) proving that the foreign legal entity is the employer of at least three workers.

The amount of investment varies by consulate. This visa is valid for 4 years and can be converted into a permanent visa after four years.  

From Temporary Resident to Permanent Resident of Mexico

There are many ways in which you can apply for Permanent Residency in Mexico after being given the work visa.

  1. Work continuously in Mexico for 4 years.
  2. Get married to a Mexican citizen and have maintained your temporary resident visa for at least 2 years.
  3. Have a child born in Mexico during your temporary residency.
  4. Retirees or pensioners, who receive from abroad sufficient resources that allow them to live in Mexican national territory
  5. By decision of the INM, according to the established points system (basically, a deal negotiated with the INM).

Being a permanent resident has many benefits. You can leave and enter the country as you please, you never have to renew your visa again, you can change jobs without any additional government procedures.

From Permanent Resident of Mexico to Second Passport

If you’ve hold temporary residency or permanent residency status in Mexico for 5 years prior to the solicitation date you can apply for a naturalization letter. To obtain the naturalization letter you must prove that you can speak Spanish, that you know the country’s history, and that you are integrated to the national culture. This process takes an estimate of one year to complete and costs approximately $6,954 pesos or US $370. When your naturalization letter is given to you, you must legally renounce to your rights as a Panamanian citizen in Mexico. At this time you also give back your Temporary or Permanent resident visa. When you receive the naturalization letter you obtain the same rights that a Mexican born citizen has.

I hope you’ve found this article on Mexican Residency to be helpful. For more information, or for assistance in moving to Mexico, please contact us at info@premieroffshore.com or call us at (619) 483-1708. We’ll be happy to assist you with your international tax plan and support  you through the coming changes.

residency in Nicaragua
Christian Reeves

How to get residency in Nicaragua

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Nicaragua is the second most popular residency program in Latin America. Residency in Nicaragua is for those who don’t want the high pressure life of Panama City, Panama and for those who aren’t from a top 50 country. Here’s how to get residency in Nicaragua no matter what country you’re from.

The top two Latin residency programs are Panama and Nicaragua. Panama is for citizens of the US, EU, UK, and any of the top 50 countries. Those who qualify can get residency in Panama with an investment of $20,000 in this country’s friendly nations reforestation visa program.

Those who want a more laidback lifestyle or a lower cost of living often prefer Nicaragua. For those who are not from a top 50 country, Nicaragua is the best second residency program available.

Here’s how to get residency in Nicaragua:

If you’re over 45 and have a guaranteed monthly income of $600, you can qualify as a retiree in Nicaragua. This program is aimed at retirees and most qualify using their fixed pension payments. However, it’s possible to set up a bank annuity that will qualify.

You’ll need guaranteed income of $600 a month for you plus $100 per month for each dependent. Your spouse is a dependent, as is each child 18 years and under.

The more popular of the Nicaragua programs is their reforestation visa. Invest $35,000 in one of the government approved reforestation programs and get permanent residency. Additional legal and government fees apply.

  • Fees for those from restricted countries are about $10,000 per person. Fees for those from the US, EU, Canada, etc. are much lower.

If you’re on the fence between residency in Nicaragua and Panama, I think you’ll find that Nicaragua is a better investment opportunity. Yes, Panama is lower, but you get a lot more teak or hardwoods in Nica per dollar. Your ROI in Nicaragua will be higher than Panama.

Before I go any further, let me point out the big difference between Panama and Nicaragua. With Panama, you need only spend a few days a year in the country to maintain your residency. That is to say, Panama doesn’t have a physical presence requirement to keep your visa.

Nicaragua requires you spend at last 180 days a year in country. Nica is looking for real residents – people who are willing to commit to the country. They want residents who bring with them money and a desire to become a part of the community, not just pay an annual fee to hold a residency permit.

Second Passport from Nicaragua

Both Nicaragua and Panama allow you to apply for citizenship and a second passport after 5 years. The application process for Nicaragua is easier in Panama, so long as you can prove your 180 days a year over your residency period.

We value second passports by the number of countries they give us visa free access too. Nicaraguan citizens have visa-free or visa on arrival access to 112 countries and territories, ranking it 46th in terms of travel freedom (tied with Marshallese passport).

By comparison, a passport from Panama gets you visa free access to 127 countries. If you want the best of the best, a second passport from Portugal gets you visa free access to 171 countries, including the United States.

US citizens are usually looking at a second passport as a backup travel document or as a way to give up their US citizenship and escape the IRS. The number of US expatriations have been doubling each year under both Obama and Trump.

Citizens of China, India, and other countries with lesser travel documents are looking at a second passport as a way to increase their travel freedom. Nicaragua’s 112 countries is better than India at 49 and China at 51 visa free countries. Also, it’s easier to get a US visa with a passport from Nicaragua than it is from China or India.

The big difference in quality between Nicaragua, China and India is that Nicaragua gets you into the European Union without a visa.  A second passport from Nicaragua gives you visa free access to the Schengen region of the European Union. You can spend up to 90 days a year in the EU without a visa with a passport from Nicaragua.

