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Reach Tom Azzara at 1-242-327-7359 or email: taxman@batelnet.bs for information.

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Posted in capital gains taxes, financial, tax, tax avoidance, tax planning, Uncategorized | Leave a comment

There are over 500,000 active IBCs registered in the British Virgin Island and over 100,000 “exempted” companies in the Caymans. Goldman Sachs (Cayman) Trust, Limited operates as a subsidiary of Goldman Sachs (Cayman) Holding Company. Why?

Need a tax haven?

JPMorgan/Chase writes on U.S. Estate taxation:  “Because stock of a foreign corporation (in a no tax haven) is not subject to U.S. estate tax, holding U.S. situs assets through a foreign corporation constitutes a planning opportunity.”

http://www.jpmfinancialservices.com/images/PDFs/EstateTaxation.pdf

https://www.linkedin.com/pulse/federal-estate-tax-chart-below-shows-exemptions-us-citizens-havens?trk=prof-post

What JPM is trying to say is a  non-resident individual that holds US stocks and bonds or US real estate in his name is subject to a 40% US federal Estate Tax (FET) should he die.

Foreign Companies (FC) are not subject to US Estate taxes (i.e., zero % rate) on any of their US holdings – and with just a little tax planning this would include his/her US real estate holdings too. JPM would likely use a FC to own a US company that owns the US real estate IMO, because otherwise there is a 30% withholding tax on any rental income sent offshore directly from US situs property (ies), with the 30% tax on the “gross up rental income” – without allowing you any deductions.

A foreign individual / NRA would be subject to a 40% FET minus only a $60,000 exemption. The FET does not apply to NRA US bank accounts, but most everything else gets taxed. If you have over $60,000 invested in the US, you should use a FC domiciled in a tax haven that has no income, estate, gift or inheritance taxes – like the Caymans, Anguilla Bahamas or Bermuda.

SIDEBAR: How one US company avoided US$2 billion dollars in federal and (California) state income tax with just two little ol’ Cayman companies. https://www.linkedin.com/pulse/dear-wealth-managerstax-attorneys-tax-havens?trk=prof-post

The US tax code has lots of legal loopholes like the one above. You don’t have to end up like UBS and Credit Suisse – and fined US$ billions.  The US Treasury is not finished with Switzerland and it’s banks. Here’s a list of 70 Swiss banks that admitted to assisting tax evasion and are in big trouble. https://www.irs.gov/Businesses/International-Businesses/Foreign-Financial-Institutions-or-Facilitators Note: Some of these Swiss banks listed were forced out of business and are in liquidation.

If you’re a US taxpayer and formed an offshore company in any of the tax havens and didn’t include IRS Compliance Form 8621, there’s a good chance you’ll end up with the same nightmarish tax problems as the American clients of UBS and Credit Suisse – who were fined up to 50% of their offshore “accounts”. All have “criminal records”, but few received jail time.  Just filing the FBAR for signature over a foreign bank account can save you from criminal prosecution, but there’s more to know to “do it right”. UBS and Credit Suisse each supplied at least 4000 account holder names to the IRS. However, there are 100,000 US account holder names the IRS did not get from these big institutions, so they’ll be back for more IMO.

There are several IRS compliance documents you have to know about, but here I will talk about just one – Form 8621 (for Passive Foreign Investment Companies or PFICs or Qualified Electing Funds – QEFs). http://www.irs.gov/pub/irs-pdf/f8621.pdf   http://www.irs.gov/pub/irs-pdf/i8621.pdf  

Click this link to see how easy it is to fill out Form 8621. Form 8621 is mandatory beginning 2014.

The IRS does not require that a PFIC/QEF (even if based in a no tax haven like the Cayman Islands) file a US income tax return. I’ll bet your offshore incorporator/service provider didn’t tell you that, now did they?  The IRS can’t/won’t audit a “no tax return required/filed” situation. About ½ of the hedge funds organized by hedge fund managers up on Wall Street are organized in tax havens like the Caymans, but there is a plethora of tax information you need to know about, but surprisingly there are some great loopholes and tax avoidance available to you as well.

Charles Schwab is “hiding out” in the Cayman Islands toohttp://cym.bizdirlib.com/node/514


 

Note, both these players (and Goldman Sachs Cayman as well) have a 2nd holding company in Cayman that own the shares in the other company. They would both meet the IRS standard for PFIC/QEF.

Gilead Sciences (GILD) has FOUR companies incorporated in the Cayman Islands.

http://www.nytimes.com/2009/01/17/business/17tax.html?_r=0

I’ve been offshore since 1990 and have seen formed many, many PFICs (offshore companies). I was audited by the IRS in 1997 (after forming over 700 offshore companies). I work with three British barristers in Anguilla since 2001. I/they formed over 350 companies in Anguilla – a no tax haven and British Overseas territory like the Cayman Islands. I am an overseas agent for the Anguilla government’s registrar.  It’s my opinion that you need two offshore companies to make a “scheme” work as outlined in EXAMPLE #1 below. And, why would you need to spend upwards of $5,000 per company, or even more, in the Caymans to a management company or foreign lawyer that knows nothing (and cares little) about IRS compliance (specifically Form 8621 for QEF’s and PFICs)?  An Anguilla company can be registered for $2,500 with us, and we will/I talk and recommend proper compliance to obtain the proper tax breaks in the event you don’t know what they are.

PFICs/QEFs can receive management company fees free of US income tax so long as they don’t open an office within the USA. There are “lots” of other transactions that can go tax free as well offshore, and Anguilla has no personal or corporate income taxes, estate taxes, death taxes, CGTs, withholding taxes. It’s classified as a “no tax haven” just like Cayman and Bermuda.

Filling out form 8621 (click this page link).

The plan is outlined below in example #1. The IRS calls them “pedigreed qualified electing funds”, and they are PFICs just like the ones Romney uses.