In order to apply for residency in Nicaragua, you’ll need the following:

  • A copy of your birth certificate
  • A copy of your passport
  • A certificate or letter from your doctor stating that you’re in good physical health, are free from communicable diseases, and are mentally sound
  • A certificate or letter from your local police department stating that you’ve not been convicted of any crime or an FBI background check
  • A certificate of income from your bank or pension plan affirming that you’ll have enough money to meet the minimum requirement of US$600 a month
  • A list of the household goods you will be importing.

A residency visa from Nicaragua also allows you to import certain household goods from the US tax free. For example, a car worth $25,000 and household goods worth $20,000. In most cases, visa holders are bringing used items from their US home.

As an added bonus, you can import a car tax free worth $25,000 every 5 years. This tax break is a big deal in Nicaragua where import taxes are quite high. I hope you’ve found this article on how to get residency in Nicaragua to be helpful. For more information on this program, you can reach me at info@premieroffshore.com or (619) 483-1708. 

Trade Bitcoin Tax Free
Christian Reeves

How to Trade Bitcoin Tax Free

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Each and every Bitcoin transaction is taxable. If you sell Bitcoin and buy Ethereum, that’s a taxable trade. If you use Bitcoin to buy a laptop on Amazon, that’s a taxable transaction. If you sell bitcoin, hold dollars in your wallet for a week, and then re-buy Bitcoin, that’s a taxable transaction. Here’s how to trade Bitcoin and pay zero capital gains tax.

Basically, anything that you do with Bitcoin is taxable. The IRS has determined that Bitcoin is a capital asset and not a currency. Thus, when you use that asset, you’re exchanging it and not spending it under our tax laws.

Even if you were to buy a Subway sandwich using Bitcoin, that would be a taxable transaction. You would be exchanging a fraction of a Bitcoin for the sandwich.

You would report your sandwich purchase on Schedule D of your personal income tax return. Your basis would be the price you paid for that fraction of a coin and your taxable gain would be the appreciation that occurred from when you bought the coin and when you exchanged it for lunch.

If you’re using a US wallet or cryptocurrency exchange, each and every trade is being tracked for tax purposes. Transfers out of your exchange to another wallet are being recorded as sales.

For example, you send $30,000 in Bitcoin from your Coinbase account to a desktop wallet. This $30,000 is recorded as a sale and reported to the IRS on Form 1099 at the end of the year. If you return that $30,000 to Coinbase, they’ll likely book it as a new deposit with zero basis. For more on this, see Coinbase Support.

And the IRS is coming after taxpayers hard. A district court just ruled that Coinbase must turn over the trading records of over 14,000 clients who had over $20,000 of cryptocurrency in their accounts.

With the IRS getting ready for an all out war against Bitcoin, many are looking for ways to trade cryptocurrency tax free. Here are the only 3 legal ways to trade Bitcoin tax free.

IRA & Retirement Accounts

Because Bitcoin is an asset, you can trade it in your retirement account or your defined benefit plan. All trades in your IRA will be tax free (ROTH) or tax deferred (traditional).

And, because of the nature of Bitcoin, you can take control of your retirement accounts and move it offshore. Bitcoin can be held and traded anywhere. You’re not required to use a US wallet or a US trading platform connected to the IRS.

To hold Bitcoin in your IRA in the United States, you should set up a self directed IRA. This gives you the ability and authority to manage your own account and eliminate investment advisory fees.

To take your retirement account offshore, you need to add an offshore IRA LLC to that self directed account. Your US custodian invests your retirement savings into your LLC and you take it from there.

Puerto Rico

Residents of Puerto Rico that qualify for Act 22 do not pay tax on their capital gains. As a US territory, Puerto Rico is free to make it’s own tax laws for its residents, which it did with Act 20 and Act 22.

Under Act 20, any qualifying business that moves to the territory will pay only 4% in corporate income tax. Act 20 gives a 100% tax exemption for the capital gains and passive income of any qualifying resident.

So, move out of your high tax state to Puerto Rico and pay zero capital gains on your Bitcoin transactions. No state tax and no federal tax on your investment profits.

Warning: the tax benefits of Puerto Rico only apply to assets purchased after you become a resident. No, you can’t move to Puerto Rico and sell the coins you’ve been holding. Assets acquired while you were in the US are taxable in the US and assets acquired after you become a resident of Puerto Rico are taxable in the territory.

Life Insurance Policy

Capital gains are tax free inside a life insurance policy. If you set up an offshore private placement life insurance policy, you can trade cryptocurrency tax free.

If you close the insurance policy during your lifetime, you’ll pay US tax on the gains (you got tax deferral from the policy). If you hold the assets in the policy until your death, they will pass tax free to your heirs (considering the step-up in basis).

Offshore PPLIPs are expensive to set up and maintain. Therefore, they’re usually only available for accounts of $2.5 million or more.

Conclusion

Those are the three legal ways for a US citizen to pay zero US tax on thier Bitcoin trades. Remember that it doesn’t matter where you live in the world. So long as you hold a blue passport, Uncle Sam wants his cut of your capital gains. If you move to a foreign country, you will still pay US tax on your Bitcoin gains.

The ONLY exception to worldwide taxation is found in the US territory of Puerto Rico. As a territory, income of residents is excluded from Federal tax under Section 933 of the US tax code.