Offshore Tactics Helped Increase Romneys’ Wealth http://www.nytimes.com/2012/10/02/us/politics/bains-offshore-strategies-grew-romneys-wealth.html?_r=1

http://www.theguardian.com/world/2012/aug/23/gawker-mitt-romney-offshore-accounts

Avoidance of taxes is not a criminal offense says IRS

 

https://www.youtube.com/watch?v=wBUz2RocJ8A


“Mitt Romney’s former firm Bain Capital – $77 billion AUM http://www.baincapital.com – has at least 138 funds (called Passive Foreign Investment Companies and QEFs by the tax code) organized in the Cayman Islands, and Romney himself has personal interests in at least 12, worth as much as $30 million, hidden behind ..” http://www.vanityfair.com/politics/2012/08/investigating-mitt-romney-offshore-accounts ….

Romney filed form 8621 for 17 QEFs in 2010. A QEF stands for a Qualified Electing Fund by the IRS!

http://www.irs.gov/pub/irs-pdf/f8621.pdf   http://www.irs.gov/pub/irs-pdf/i8621.pdf  

                                                            
I’ll repeat myself: The IRS does not require that a PFIC/QEF file a US income tax return.
IRS can’t/won’t audit a “no tax return required/filed” situation!

Click this link to see how easy it is to fill out Form 8621. Form 8621 is mandatory beginning 2014.

If you trade the stock and bond markets using offshore companies like Mitt Romney you need to know what forms to file.

Offshore companies like Bain Capital’s 138 funds organized in the Cayman Islands do not owe US short term or long term capital gains taxes.

Just think about that next time you call your stock broker or log on online with your stock broker.

Example #1 Foreign company A (FCA) owns 100% of Foreign company B (FCB). US person X owns 4.5% of Foreign company A. FC B owns 95.5% of FCA.
Foreign company B is the business vehicle and has $270,000 in passive profits in its first year. For the example we’ll assume this $270,000 is CG, not ordinary income.

SIDEBAR: Profits and income of FC B or FC A could be from stock or bond market gains(and interest or dividends) in the stock market like a hedge fund would have.
Ordinary income from foreign personal holding company incomes as described here.. http://www.law.cornell.edu/uscode/text/26/1293 and
http://www.law.Cornell.edu/uscode/text/26/1297

Foreign base company sales and service income of a QEF are usually considered ordinary (passive/subpart F) incomes for purposes of the QEF/PFIC/CFC legislation. But, that’s ok, because US person X is reporting the income and paying tax on of both FCA and FCB annually. Note. US Person X is only paying tax on his “pro rata share” of the two offshore company’s  income. Most of the offshore profits in these two companies goes untaxed indefinitely.

If it seems confusing, it’s because the US Treasury’s tax writers wanted it to be confusing. Still, it is the (tax) law.

US person X takes the election to be taxed as a QEF for both FCA and FCB.

No US tax returns for Foreign company A or B are required under the US tax law.

For purposes of the PFIC provisions Section 1291 thru 1298, US person X would report his “pro-rata” share of Foreign company A’s profits (called the ordinary earnings + capital gains of his QEF or PFIC).

Person X should file Form 8621 in the first year and check box A in Part II for to be a (Pedigreed) QEF http://www.irs.gov/pub/irs-pdf/f8621.pdf

For purposes of the PFIC provisions, person X would ALSO report his “pro-rata” share of Foreign company B’s net capital gains + B’s ordinary income ($270,000 – we’ll say this is ALL capital gains), but the IRS allows X to pay tax as long term capital gains on FC B’s CGs… at the lower long term capital gains 15% tax rate. Remember, this is just an example. Most QEFs would not have LTCGs in the first year of operation.
http://www.law.cornell.edu/uscode/text/26/1293

If Foreign Company A has $30,000 of dividend income, US taxpayer X would put 4.5% of the $30,000 dividend ($1,350), (i.e., his pro rata share of the ordinary income of foreign company A) on his tax return. See part III of the form.. http://www.irs.gov/pub/irs-pdf/i8621.pdf

Special Note: X would not have to pay any tax on his pro rata share of the $30,000 dividends that are actually distributed to him ($1,350). That amount ($1,350) could be passed on to him AND he would not have to pay tax on it again.

COMPUTING THE TAXES: The tax for US person X for QEF A (i.e., Foreign Company A) would be on $1,350 income (his pro-rata share of the $30,000 dividend) at a tax rate of say 25% or about $337.50

The tax for US person X for QEF B (I.e., Foreign Company B) would be on B’s $270,000 income (i.e., B’s net capital gains + ordinary income) at a tax rate of 15% or $1,731.375. We’ve assumed FC B had only capital gains and no ordinary income.

The IRS allows the ordinary earnings and profits of Foreign Company B ($270,000) to be taxed at the long term capital gains tax rate of 15% on US person X’ tax return. NOTE: For 2014 the tax rate is going up to 20% for LTCGs.
See Part III, items 6 and 7 of form 8621. http://www.irs.gov/pub/irs-pdf/f8621.pdf.

Note: The net capital gains cannot exceed the earnings and profits of B according to the tax code. (i.e., I’m assuming $270,000 in net capital gains for FCB).
In our example, X would pay a tax on QEF B totaling $1,822. (multiply 4.5% indirect ownership times $270,000 GG = $12,150 / X’s pro rata share) (this figure ($12,150) gets put in part III of form 8621 and gets taxed at a 15% tax rate AND equals $1,822 in taxes). See Part III, items 6a,b and 7a,b of Form 8621. http://www.irs.gov/pub/irs-pdf/f8621.pdf.
If you read the instructions for Form 8621 it tells you exactly what line on your 1040 that you put the ordinary incomes of the QEFs, and tell you to add the capital gains onto your Schedule D.

REVIEW: Here’s the tax computation of US person’s X tax return for QEF A and QEF B.

X would pay tax on his 4.5% (i.e., his indirect shareholding is 4.5% X 100% = 4.5%) of the $270,000 capital gains (or ordinary income if it’s a pedigreed QEF in it’s 1st year) of foreign company B. The Form 8621 instructions tells X to put any capital gain from a QEF on his Schedule D of his 1040.
X’s tax on FCB is $1,822.
+
X would pay tax on his 4.5% pro rata share of the $30,000 dividends/interests of company A or $337.50.
Multiply $30,000 by 4.5% = $1,350 which equals an actual reportable tax of $337.50.
X’s direct ownership in foreign Company A is 4.5%.

Total tax on $300,000 in offshore profits for both companies would amount to $2,159.5. US person X pays this amount.

That’s a savings of about $120,000 in taxes (annually). For example, if FCA and FCB were doing business in California as domestic corporations or mutual funds their tax bills would be greater than $120,000 (not including any state and city taxes!)

Note: THAT’S A TOTAL TAX RATE OF .77% … LESS than 1%.

Effectively, X would file two QEF forms for Company A and Company B.
See part III for where your accountant reports and files Form 8621 for YOU or person X.
Form 8621 gets attached to your 1040 tax return in March of each year.
Two forms get filed for each of the QEFs (FC A + FC B) in our example.

Note: This author has filed his TD-90.22-1 every year since 1995 (and I have copies to prove it). It’s due by June 30th of every year… . For 2014 the Treasury will be using the NEW FBAR…, and you file electronically
http://www.fincen.gov/forms/files/FBAR%20Line%20Item%20Filing%20Instructions.pdf

“Avoidance of taxes is not a criminal offense. Any attempt to reduce alleviate taxes by legitimate means is permissible.
The distinction between evasion and avoidance is fine yet definite.
One who avoids tax does not conceal or misrepresent.
He shapes events to reduce or eliminate tax liability and upon the happening of the events makes a complete disclosure.

Evasion on the other hand involves deceit subterfuge camouflage concealment some attempt to color or
Obscure events or making things seem other than what they are.”

— Internal Revenue Service

Send questions and comments to taxman@batelnet.bs

For offshore Bahamian or Anguilla companies visit this link

https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

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Posted in capital gains taxes, financial, tax, tax avoidance, tax planning | Tagged , , , , , , , , , , , , , , , , , , | 18 Comments

Need a tax haven?

Need a tax haven?

Chart Offshore Big companies

https://www.linkedin.com/pulse/partners-associates-wanted-thomas-azzara?trk=pulse_spock-articles

Kind regards,

 

TomAzzara                                                                                                                                                                                                                                                                                             Overseas agent / Anguilla Registrar / Since 2001                                                                                                                                                                                                                                                                                                             SEC Registered Investment Advisor / Since 2009                                                                                                                                                                                                                                 Nassau, Bahamas

242 327 7359

242 359 0202

taxman@batelnet.bs                                                                                                          havens67@gmail.com

Over 1,030 Bahamian companies                                                                                                          over 350 Anguilla IBCs formed.

FYI there are over 500,000 active IBCs registered in the British Virgin Island and over 100,000 “exempted companies in the Caymans.

Why so many offshore companies?

Under the US tax code FCs (foreign companies) don’t have to file tax returns or pay taxes so long as they have no ECI.

These havens also impose no taxes on CG or income of any kind.

65% of the money in the Cayman Islands banks comes from USA deposits according to the Cayman Government.

 

surprising-tax-havens

 

 

Posted in Uncategorized | Leave a comment

Let us be your offshore office. I’ve been domiciled in the tax free Bahamas since 1990.

The biggest loophole for foreign individuals who invest in the US is in the US estate tax code. See for yourself. https://www.linkedin.com/pulse/federal-estate-tax-chart-below-shows-exemptions-us-citizens-havens?trk=pulse_spock-articlescartoon-tax-avoidance

 “I’ve been offshore since 1990 in Nassau, Bahamas. Over 500 Bahamian Cos formed before IRS audited me. If you don’t know IRS Form 8621 (for American taxpayers) and how to deal with it, you should probably be let go, and Americans offshore should probably sue you.”

cayman-stamp-queen

A top (Bodden) Cayman Bank turns over US investor names to IRS and pleads guilty to criminal behavior just 8 months ago. You listen to me, this won’t happen to you. https://www.justice.gov/opa/pr/two-cayman-island-financial-institutions-plead-guilty-manhattan-federal-court-conspiring-hide

Swiss banks were fined billions for FBAR violations (i.e., undisclosed American accounts). IRS is not through “busting” Cayman banks. https://www.irs.gov/Businesses/International-Businesses/Foreign-Financial-Institutions-or-Facilitators

lloyds-secrecy

Offshore bank secrecy and income tax evasion. What a deadly combination.

https://www.irs.gov/uac/offshore-tax-avoidance-and-irs-compliance-efforts

goldman shipping

So, where is Goldman Sachs and Company? GS has been in this tax haven for 20 years. http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=139744266

RE: IRS Form 8621. Need help filing yours? https://www.irs.gov/pub/irs-pdf/i8621.pdf

george_soros_1444145http://www.foxnews.com/world/2016/05/16/panama-papers-reveal-george-soros-deep-money-ties-to-secretive-weapons-intel-firm.html

Offshore based management companies with a real presence don’t have to pay federal taxes on their management fees, and don’t have to file income tax returns. I’ve been filing a form 2555 with my tax return since 1995 – excluding up to $100,800 in salary that I draw off. It’s called the Foreign Earned Income Exclusion.

Let me be your offshore office. I’ve been domiciled in the tax free Bahamas since 1990.

The FC must also not have any effectively connected income (ECI), or all its income will become taxable, and it would than need to file a tax return, so you must be careful.

 

wall-street-sign

Dear Offshore office hunters; https://vid.me/WsWO

Through September of 2016 there were 4,215 “new” IBCs registered in Anguilla. I estimate there were about 40,000 IBCs registered in Anguilla since the end of the 1990s, rivaling the Caymans (100,000) for offshore international company formations.

Yesterday, the Anguilla registrar told me there are 22,000 IBC still “active”. Anguilla is also a top jurisdiction for reinsurance companies – trailing Bermuda and the Cayman Islands. The BVI have 500,000 IBCs on their register today. All of them are “active” – 98% of them potential IRS Form 8621 victims.

I used to form on average over 100 Bahamian IBCs a year in the “roaring 1990s” (for ten years in a row).

Since 2001, I’ve formed over 350 Anguilla IBCs. We maintain offices offshore and draft the necessary company documents, provide a foreign trust with a foreign trustee (FT) to hold shares the client doesn’t want to hold in own name (a common tax strategy), and advise on where to bank with a company . I have good banking connections both onshore and offshore, and am skilled in IRS compliance for US taxpayers.