I hope you’ve found this article helpful. For more information on setting up an offshore IRA LLC, a PPLIP, or qualifying for Act 22 in Puerto Rico, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

What can I buy with Bitcoin
Christian Reeves

What can I buy with Bitcoin?

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The list of items you can buy with Bitcoin hasn’t changed much since 2014. Yes, there are some good websites in the group of 100,000+ that accept Bitcoin, and there are restaurants that accept crypto, but there have been very few large transactions done in Bitcoin… until now.

To date, Bitcoin has been a buy and hold or trade investment. The practical uses of crypto as a currency have yet to be proven. Sure, as more merchants come on line, and more large dollar transactions are completed in Bitcoin, it may become the alternative means of transacting the founders envisioned. Until then, Bitcoin is primarily an investment.

And this is how the IRS views Bitcoin – as a capital asset and an investment like a share of stock. Whenever you sell Bitcoin or exchange it for another cryptocurrency, you have a capital gain or loss that must be reported. Likewise, whenever you exchange Bitcoin for something, anything, you have a taxable event reportable on Schedule D of your personal tax return.

As I said, there has not been much change to what you can buy with Bitcoin in 2018. Sure, there are a few more merchants, and Coinbase and others have improved their user interfaces, but nothing exciting has gone on in the offshore space… until now.

The motivation for this article is the fact that you can now buy real estate in Belize using Bitcoin. You can complete the entire transaction is Bitcoin, including taxes and fees. I expect Belize to begin allowing purchases in Ethereum in the next few weeks.

The second unique offering of Bitcoin is residency in Panama. If you’re from the US, EU, UK, or any of the top 50 countries, you can get residency with in investment of $20,000 plus fees in crypto. More on this later.

The ability to buy real estate in Belize using Bitcoin is a big deal. It means that, for the first time, you can exchange Bitcoin for real estate in a private offshore transaction. You can use Bitcoin to plant your flag offshore in a country that believes in the values that Bitcoin was founded on – privacy, security, and freedom.

Belize has always embodied these principles. Taxation is minimal and the right to privacy is absolute. You can live, work, and do things your way in Belize without government interference.

The other reason buying real estate in Belize using Bitcoin is a big deal is that this is the first large dollar offshore transaction available to those holding crypto. Many early adopters have a lot of Bitcoin that they don’t want to convert to dollars and don’t know what to do with.

These early adopters are looking for an efficient way to diversify out of Bitcoin in a private transaction. Belize is the first jurisdiction to provide a path to convert relatively large amounts of Bitcoin into an asset like real estate.

Yes, there have been one or two real estate transactions in the US that were completed with Bitcoin. These were one off transactions where the seller agreed to accept Bitcoin from the buyer… and the sale was reportable to the IRS and other US agencies by the exchange / wallet and through the escrow agent.

Belize is the first country where you can easily buy real estate using Bitcoin without all the red tape. Systems are in place to facilitate the transactions and it may even be possible to get a mortgage from a local bank, such as Caye Bank, to support a Bitcoin transaction.

You can also buy residency in Panama using Bitcoin. Invest the equivalent of $20,000, plus legal and government fees, in this country’s reforestation visa program and get permanent residency. After 5 years of residency you can apply for citizenship and a second passport from Panama.

Panama’s residency program is open to citizens of the US, EU, UK and other “friendly nations.” These are basically those from top 50 countries. Some on the list, such as South Africa, are surprising, so click here for more information.

If you’re not from a friendly nation, you can buy residency in Nicaragua with Bitcoin. This program requires an investment of $35,000 and costs are about $10,000 per person. You can complete the entire program using Bitcoin and it’s open to citizens of China, India, and most other countries.

Like Panama, you can apply for citizenship and a second passport from Nicaragua after 5 years of residency. The catch with Nica is that you must spend 180 days a year in country to maintain your residency. Panama does not have a physical presence requirement.

What else can you buy with Bitcoin? Here are the more common options:

  1. Over 100,000 merchants now accept Bitcoin. Click here for a list.
  2. Here’s a list of restaurants throughout the United States that accept Bitcoin.
  3. The most common way to spend Bitcoin today is by transferring crypto to a US dollar gift card. These cards can then be used in hundreds of stores online and in the US. The top crypto to gift card platforms are eGifter and Gyft.
  4. You can spend Bitcoin for travel on Expedia and Cheap Air.

I hope you’ve found this article on what can you buy with Bitcoin to be helpful. For more on residency in Panama or Nicaragua, or to be connected to a real estate expert in Belize, please contact me at info@premieroffshore.com. We’ll be happy to introduce you to a local expert who can assist you diversify your holdings.

nonresident FEIE
Christian Reeves

How to become a nonresident of the United States

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The 330 day test for the Foreign Earned Income Exclusion is being eliminated by President Trump. If you want to keep this tax break, you need to become a legal resident of a foreign country as soon as possible. Here’s what you need to do to become a nonresident of the United States for tax purposes.

Of course, the most important component of the residency test for the FEIE is residency. You must be a legal resident of a foreign country for a full calendar year to qualify for the FEIE using the residency test. Where the 330 day test was over any 12 month period, the residency test is January 1 to December 31.