I wrote a book on tax havens and US tax law and that’s how I ended up in this business. https://www.amazon.com/Havens-World-Eighth-Thomas-Azzara/dp/1893522024

Kind regards,

TomAzzara                                                                                                                                                   Overseas agent / Anguilla Registrar / Since 2001                                                                                                                                                                           SEC Registered Investment Advisor / Since 2009                                                                             Nassau, Bahamas                                                                                      Havens67@gmail.com                                                                                  taxman@batelnet.bs                                                                                                                                           1 242 3277359                                                                                                                                                                  1 242 359 0202(cell)

Visit my linkedin page for more articles on international taxation and tax havens.

https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

1030 Bahamian companies since 1990                                                                                                   360 Anguilla companies since 2001                                                                                                          Offshore since 1990.

Contact us.

We are a tax consulting and company formation firm located offshore in the sunny, tax free Bahamas since 1990.

  • Anguilla is a UK overseas territory with same tax status as Cayman Islands.
  • All the money and technology to create their offshore registration services came out of London.
  • Anguilla was one of the very first tax havens that adopted an online registry service.
  • QEII is the head of State.

Got questions? email taxman@batelnet.bs

  • Imagine evading as much as $3B in US federal income (CGT) taxes on one single transaction and pitting that money in a company (FC) you control – all the while the IRS looks the other way? You’ll never be this “lucky”. Someday the IRS will (might) do a reapportionment under IRS sections 485 and 482 and collect the money… IMO. The US Treasury employ 100,000 people – and the IRS is their enforcement arm. They are understaffed but very powerful.
  • skype-300x133
  • Silver Lake, the US $26 Billion dollar venture capital firm based on the West Coast, formed two Cayman companies and used them to “mark up” and sell Skype to Microsoft for $8.5 billion dollars. Their Cayman PE investment in Skype was about $1B, and I maintain that they diverted billions in “taxable income” that is still in the Cayman Islands in companies they control (essentially in their own pants pockets) where it can work tax free.https://www.linkedin.com/pulse/avoiding-us-gift-taxes-estate-capital-gains-offshore-companies-tax?trk=prof-post
  • “Dizzying array of offshore entities and holding companies” – MarketWatch – Microsoft and friends don’t like paying taxes. http://www.marketwatch.com/story/skype-deal-a-lesson-in-offshore-accounting-2011-05-12?link=MW_story_popular

PS   I was audited by IRS in 1997 (after forming approximately 500 offshore Bahamas companies), and they did not ask for any taxes.

I’m a pretty good tax planner (especially for American taxpayers), and have been doing “offshore” since 1990.

See IRS audit attachment. (email me and I’ll send it)

july14tboat-be

Enjoy life / Have some fun

YFT in November? No way?

Way. Both caught on squid (small piece – not whole squid, ’cause YFT don’t like whole piece usually) (on #9 circle hooks, ’cause YFT can’t throw a #9 circle hook – but rarely). Both hooked up by me this day. I’ve landed 700 YFT since 2000 on this boat. Mostly fishing “solo”.

Going to the buoy https://vid.me/mUKK

Jimmy’s 5 second tuna video today https://vid.me/UQx1

Note: Jimmy is Master mokanic for largest Honda/Chevy dealer here in Nassau. Dealer is always sending him here and there for more “motor” training.thompson67yft

Performance 40 is such a beast. “Unbreakable”. 100 miles and 100 gallons of gas at $4.14 a gallon today. Boat builder lives in Pompano Beach and has good size shop in Miami where he builds these sea worthy, versatile, fast “ships”.

We are over open ocean now – water depth is 6000 feet. Wind kicks up even a little, and you sometimes get big seas. https://vid.me/ofAY

Jimmy Thompson having a bad day on the electric real – only 16 snappers.

He usually gets 25 to 30 – so he was not happyhttps://vid.me/rHKs

“Fresh from the Sea” https://vid.me/1szu

Anguilla and the Caymans are both “overseas territories” and no-tax havens in the Caribbean. QE II is the head of State in both.

cayman-stamp-queen

Posted in Uncategorized | Leave a comment

The biggest tax loophole for foreign individuals who invest in the US is in the US estate tax code. Let us be your offshore office in the Caribbean.

The biggest loophole for foreign individuals who invest in the US is in the US estate tax code.  Now, you really need me. https://www.linkedin.com/pulse/federal-estate-tax-chart-below-shows-exemptions-us-citizens-havens?trk=pulse_spock-articles

Cayman-island-tax-haven-for-the-rich--300x224

 “I’ve been offshore since 1990 in Nassau, Bahamas. Over 500 Bahamian Cos formed before IRS audited me. If you don’t know IRS Form 8621 (for American taxpayers) and how to deal with it, you should be let go, and Americans offshore should sue you.”

A top Cayman Bank turns over US investor names to IRS and pleads guilty to criminal behavior just 8 months ago. You listen to me, this won’t happen to you. https://www.justice.gov/opa/pr/two-cayman-island-financial-institutions-plead-guilty-manhattan-federal-court-conspiring-hide

Cayman Stamp Queen

Swiss banks were fined billions for FBAR violations (i.e., undisclosed American accounts). IRS is not through “busting” Cayman banks. https://www.irs.gov/Businesses/International-Businesses/Foreign-Financial-Institutions-or-Facilitators

lloyds-secrecy

Offshore bank secrecy and income tax evasion. What a deadly combination.

https://www.irs.gov/uac/offshore-tax-avoidance-and-irs-compliance-efforts

So, where is Goldman Sachs and Company? GS has been in this tax haven for 20 years. http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=139744266

goldman shipping

 

RE: IRS Form 8621. Need help filing yours? https://www.irs.gov/pub/irs-pdf/i8621.pdf

 

 

Dear Partners/Job hunters; https://vid.me/WsWO

Through September of 2016 there were 4,215 “new” IBCs registered in Anguilla. I estimate there were about 40,000 IBCs registered in Anguilla since the end of the 1990s, rivaling the Caymans (100,000) for offshore international company formations.

Yesterday, the Anguilla registrar told me there are 22,000 IBC still “active”. Anguilla is also a top jurisdiction for reinsurance companies – trailing Bermuda and the Cayman Islands. The BVI have 500,000 IBCs on their register today. All of them are “active” – 98% of them potential IRS Form 8621 victims.

I used to form on average over 100 Bahamian IBCs a year in the “roaring 1990s” (for ten years in a row).

Since 2001, I’ve formed over 350 Anguilla IBCs. We maintain offices offshore and draft the necessary company documents, provide a foreign trust with a foreign trustee (FT) to hold shares the client doesn’t want to hold in own name (a common tax strategy), and advise on where to bank with a company . I have good banking connections both onshore and offshore, and am skilled in IRS compliance for US taxpayers.

I wrote a book on tax havens and US tax law and that’s how I ended up in this business. https://www.amazon.com/Havens-World-Eighth-Thomas-Azzara/dp/1893522024

I am looking for partners and associates to share profits 50%/50% (after my expenses).

Applicants can contact me at the addresses below.

Kind regards,
Tom Azzara                                                                                                                                               Overseas agent / Anguilla Registrar / Since 2001                                                                                                                                                                         SEC Registered Investment Advisor / Since 2009                                                                      Nassau, Bahamas                                                                                      Havens67@gmail.com                                                                                  taxman@batelnet.bs                                                                                                                                       1 242 327 7359                                                                                                                                               1 242 359 0202(cell)                                                                                                                                             Visit my linkedin page for more articles on international taxation and tax havens.

https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

1030 Bahamian companies since 1990                                                                                                 360 Anguilla companies since 2001                                                                                              Offshore since 1990.

Contact us.

We are a tax consulting and company formation firm located offshore in the sunny, tax free Bahamas since 1990.

  • Anguilla is a UK overseas territory with same tax status as Cayman Islands.
  • All the money and technology to create their offshore registration services came out of London.
  • Anguilla was one of the very first tax havens that adopted an online registry service.
  • QEII is the head of State.
  • Got questions? email taxman@batelnet.bs
  • Imagine evading as much as $3B in US federal income (CGT) taxes on one single transaction and pitting that money in a company (FC) you control – all the while the IRS looks the other way? You’ll never be this “lucky”. Someday the IRS will (might) do a reapportionment under IRS sections 485 and 482 and collect the money… IMO. The US Treasury employ 100,000 people – and the IRS is their enforcement arm. They are understaffed but very powerful.

    skype

  • Silver Lake, the US $26 Billion dollar venture capital firm based on the West Coast, formed two Cayman companies and used them to “mark up” and sell Skype to Microsoft for $8.5 billion dollars. Their Cayman PE investment in Skype was about $1B, and I maintain that they diverted billions in “taxable income” that is still in the Cayman Islands in companies they control (essentially in their own pants pockets) where it can work tax free.https://www.linkedin.com/pulse/avoiding-us-gift-taxes-estate-capital-gains-offshore-companies-tax?trk=prof-post

PS   I was audited by IRS in 1997 (after forming approximately 500 offshore Bahamas companies), and they did not ask for any taxes.

I’m a pretty good tax planner (especially for American taxpayers), and have been doing “offshore” since 1990.

See IRS audit attachment. (email me and I’ll send it)

 

 

 

 

 

 

 

 

 

 

july14tboat-eng
Enjoy life / Have some fun

YFT in November? No way?

Way. Both caught on squid (small piece – not whole squid, ’cause YFT don’t like whole piece usually) (on #9 circle hooks, ’cause YFT can’t throw a #9 circle hook – but rarely). Both hooked up by me this day. I’ve landed 700 YFT since 2000 on this boat. Mostly fishing “solo”.

Going to the buoy https://vid.me/mUKK

Jimmy’s 5 second tuna video today https://vid.me/UQx1

Note: Jimmy is Master mokanic for largest Honda/Chevy dealer here in Nassau. Dealer is always sending him here and there for more “motor” training.

Performance 40 is such a beast. “Unbreakable”. 100 miles and 100 gallons of gas at $4.14 a gallon today. Boat builder lives in Pompano Beach and has good size shop in Miami where he builds these sea worthy, versatile, fast  “ships”.

We are over open ocean now – water depth is 6000 feet. Wind kicks up even a little, and you sometimes get big seas. https://vid.me/ofAY

Jimmy Thompson having a bad day on the electric real – only 16 snappers.

He usually gets 25 to 30 – so he was not happyhttps://vid.me/rHKs

“Fresh from the Sea” https://vid.me/1szu

Anguilla and the Caymans are both “overseas territories” and no-tax havens in the Caribbean. QE II is the head of State in both.

Posted in Uncategorized | 1 Comment

Avoiding US Gift taxes, Estate taxes and Capital Gains taxes with offshore companies domiciled in no tax havens.

I’ve been offshore in the Bahamas since 1990. We formed over 1300 foreign companies (FC) in no tax havens just like Microsoft and IBM. Today, if you don’t plan to file the right IRS information forms, there is a 90% chance the IRS will “bust” you into tears or bankruptcy. Contact me if you need to talk (taxman@batelnet.bs). To date, I’ve never had a client put out of business by the IRS. Call my Magic Jack number in the US with your questions. 954 580 7491 It’s a free call.

Silver Lake, the $25B VC firm from Silicon Valley, avoided more than $2B in Federal Income Taxes using two Cayman companies when they acquired Skype for Microsoft (Bill Gates) in 2011. In case you don’t remember, Microsoft paid $8.5B for Skype. Ouch!

skypeSL and WS use tax havens every day. The IRS let them get away with it. No audit. No tax. Why? Offshore companies (called Passive Foreign Investment Companies or PFICs) don’t have to file US income tax returns if they don’t have ECI. Mitt Romney’s Bain Capital had 138 Cayman PFICs. Bain calls them private equity companies.

Most tax lawyers won’t tell you that there is no gift tax between non-resident alien individuals or corporations under the US tax code. So, if a foreign company (FC1) incorporated in a no tax haven like Anguilla or Cayman gives $5,000,000 to another FC2, there is no US gift tax even if the companies have US shareholders. Even more interesting is FC1 and FC2 don’t need to file US income tax returns or pay any US income taxes so long as they don’t have ECI (Effectively Connected Income).