It doesn’t matter where you get your residency visa for US tax purposes. So long as you have legal residency in a country which is your home base, you’re covered.

Of course, if you want to minimize your worldwide tax obligations, you should become a resident of a country that doesn’t tax foreign source income. For more on this, see: Which Countries Tax Worldwide Income?

For those that want to live in Europe, the most popular residency visa is Portugal. Buy a home for 500,000 euros, or deposit 1 million euros in a local bank, and you can qualify for residency. A resident of Portugal can live anywhere in the EU. You just need to spend a few weeks  a year in Portugal.

The most popular visa in the world is Panama. Invest $20,000 in their friendly nations reforestation program and become a permanent resident. This visa can also lead to citizenship and a second passport in 5 years. For more, see: Best Panama Residency by Investment Program

Once you have your residency visa, you need to cut as many ties with the US and create as many ties with your new home country as possible.  That is to say, a US citizen who wants to become a nonresident for US tax purposes must truly move and become a part of their new community, including:

  • Selling your US home;
  • Leaving US employment and becoming an employee of an offshore corporation reported on IRS Form 5471;
  • Establishing and spending time in a home located in your new country. This home should be of equal size, cost, and amenities as your US home;
  • Establishing business and social ties in the new country;
  • Discontinuing business and social ties in the United States;

Do not:

  • Keep your US home and let the children live there;
  • Have children in school in the United States;
  • Vote in State elections (Federal elections by mail, listing your foreign home as your residence is OK);
  • Have mail sent to your old address in the US. Establish a PMB address if necessary;
  • Continue to use US physicians, dentists, or other professionals who require the taxpayer’s physical presence to transact business.

Remember that you need to be a nonresident for Federal and State tax purposes. Sometimes these tests are different. Here is a list of ties a California court listed as indicating residency (In the Appeal of Stephen D. Bragg, May 28, 2003, 2003-SBE-002).

  • The location of all of the taxpayer’s residential real property, and the approximate sizes and values of each of the residences;
  • The state wherein the taxpayer’s spouse and children reside;
  • The state wherein the taxpayer’s children attend school;
  • The state wherein the taxpayer claims the homeowner’s property tax exemption on a residence;
  • The taxpayer’s telephone records (i.e., the origination point of taxpayer’s telephone calls);
  • The number of days the taxpayer spends in California versus the number of days the taxpayer spends in other states, and the general purpose of such days (i.e., vacation, business, etc.);
  • The location where the taxpayer files tax returns, both federal and state, and the state of residence claimed by the taxpayer on such returns;
  • The location of the taxpayer’s bank and savings accounts;
  • The origination point of the taxpayer’s checking account transactions and credit card transactions;
  • The state wherein the taxpayer maintains memberships in social, religious, and professional organizations;
  • The state wherein the taxpayer registers automobiles;
  • The state wherein the taxpayer maintains a driver’s license;
  • The state wherein the taxpayer maintains voter registration and the taxpayer’s voting participation history;
  • The state wherein the taxpayer obtains professional services, such as doctors, dentists, accountants, and attorneys;
  • The state wherein the taxpayer is employed;
  • The state wherein the taxpayer maintains or owns business interests;
  • The state wherein the taxpayer holds a professional license or licenses;
  • The state wherein the taxpayer owns investment real property; and
  • The indications in affidavits from various individuals discussing the taxpayer’s residency

The above is basically a list of why expats have relied on the 330 day test. It’s easy, you don’t need to invest or spend money to get a visa, and you don’t need to worry about your ties to the US. Just be out of the US for 330 out of 365 days and you’re good to go.

The problem is that expats often pushed their days in the US and the IRS loves to audit these returns. Many don’t realize that travel days and time in international waters can count as US days. Because the FEIE is all or nothing, the risk in these cases is significant.

More importantly, President Trump is moving the US from a global tax system to a territorial tax system. This likely means an end to the 330 day test and a move towards residency.

Because it takes time to become a legal resident of a foreign country, and time to break ties with the US, and you must qualify for a calendar year, I’m recommending clients begin this process as soon as possible.

I hope you’ve found this article on how to become a nonresident of the United States for tax purposes to be helpful. For information on residency visas, or to setup an offshore business, please contact me at info@premieroffshore.com or call us at (619) 483-1708. 

IRS Bitcoin
Christian Reeves

The IRS smells blood in the water over Bitcoin!

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The IRS smells blood in the water over Bitcoin and it’s coming hard for Coinbase users. The war on cryptocurrency is just getting started and it’s going to get ugly fast. Expect US citizens with US crypto accounts to be put in jail to send a message to the rest of us to fall in line.

The IRS says that only 0.2% of Coinbase users reported a gain or a loss from cryptocurrency on their returns. The government reviewed 500,000 accounts and found only 900 of them had properly reported transactions on their US returns.

The IRS has ruled that Bitcoin and cryptocurrencies are property. That means each and every trade of crypto results in a capital gain or loss that must be reported on Schedule D. Cryptocurrency is treated like stock and not as a currency for US tax reporting.

So, if you bought Bitcoin and exchanged it for Ethereum in your wallet, that trade is taxable. Each time you sell Bitcoin, you have a taxable gain. Anyone who’s buying and selling in their wallet has transactions that must be reported. Every time you use Bitcoin to buy something, you have a taxable transaction requiring you to report the conversion of the crypto into dollars.