Cayman-island-tax-haven-for-the-rich--300x224

Here’s the IRS link that describes the type of income you can’t have if you want to avoid US taxes with a tax haven holding company.

Note, that Goldman Sachs (Cayman) (and most all offshore American owned holding companies/banks in tax havens) get a special tax exemption/loophole under the US tax code for their ECI. Open the link now and read especially:

NOTE: If your only U.S. business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U.S. resident broker or other agent, you are NOT engaged in a trade or business in the United States” – IRS / Effectively Connected Income (ECI) https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci

There’s a reason Goldman uses this offshore strategy to avoid US taxes, and I’ll try to explain how in few words. Take notes: Goldman Sachs uses two offshore companies in the Cayman Islands in their offshore plan – one to own most all the shares of the other. http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=139744266

Example #1: Suppose Wall Street Johnnie (WSJ) starts up an Anguilla/Cayman company (FC1) by buying 100 shares for $10,000,000. This is called a capitalization by tax lawyers, and is a non-tax event. Now, let’s assume FC1 has an authorized capital of 50,000$US. Suppose 49,890 shares of FC1 is owned by FC2 (a second offshore Anguilla company – like the GS setup in the Bloomberg link).

WSJ has to file an IRS form 8621 annually with his tax return in the year following his investment, and WSJ needs to report the income of FC1 on this form 8621, and pays taxes, but the amount of tax he has to pay is dependent on his “pro rata” share of FC1. Let’s investigate form 8621.

“Pro rata share” is the IRS term you have to understand. Its mentioned in the instructions for form 8621.

https://www.irs.gov/pub/irs-pdf/f8621.pdf

FC1 is formed in 2016 and has $10,000,000 with a US stock broker. FC1 has $500,000 in short term capital gains from trading in the stock market. FC1 doesn’t have to file a US tax return, but WSJ has to file a form 8621 and report his pro rata share of the offshore company profits.

 I have several clients with brokerage accounts with brand name brokers within the USA. https://www.linkedin.com/pulse/ipos-offshore-private-family-owned-hedge-funds-capital-tax-havens?trk=prof-post

Here’s how you figure the tax. WSJ’s pro rata share is 100 shares divided by 50,000 shares outstanding which equals a fraction (.002%) – which multiplies (morphs) into $1,000 of income. WSJ needs to put this $1,000 on the form 8621 and pay taxes on it at the ordinary income tax rate. For this example, we’ll assume WSJ is in the 25% income tax bracket, so WSJ owes the IRS $250 on the offshore company’s profit in 2016 ($500,000 duh!).

NOTE: When WSJ files his form 8621 in 2018 (for 2017 offshore company profits) the IRS will allow him Long Term Capital Gains tax treatment (at a tax rate of 20%) instead of taxing him at ordinary income tax rates (as high as 39.9%).

Under the Passive Foreign Investment Company (PFIC) provisions of the US Tax Code, WSJ would go to Part II of this 3 page Form 8621, and check the first Election box, and declare his holding as a Qualified Electing Fund (QEF).

Under the PFIC rules, WSJ can be a director of both FC1 and FC2 and it doesn’t change things. Once he makes the QEF election he is compliant and home about tax free for years to come, because unlike the Controlled Foreign Corporation provisions of Section 951 thru 958, it doesn’t matter how many US directors an offshore company might have, and the IRS doesn’t care if US directors “control” FC1 or FC2. A PFIC can have one US citizen as a director. Perfectly ok.

ASSET PROTECTION USE: Suppose WSJ is 40 years old and remarries a 25 year old, but wants to leave the $10,000,000 offshore to his daughter (WSG) in the event of his death. He already has a $5,000,000 home on Long Island that his new wife will inherit, and he wants his daughter from his first marriage to have “control” of the $10,000,000 offshore – not his new wife.

The Federal Estate Tax exemption for US citizens is $5.45 million in 2016, but foreigners get NO FET exemption – excepting just $60,000. https://www.linkedin.com/pulse/federal-estate-tax-chart-below-shows-exemptions-us-citizens-havens?trk=prof-post

FC1 sells 10 shares to WSG for $1,000. WSJ appoints WSG as a director and secretary for FC1 and FC2. Should WSJ die, WSG will be able to continue controlling both offshore companies the same as when her father was alive. His second wife would be entitled the FMV of the 1000 shares her husband WSJ owned with a value of $200,000, but that is all she and her estate tax lawyer can lay claim to.

For extra protection: WSJ can leave his 1000 shares in FC1 to his daughter WSG by way of his US last Will and Testament.

OFFSHORE MANAGEMENT COMPANY: FC2 can collect management fees from managing a portfolio of stocks for Americans so long as FC2 does not have ECI.

EXAMPLE #2. FC2 has a profit of $500,000 from the sale of $5,000,000 vacation home in Bermuda. WSJ would need to file a second form 8621 and put his PRO RATA share of the $500,000 profit on his tax return. WSG would also have to put her PRO RATA share of the $500,000 profit on her tax return. Computing WSG’s tax liability on Form 8621 based on her ownership of 10 shares in FC1 and we find that she would have $100 in taxable income.

Big savings for both WSJ and WSG on the sale of the Bermuda home.

Ninety-nine present of the companies registered in the Caribbean are PFICs.

480,000 IBCs in BVI; (pop 26,000)                                                                                                 100,000 “exempt companies” in Cayman;                                                                                    45,000 IBCs in the Bahamas;                                                                                                             30,000 cos in Bermuda;                                                                                                                        85,000 IBCs in Anguilla;

None of the Caribbean (tax) havens levy an estate tax or a capital gains tax. None of the tax havens above levy any personal of corporate income taxes at all. No special business license is required for an offshore company. These companies are also exempt for most SEC filing regulation – until they are listed on a US stock exchange.