Even if you have a net loss, each and every trade must show up on your Schedule D at the end of the year. You also need to keep accounting records to prove your purchase price (basis) and any expenses you incur.

The fact that only 0.2% of users are in compliance has the IRS on the hunt. The Service wants to know about each and every transaction and will make examples of many Coinbase users in 2018. Typical IRS modus operandi is to hang a pelt on the wall in each big city and each State for the press release. Expect the first charges and indictments to be announced around April 10, 2018, just in time for tax filings.

Also, keep in mind that all IRS reporting requirements apply to US Bitcoin transactions. If you pay someone a salary in crypto, you must report it on Form W-2 and withhold the employee’s taxes and pay over federal and state payroll taxes. Doing this will require you to convert from crypto to US dollars, which generates a capital gain.

The same goes for payments to independent contractors. You must file a Form 1099 on any payment of $600 in rents, services (including parts and materials), prizes and awards, or other income payments.

And don’t get your hopes up that Bitcoin in exchange for services will be taxed as a capital gain to the recipient. When you receive crypto for personal services, the coins are magically converted from capital assets to ordinary income in the eyes of the IRS. Thus, you will pay ordinary income tax to the IRS and your state on any Bitcoin earned from work or services.

The last time the IRS was so excited about taking money from it’s citizens was 2008. The Service issued a John Doe summons to offshore bank UBS, just as they did to Coinbase in 2016. When the offshore banking battle was over, the IRS had netted over $10 billion in new taxes, interest, and penalties.

The IRS is really pulling out all the stops in this case. They’ve hired Chainalysis, a provider of Anti-Money Laundering software, to search out Bitcoin users. As reported by Fortune, “In a letter to the IRS, the co-founder of Chainalysis says the company has information on 25 percent of all bitcoin addresses and that it deploys millions of tags to help track and identify transactions.”

The IRS says only 0.2% have reported capital gains on their US tax returns. What should the remaining 99.8% do to minimize risk and tax costs?

If you have unreported crypto gains from 2014 to 2017, you should hire an expert to amend your return. Crypto capital gains are treated like stock transactions, but only a CPA or EA experienced in these transactions is qualified to amend your return.

Amending your returns before the IRS targets you will reduce your risks and penalties. If you’re caught in an audit, expect the full weight of the Service to fall on you.

If you want to maintain some semblance of privacy in your crypto transactions, I suggest you move your coins offshore. Form an offshore LLC, corporation or trust, and open a foreign wallet under that entity. If you need asset protection and estate planning, go with a trust. If you operate a business, use a corporation. Casual investors should form an LLC.

If you’re with Coinbase, you should sell and transfer cash offshore through your bank (a taxable event). If you’re with another firm, you might transfer crypto offshore (usually not taxable).

  • Remember that we’re talking about privacy and asset protection. Moving offshore doesn’t reduce or change your US taxes.  

There are two ways to legally avoid US tax on your Bitcoin transactions. You can invest using a retirement account or you can move to the US territory of Puerto Rico and qualify for Act 22.

If you have a US IRA or 401-K that’s vested, you can form an offshore IRA LLC and move that account offshore. If you’re defined benefit plan can be converted into an IRA, you can also move that offshore. From here you can buy cryptocurrency or any other investment allowed for within the IRA rules.

If you move to the US territory of Puerto Rico, and qualify under Act 22, you will pay zero capital gains tax on your Bitcoin transactions.  Note that this tax deal is only available in Puerto Rico for assets acquired after you become a resident of the territory. It does not apply to your current crypto portfolio.

For more information on Puerto Rico’s unique tax incentive programs, see: A Detailed Analysis of Puerto Rico’s Tax Incentive Programs. Keep in mind that US citizens are taxed on our capital gains no matter where we live. Foreign countries can’t match Puerto Rico’s offer.

I hope you’ve found this article on why the IRS smells blood in the water over Bitcoin to be helpful. Please contact me at info@premieroffshore.com to be connected to an expert in amending tax returns with crypto gains or for information on structuring your affairs or your retirement account offshore. 

Best ICO for 2018
Christian Reeves

The Best ICOs for 2018

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The ICO market went on a wild ride for 2017. Over 75% of the ICOs that were funded blew up and hundreds of millions were lost. Here’s where I see the ICO market going and which will be the best ICOs for 2018.

Nearly $2.5 billion has been raised through October in ICOs worldwide, with the majority of that coming in the first half of 2017. Then the US government stepped in to take it’s cut and regulate ICOs. This put most US ICOs on hold and is pushing the market offshore.

There are now 3 ways for US investors to get in on ICOs:

  1. Anyone can buy utility tokens,
  2. Accredited investors can buy equity tokens in the US, and
  3. Anyone can buy in to offshore ICOs.

The SEC has said it will not regulate utility tokens. Thus, anyone can buy these investments and the business need not incur all kinds of legal fees to put the token forward.

A utility or use token is one that gives you a right to use a service or receive a product. For example, if Lyft were to issue a use token, you would receive the right to a certain number of rides in exchange for your cryptocurrency.