And most importantly of all, offshore companies (called Passive Foreign Investment Companies by the IRS) don’t have to file US income tax returns so long as they have no ECI. https://www.law.cornell.edu/uscode/text/26/1297

IRS Form 8621 with instructions – Don’t go offshore without filing this form.

https://www.irs.gov/pub/irs-pdf/i8621.pdf

https://www.irs.gov/pub/irs-pdf/f8621.pdf

Kind regards,

Tom Azzara

Overseas agent / Anguilla Registrar / Since 2001   

SEC Registered Investment Advisor / Since 2009                                                                      Nassau, Bahamas

Havens67@gmail.com

taxman@batelnet.bs

1 242 327 7359

Visit my linkedin page for more articles on international taxation and tax havens.

https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

1030 Bahamian companies since 1990                                                                                        

360 Anguilla companies since 2001
Offshore since 1990.
Contact us.

  • We are a tax consulting and company formation firm located offshore in the sunny, tax free Bahamas since 1990.
  • Anguilla is a UK overseas territory with same tax status as Cayman Islands.
  • All the money and technology to create their offshore registration services came out of London.
  • Anguilla was one of the very first tax havens that adopted an online registry service.

Chart Offshore Big companies

https://www.linkedin.com/pulse/avoiding-us-gift-taxes-estate-capital-gains-offshore-companies-tax?trk=prof-post

Estate Tax

Bet you didn’t know the US FET applies to you – even if you’ve never stepped foot in the United States? The IRS can get up to 40% of your US assets (US stocks, US homes, US raw land) if you don’t plan just right!
https://www.linkedin.com/pulse/federal-estate-tax-chart-below-shows-exemptions-us-citizens-havens?trk=pulse_spock-articles

Cayman Stamp Queen

The IRS and the US Justice Department has just begun their prosecutions of Cayman Island banks only last month. That court room drama was a solid victory for them. And.., it is just the beginning for Cayman bankers. Like a junk yard dog, you never want to run into these guys. The IRS is relentless, well funded and powerful.

https://www.justice.gov/opa/pr/two-cayman-island-financial-institutions-plead-guilty-manhattan-federal-court-conspiring-hide

goldman shipping

https://www.linkedin.com/pulse/you-ready-storm-coming-your-way-cayman-islands-bahamas-tax-havens

 

 

Posted in bahamas, banking, capital gains taxes, Caymans, companies, estate tax, financial, formation, Goldman, irs, JPM, offshore, stock market, tax, tax avoidance, tax planning, Uncategorized, wall street | Tagged , , | Leave a comment

IPO’s and Offshore private family owned hedge funds – NO CAPITAL GAINS TAXES is the attraction.

Wall Street firms love the offshore tax havens and use them all the time – every day – to completely avoid capital gains taxes. The money doesn’t even have to be sent offshore, but can remain in the same bank in New York you bank at now. It’s called a “capitalization”, and it’s perfectly legal to do. I recently had a client open an account in California for a FC (Foreign Corporation) with one of the biggest banks in the world. It took 4 months.

https://www.linkedin.com/pulse/ipos-offshore-private-family-owned-hedge-funds-capital-tax-havens?trk=pulse_spock-articles

goldman shipping

Harvard business professor Mihir Desai calculated that in 2008 there were three U.S. initial public offerings of stock by tax-haven-incorporated companies for every 10 U.S.-incorporated IPOs. Bidu and Alibaba are headquartered in the Cayman Islands. So what’s the attraction?

California has the highest capital gains tax rate in the US at 13.3%. The combined long term (LT) federal and state GGT rate is 33%. (includes a 3.8 percent surtax for those earning over $200,000). New York is just a percentage point behind (if you don’t consider NYC taxes).

But what could be worse than that? If you are an options or futures trader or you trade commodity contracts, the ST CGT can be devastating.

Short-term capital gains are taxed as ordinary income. This means any income you receive from investments held for less than a year must be included in your taxable income for the year. If you have $60,000 in taxable income from salary and $5,000 from short-term investments, your total taxable income is $65,000. If you file as an individual, you would be in the 25% tax bracket and would owe $12,021.25 in income tax for the year (using 2015 tax tables). (Investopedia).

Note: If you are in the upper tax bracket and have income over $200,000 short term CGT is 39.6%, and in California and New York the combined Federal and State tax rates would be almost 48%.

The US Tax Code allows for the complete avoidance of these high GGT rates if you use an offshore company to do your trading in a no-tax haven like the Caymans, Anguilla, Bermuda or the Bahamas, but only if the offshore company has no ECI.

Read this link for the IRS’s description of Effectively Connected Income (ECI). https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci

NOTE: The IRS tells you…” If your only U.S. business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U.S. resident broker or other agent, you are NOT engaged in a trade or business in the United States.”

480,000 IBCs in BVI;  (pop 26,000)

100,000 “exempt companies” in Cayman;

45,000 IBCs in the Bahamas;

30,000 cos in Bermuda

25,000 IBCs in Anguilla

None of the Caribbean (tax) havens levy an estate tax or a capital gains tax. None of the tax havens above levy any personal of corporate income taxes at all. No special business license is required for an offshore company. These companies are also exempt for most SEC filing regulation – until they are listed on a US stock exchange.

And most importantly of all, offshore companies (called Passive Foreign Investment Companies by the IRS) don’t have to file US income tax returns so long as they have no ECI. https://www.law.cornell.edu/uscode/text/26/1297

Kind regards,

 

Tom Azzara

Overseas agent / Anguilla Registrar / Since 2001

SEC Registered Investment Advisor / Since 2009

Stock analyst

Nassau, Bahamas

Havens67@gmail.com

taxman@batelnet.bs

1 242 327 7359

1 242 359 0202 (cell)

https://www.linkedin.com/in/taxhavens?trk=hp-identity-name

1030 Bahamian companies since 1990

360 Anguilla companies since 2001

Offshore since 1990.

  • We are a tax consulting and company formation firm located offshore in the sunny, tax free Bahamas since 1990.
  •  Anguilla is a UK overseas territory with same tax status as Cayman Islands.
  •  All the money and technology to create their offshore registration services came out of London.
  •  Anguilla was one of the very first tax havens that adopted an online registry service.
  • QEII is the head of State.
  • Contact us: taxman@batelnet.bs or havens67@gmail.com
  • Cayman Stamp Queen
Posted in bahamas, Blogroll, capital gains taxes, companies, estate tax, financial, formation, tax, tax avoidance, tax planning, Uncategorized | Leave a comment

PLAN CAREFULLY! The Federal Estate Tax exemption for US citizens is $5.45 million in 2016, but foreigners get NO FET exemption – excepting just $60,000.