The same applies to those selling a product. You give the company cryptocurrency and they promise to give you a product when it becomes available. Invest in a new  high tech suitcase company, they use the crypto to finish and produce their first product, and you get a suitcase at a discount if and when it becomes available.

Use tokens are basically the crowdfunding sites like Kickstarter and Indiegogo. The only difference is that you’re exchanging cryptocurrency for a token. That token entitles you to use the service or receive a product in the future.

Equity tokens differ from use tokens in that they give you a right to some of the company’s future earnings. Equity tokens act like a share of stock in that they give you some level of ownership and control over the company. Rather than a right to use a service or receive a product, you get a right to ownership and a share of the profits.

The US SEC says that, if you issue an equity token, the US government can regulate and control the transaction. As a result, the costs of most ICOs in the United States have increased by hundreds of thousands of dollars to millions of dollars in some cases. Only the largest companies can now issue ICOs in America.

Finally, the US government says it’s a crime to sell bitcoin outside of a licensed and regulated exchange. If you sell your coins without an exchange and in such a way that the IRS can’t track and tax the transaction, you’ve committed a crime and can be put in jail.

As a result, Americans are moving their coins offshore and true startups will be forced to issue their ICOs offshore. If American investors want to get in on the ICOs with the most potential, those truly in the beginning stages, then we will need to look abroad from here on out.

Keep in mind that there are no laws that prevent US citizens from buying offshore ICOs. The SEC doesn’t allow foreign ICOs to market into the United States. But, if you can find the right offshore investment, you’re free to deploy your capital as you see fit.

Of course, when you invest offshore, the task of due dilligence – checking out the investment – falls to you. Uncle Sam and a swarm of lawyers have not vetted these transactions. This keeps the costs are lower, opportunities greater, and the need to research falls to you.

With all of that said, I believe the best ICOs for 2018 will be offshore. More specifically, I believe the best ICOs for 2018 will be offshore financial technology companies operating banks or proving unique blockchain services to international financial entities.

As legacy banks fight to keep cryptocurrency from taking over, they’re closing accounts and forcing customers offshore. For example, the US is waging an all out war on cryptocurrency and Hong Kong is closing accounts, putting exchanges out of business.

As in any war, there are winners and losers. The winners in this battle are offshore banks that can efficiently convert from crypto to FIAT. Those with blockchain systems and zero cost transfers are especially interesting.

  • A bank that sends international transfers over blockchain, and avoids SWIFT, can do so with zero or little cost.

Banks that can raise money through an ICO, or have an ICO platform for their clients, will be especially valuable in the near future. The bottom line is that blockchain and cryptocurrency are the future of offshore banking and early adopters are excellent investment opportunities.

If you’re an accredited investor and would like information on offshore crypto banks and FinTech opportunities, you can reach me at info@premieroffshore.com. I will be happy to introduce you to quality international banks.

If you run an offshore bank, our would like to form a new crypto focused international financial entity, you might find my 300+ page book on the topic helpful. See Offshore Bank License Guide, 2017, available on Amazon Kindle.

design

Cum să alegeți porno pentru petrecerea dvs. pentru adulți

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Puteți arunca filme porno în mixul următoarei petreceri aniversare sau chiar în noaptea următoare în oraș.

Puteți obține câteva idei grozave de temă de petrecere pentru videoclipuri pentru adulți doar din căutarea pe web. Dacă intenționați o petrecere, atunci asigurați-vă că luați în considerare ce fel de divertisment pentru adulți veți avea. Vei avea un bar deschis? Vor fi servite bomboane și băuturi?

Există site-uri video pentru adulți unde puteți găzdui propria petrecere. Acesta este de fapt cel mai bun mod de a merge, deoarece puteți controla tipul de filme xxx pe care le aveți. De asemenea, puteți alege să îl redați la anumite ore sau să aveți muzică cu anumite tipuri de teme. De exemplu, dacă organizezi o petrecere de ziua de naștere, atunci poți reda un videoclip porno în timpul petrecerii, astfel încât oaspeții tăi să nu aibă niciun cuvânt de spus cu privire la momentul în care se vor distra. Cu toate acestea, dacă organizați o petrecere în care există adolescenți la petrecere, atunci vă recomandăm să vă îndepărtați de videoclipurile pentru adulți și să vă concentrați pe activități mai orientate spre adulți.

Una dintre cele mai frecvente idei de  FILMEPORNO1.COM este de a amenaja o zonă de joacă sau o cameră de joacă în casă.

Puteți avea petrecerea înconjurată cu o perdea sau puteți folosi pur și simplu o foaie mare de carton și câteva serpentine. Ideea este de a crea un refugiu video pentru adulți în care oamenii să poată intra și să se distreze în timp ce sunt la petrecere. Multe locații vor oferi chiar divertisment înainte de petrecere sub formă de videoclipuri. Acest lucru poate elimina într-adevăr stresul din planificarea petrecerii, deoarece petrecăreții nu trebuie să se îngrijoreze de nimic altceva decât să se distreze.

O altă idee video grozavă pentru adulți pentru o petrecere este închirierea unui teatru în casa ta.

Acest lucru poate fi puțin scump, dar poate servi și ca loc de divertisment excelent pentru petrecerea ta. Puteți închiria un televizor cu ecran lat cu DVD player sau le puteți configura pe toate într-o zonă specială a casei dvs.