According to JPM, a Foreign Corporation (FC) can avoid the entire US Federal Estate Tax (FET), but a foreign individual would get clipped of about 40% of his US stocks, bonds, homes, land holdings, and other US situs property by the IRS.

JPMorgan/Chase: “Because stock of a foreign corporation (in a no tax haven) is not subject to U.S. estate tax, holding U.S. situs assets through a foreign corporation constitutes a planning opportunity.”

http://www.jpmfinancialservices.com/images/PDFs/EstateTaxation.pdf

The Caribbean tax havens have grown to rival New York and London as a place to hold family assets, and the US FET is one reason why there are so many offshore companies there.
480,000 IBCs in BVI;
100,000 “exempt companies” in Cayman;
45,000 IBCs in the Bahamas;
30,000 cos in Bermuda
25,000 IBCs in Anguilla

None of the Caribbean (tax) havens levy an estate tax.

We are a tax consulting and company formation firm located offshore in the sunny, tax free Bahamas since 1990.

◾Anguilla is a UK overseas territory with same tax status as Cayman Islands.
◾All the money and technology to create their offshore registration services came out of London.
◾Anguilla was one of the very first tax havens that adopted an online registry service.

◾QEII is the head of State in Anguilla.Cayman Stamp Queen

◾Got questions? email taxman@batelnet.bs
https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

1030 Bahamian companies since 1990
360 Anguilla companies since 2001
Offshore since 1990.

 

 

 

Posted in bahamas, capital gains taxes, companies, financial, formation, tax, tax avoidance, tax planning | Leave a comment

Are you ready for the storm that is coming your way – Cayman Islands? Bahamas? BVI?

Hello. My name is Thomas (Tom) Azzara. I came to Nassau, Bahamas in 1990. I had recently written a book on tax havens and the US tax law covering their use (and abuse) – “Tax Havens of the World” (8th edition 2003). My mentor into this field of Internal Revenue Tax “Code” and the US Treasury Regulations was a law professor and author named Marshall J. Langer, who graduated summa cum laude from the Wharton School of Finance. Langer’s books (including his “Practical International Tax Planning” – formerly titled “How to use Foreign Tax Havens (1972)) are in every major college law library in the United States still.

In 1997, I was audited by the IRS after forming more than 650 Bahamian IBCs. That was no accidental inquiry into my financial affairs, and my name was not pulled out of someone’s hat. The IRS is a formidable foe – as 100 Swiss banks have recently found out. Several of the banks on the list below were forced into liquidation by the IRS. Who else do you know could collect over $1.5B from Credit Suisse and $650 million from UBS, and obtain guilty, criminal pleas to boot from all 100?

https://www.irs.gov/Businesses/International-Businesses/Foreign-Financial-Institutions-or-Facilitators

The IRS and the US Justice Department has just begun their prosecutions of Cayman Island banks only last month. That court room drama was a solid victory for them. And.., it is just the beginning for Cayman bankers. Like a junk yard dog, you never want to run into these guys. The IRS is relentless, well funded and powerful.

https://www.justice.gov/opa/pr/two-cayman-island-financial-institutions-plead-guilty-manhattan-federal-court-conspiring-hide

The IRS is the enforcement arm of the US Treasury Department (whose tax writers write the US Tax Code I study to this day).

As for my own 1997 audit, it turned out that one of my clients back then was a CPA and an IRS enrolled agent, and he took on that IRS audit. Three months after the audit began; I received a short, one sentence letter from the IRS. I owed them no money for the tax years audited it said. Whew… What a relief!

The IRS is not and never will be anyone’s friend. Believe it or not, the IRS did not ask me for one bank statement – offshore or onshore. You never volunteer to give the IRS anything they don’t ask for in an audit my advisor GE warned me. Of course, I had filed that FBAR anyway – unlike the American clients in the Justice Department’s link above.

UBS gave the IRS 4,450 names of Americans that had undisclosed accounts with them (i.e., no FBARs filed with the US Treasury Department). The IRS has prosecuted at least 100 of these non compliant US taxpayers that relied on Swiss bank secrecy … so far. All 100 were found guilty, and now have criminal records and can’t vote. Very few received any jail sentences, but the fines were upwards of 40% of the amounts undisclosed in the offshore accounts. Had they just filed that FBAR they would not have been investigated or prosecuted IMO.

I have filed a tax return with the IRS every year as required, and a FBAR every year since 1995 as well. With my annual tax return 1040 I file an IRS form 2555 (Foreign Earned Income Exclusion = FEIE). The IRS form 2555 allows me to exclude from income up to $72,000 in salary from the offshore company I work for. Today the annual FEIE limit has been raised by Congress to $100,800 (2015). If you don’t file the Form 2555 with you tax return, you don’t get the exclusion.

Using the tax code, I managed to keep my tax liability very low, and it was all legal the way the US government wants it. To qualify for the FEIE, you must be a US Citizen and live outside the United States 330 days of the year. It doesn’t matter if you live in a tax haven or not. Only an American citizen is entitled to the Foreign Earned Income Exclusion. A husband and wife team could exclude up to $201,600 annually. Both get an equal allotment under the tax code.

The name of the offshore company I work for is on my US tax return (i.e., the Form 2555) every year, but the company itself does not have to file a US income tax return (form 1120) or pay income taxes.

My specialty is Passive Foreign Investment Companies (or IBCs as they are called offshore) and Qualified Electing Funds (QEF). Legal tax avoidance is the goal.

Here is the IRS Form and instructions for Form 8621.

https://www.irs.gov/pub/irs-pdf/i8621.pdf

https://www.irs.gov/pub/irs-pdf/f8621.pdf

You can read more about me and my tax writings at my LinkedIn page.

https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button

No FBAR means Americans with undisclosed accounts will be criminally charged and convicted if caught.  IRS has won 100% of FBAR cases via the UBS probe.

https://www.irs.gov/uac/Offshore-Tax-Avoidance-and-IRS-Compliance-Efforts

tax planning street sign

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