Filmele pentru adulți sunt o modalitate excelentă de a vă bucura de videoclipuri porno și de a da petrecerea dvs. o întorsătură. Dacă închiriați un film, asigurați-vă că acesta conține conținut pentru adulți. Multe cinematografe permit acum oamenilor să vizioneze videoclipuri xxx cu un instrument de control parental activat. În acest fel, copiii pot viziona filmul fără să se gândească cât de deranjant este.

Unii adulți aleg să vizioneze clipuri porno în timpul pauzelor la locul de muncă. Acesta este un mod excelent de a petrece timpul suplimentar la locul de muncă și de a ține pasul cu sarcinile legate de muncă. Nu este neobișnuit ca adulții să petreacă ore întregi la biroul lor urmărind emisiuni de televiziune sau filme după serviciu. În acest fel, se pot relaxa în timp ce se află la birou, dar totuși beneficiază de un timp video pentru adulți atât de necesar.

De asemenea, puteți duce clipuri xxx la birou.

Puteți achiziționa un player video portabil mic și îl puteți folosi la orice întâlnire, mare sau mică. În acest fel, toată lumea poate fi implicată în vizionarea videoclipurilor pentru adulți. Acesta va asigura un timp minunat și va spori socializarea tuturor celor din birou.

De asemenea, puteți închiria câteva porno în unele magazine. Majoritatea magazinelor video pentru adulți au secțiuni speciale de vizionare în care clienții pot închiria videoclipuri. Aceste închirieri sunt de obicei gratuite și ușor de făcut. Când sunteți la un magazin, întrebați un funcționar video pentru adulți dacă oferă închirieri. Aceștia ar trebui să vă poată direcționa către secțiunea magazinului care oferă videoclipuri pentru adulți disponibile pentru închiriere. Majoritatea magazinelor video pentru adulți oferă închirieri private și prin intermediul site-urilor lor web.

Privacy Flag Offshore
Christian Reeves

Top two max privacy options to plant your flag offshore

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The last few months have seen a striking increase in demand for offshore residencies and investments. Americans are looking to diversify out of the dollar, move their assets abroad, and to plant as many foreign flags as possible before the year end. Here are the top two max privacy options for 2018.

Because of the political climate in our country, Americans are renouncing US citizenship at record rates. In the third quarter of this year, 1,376 Americans renounced their US citizenship, putting the annual tally on pace to beat 2016’s record. That’s a 26 percent increase from 2016’s total of 5,411 – which was itself a 26 percent jump from 2015.

Those who are planning on burning their blue passports, want to diversify and create a safety net abroad, or wish to build an escape route and landing spot should things go badly, need to plant as many flags offshore as possible. The hottest offshore plans this quarter are:

  1. A second residency in a low or no tax country that leads to citizenship and a second passport, and
  2. Belize is suddenly the most active real estate market for those seeking personal freedom. This is a very new development and can be summed up in one word – Bitcoin!

Here’s where to get a second passport or second residency and why Belize has become the hottest offshore real estate market out there.

Second Residency Programs

There are two ways to acquire a second passport: you can buy it or you can earn it over time. You can buy a passport from a country like St. Lucia for $125,000 (single applicant) to $300,000 (family). St. Lucia is the lowest cost quality passport for purchase.

If you want a top tier passport, or don’t have an extra $250,000 lying about, you can earn a second passport through residency. Get a residency visa, maintain that visa for 5 or 6 years, and you can apply for citizenship.

The best top tier residency program Portugal. This country’s golden visa program get’s you EU residency, which means you can live and work anywhere in the Union during your residency. You can apply for citizenship and a passport after 6 years of residency.

You can get residency in Portugal by depositing money in a local bank or with the purchase of real estate. The most popular option is to deposit € 1,000,000 into a bank in Portugal (you don’t need to spend or invest it, just hold it in the bank). You can also buy any property for at least € 500,000 and get residency. If you buy a property that’s 30+ years old or located in an “urban renovation” area you need only spend € 350,000.

The best low cost residency program is Panama. If you’re from a “friendly nation,” you can get residency in Panama with an investment of just $20,000. You can then apply for citizenship and a second passport after 5 years of residency.

The investment must be made into one of Panama’s approved reforestation programs and covers the entire family. That is, only one investment is required for a husband, wife, and dependent children 18 years and under. Legal and government fees apply per person.

If you’re not from a friendly nation, the best residency program with a path to citizenship is Nicaragua. Anyone can apply, no matter your country of citizenship and the investment is only $35,000. Legal and government fees are higher than Panama, about $10,000 per person.

The big difference between Panama and Nicaragua is that you must spend 180 days a year in Nicaragua to keep up your residency. Panama does not have a physical presence requirement.

Real Estate in Belize

The Belize real estate market has been on fire for the last 2 months. Belize developers are now allowing buyers to pay 100% of the purchase price and all fees in cryptocurrency. For those looking to get their coins out of the US and away from the IRS, real estate in Belize provides an excellent opportunity to trade Bitcoin and diversify out of cryptocurrency.

Most of the buyers in Belize have been early adopters of Bitcoin. Those with significant gains and a desire to diversify out of cryptocurrency. Belize provides the best, and often the only, way for these investors to exchange coins for property.

The reason Belize and crypto have gone so well together is that Bitcoin’s original business model of privacy and security is what Belize has been about from day 1. Belize is one of the last tax havens standing where personal privacy is a natural right.

As Bitcoin grew, government’s perverted the original intent, but early adopters can still find a libertarian and (nearly) tax free existence in Belize. This country doesn’t tax capital gains and won’t ask you to report your holdings or your transactions.

Conclusion

For the above reasons, the top two max privacy options to plant your flag offshore is a second residency in a low or no tax country and buying real estate in Belize with your appreciated cryptocurrency. Both have seen major increases in demand this quarter and I expect them to do even better in 2018.

If you would like more information on second residencies, second passports, or real estate in Belize, please contact me at info@premieroffshore.com or call us at (619) 483-1708. We’ll be happy to assist you to diversify offshore. 

The Best Cheap Residency Programs for 2018
Christian Reeves

The Best Cheap Residency Programs for 2018

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Here are the best cheap residency programs for 2018. These are the best low cost residency programs that include a path to citizenship and to a second passport. If you’re looking to earn your second passport, check out this list the best cheap residency programs.

Residency allows you to live in a particular country. Some require you to spend a certain amount of time in country and some do not have a physical presence requirement.

Most second residency programs allow you to start a business (work for yourself) but don’t permit you to work for someone else. The intent is that you will come to the country and become a valuable part of the community. The government doesn’t want you to take jobs away from locals… they want you to create new jobs.

There are three ways for you to earn a second passport: 1) through residency, 2) by investing a large amount of money in real estate or government bonds, or 3) purchasing citizenship for cash. This article is focused on the best cheap residency programs for 2018 that allow you to earn a second passport.

These residency programs allow you to “earn” citizenship by becoming a part of the local community. Most require you maintain residency for 5 or 6 years before you apply for citizenship. That is to say, you must prove your commitment and your value over several years to earn citizenship.

Thus, citizenship through residency is a negotiation with the government. Become a part of the community, create as many ties to your new country as possible, and then apply for citizenship. This is very different from the cash for citizenship programs available from St. Lucia and St. Kitts (from these links you’ll see I’m a fan of St. Lucia’s program but not St. Kitts).

So, without more ado, here are the best cheap residency programs for 2018

Residency on a budget from a top 50 country: Panama

If you’re a US citizen, or from the UK, EU, or any of the other top 50 nations, you can get residency in Panama for cheap! Panama’s friendly nations reforestation visa program is the most efficient second residency program in the world, guaranteed.

Invest $20,000 in one of Panama’s approved teak reforestation programs and receive residency for you and your family (you, your spouse, and dependent children 18 and under). This is the lowest cost residency by investment program with a path to citizenship.

And Panama allows you to purchase your reforestation parcel with your US retirement account. Use IRA money to purchase the teak and personal money to cover legal and filing fees to stay within US IRA rules.

If you also want to take your US retirement account offshore, we can help. See: Here’s how to take your IRA offshore in 6 steps

Residency on a budget for everyone else: Nicaragua

For those of you not from a “friendly nation,” or just prefer a more laidback country, consider Nicaragua. Nica copied Panama’s program and opened it up to all nationalities.

Purchase $35,000 in a bundled reforestation package and get residency for you and your family. If you’re from a restricted country like China, India, or Pakistan, legal and government fees will be about $10,000 per person.

The big difference between Panama and Nicaragua is that Panama doesn’t have a physical presence requirement to maintain your residency visa. Nicaragua requires you spend at least 180 days in country during your residency period (5 years). Once you have your passport, you can spend as much or as little time in Nica as you wish.

Residency for retirees on a budget: Belize

The Belize QRP program was designed for retirees, but can be used by anyone with an annuity or is otherwise receiving fixed and guaranteed monthly payments. In most cases, these are distributions from a retirement account.

To qualify for the QRP, you must be receiving $2,000 a month or $24,000 a year in guaranteed payments. If you have this cash flow, you and your family can qualify for residency in Belize.

As with the other visas, the QRP program covers you, your spouse and your dependent children 18 years of age and under.

Belize has a very light physical presence requirement. You must spend 30 consecutive days each year to maintain your residency.

Residency in the European Union: Portugal

The best cheap residency program in the European Union is Portugal’s golden visa. To qualify, you must purchase real estate worth € 500,000 or deposit € 1 million in a local bank.

Obviously, € 500,000 or € 1 million are large amounts of money. I list Portugal as a “cheap” residency program because all you need to do is make a deposit in a local bank. You don’t need to spend the money or invest it. You can simply leave it in a local bank or buy a CD for the term of your residency.

Portugal’s golden visa gets you a top tier passport after 6 years. Residency in Portugal also allows you to live and work anywhere in the European Union.

Finally, you need only spend 2 weeks a year in Portugal to maintain your residency. You can send the rest of your time in the EU or wherever you like.

Conclusion

I hope you’ve found this article on the best cheap residency programs for 2018 to be helpful. For more information on any of these programs, please contact us at info@premieroffshore.com or call us at (619) 483-1708  for a confidential consultation.