IB accept Panama corps. you can call them and ask about it. i know at least 5 guys,who have offshore corps and IB accounts. i have to add that they not US citizens. setting up offshore on your name, if you are US citizen or resident is suicidal..but on other hand - there plenty of ways around it... true, but you can get around it,if you know programming and have personal account.
Now that I have answered your questions.... Sorry, I forgot to ask where you life and your particular experience in these matters?
oh come on- you're happy for my post, it gave you an opportunity to make a sales presentation (i'd bet you're now getting PM's). :eek: the OP is an American. the gist of the thread is obviously an AMERICAN TRADER trying to minimize taxes (i'll give the benefit of the doubt and say 'avoid' vs 'evade'). we all want to avoid taxes. so... your structure does nothing to accomplish this. if you're employed by an offshore corp, yeah... you get teh first 87m US tax free. not a very large amount, and barely enough to even bother with the hassle. still, your structure won't even accomplish this. with knowledge that the offshore corp you 'work for' is simply a company you created in an attempt to look like you work for a foreign company when you're really not (why having to produce your ID to IB blows up any hope of this slipping past the IRS), the IRS will disallow the 87m exemption- making the entire exercise one of futility. one of my best friends lives offshore and, as it would happen, works in this business. nearly all of their clients are not US citizens for reasons you already know; being in the business. i'm considering living abroad and would like to avoid whatever taxes i can. trying to accomplish a structure that will do this for a trader has proven difficult despite having someone i trust in the business. everything that would accomplish anything falls into a pretty dark shade of grey- in fact, one that the IRS wouldn't see as grey at all. on the upside for me, i've proven to be such a shitty trader over the past 7 months that capital gains are now a foreign concept to me. therefore, i have stumbled upon the holy grail- zero taxation! in fact, given my negative earnings, i imagine i qualify for govt. charity so, in reality, i've found a way to have the govt. pay me! as appealing as this all sounds, i doubt many will willingly follow in my footsteps. but i digress... as to the OP's goal: tax avoidance- elaborate as to how your structure would accomplish this. frankly, i don't see it.
Bob. i was addressing the contention that setting up an offshore company in a legal transparent way, giving IB genuine documents (ie: YOUR ID) they ask for... that this would provide any tax advantages. as to plenty ways around it.... if you could name any of these 'plenty' that are above board and create an offshore company that will provide you with the tax avoidance goal whilst still being legal.... i'm all ears. closest i've seen is the foreign wife angle which is at least kinda grey. still, as stated above, you better be damn sure wifey really loves you before putting your trading account inside a company which she legally controls/owns. and even then, this requires getting married- not exactly the first thing on my 'to do' list once moving abroad!
Gang- The orginal thread was posted by a US citizen in Japan. I dont know if he has to be a legal resident to open a corp or not...but the point is that he lives abroad. The idea with a company is that you are a professional and your "business" is trading. You can do this with an LLC in the US, why not an S.A. or structure in another country. You can reduce business expenses etc. For example, I own a Title Trading affiliate office in Costa Rica (well, doors open in a couple of weeks really). Say that company makes $250k per year (god willing in a few years)...I will make sure that I recieve less than $87k and that the company owns the rest. The company can own cars and property and other things for business use. Therefore, I LEGALLY lowered my personal tax liability becuse the the money never went to me. that company happens to be bricks and mortar...but it could be a personal trading company as well. 1. on #1 above, the reason why brokers ask for documents is for KYC and AML (know your customer and anti-money laundering) regulations that exists in most countries. If the authories ask, they simply have to know who owns the account at the end of the day. They dont care If a US citizen owns a foreign company, and they dont pro-actively send your info to the IRS...that is your job. You give them your documents, they run a background check on you..and the account opens. 2. I think he was refering to "ways around entitlement fees " if i remeber correctly. I think what he is referring to is having a small personal "bundled" account in your name and recieveing data for free. you use those free charts and entitlements as if it were a charting program and then you trade off of the "business" account in which opt not to pay the market data fees. 3. People do the foreign wife/changing names...etc. Easy to get screwed. Now, What I think you are trying to get at is correct..."in the end if they want to get you...they WILL get you". Agreed. But using offshore companies if you live offshore or have offshore residency is not dodgy. If you do it correctly, it is just being a good business person. You see the god Ol USA...is the biggest "offshore" haven in the world. that is where everyone else puts their money.
The "solution" is this... If you're US-based or US citizen, you open an account with a non-USbased broker outside of US. If you're NOT US-based/NOT US citizen, then you open an account with a US-based broker like IB. Simple.
'USA...is the biggest "offshore" haven in the world" ha- my friend says that all the time. my understanding is that your case is different from mine/OP's. you have a business, employees, B&M, etc. for me though, the fact that the foreign llc is owned by me and is simply what i do my trading thru does not provide sufficient distance to make me eligible for the 87m exemption and would never hold up in an audit. further, the 'business' retaining earnings above the 87m would also not hold up and that this would be damn close to tax evasion. the code for the 87m is there for people legitimately taking work with a foreign company abroad, not a way for the clever to get out of paying taxes on their investment income (most who would attempt this are not traders, they're people with $ living off investment income and the like). the IRS is hip to this and doesn't buy it. i jsut have a hard time seeing an IRS audit where you admit (they'll know anyway by getting your info from IB) that you made, say, $500m, 'paid' yourself 87m, and retained 423m and didn't pay US taxes on it- all under the guise that this offshore llc you created solely to trade is magically outside of the reach of the IRS. you say you could then invest the $ in property or whatever. fine the IRS would say- after you pay taxes on the $423m- and... you'll be paying US taxes on any cap gains on the property you buy too! if this is what you're saying, then i'm guessing none of your clients have been audited yet. i initially hoped such a structure was feasible. my friend, being a friend, thought an audit would prove problematic too. i ran it by a tax attorney and he basically was like, 'yeah, good luck with that. you'll be paying penalties and interest on top of your taxes' i'd like to believe what you're saying would ACTUALLY work when PUT TO THE IRS TEST; as i do hope to actually make money again some day and live abroad. hell, even a 2nd passport doesn't really work. in fact, it makes the 'evasion' much easier to prove- ie: intent. no country has the long reach of the US for income earned anywhere on earth (hell, if an American colonized the moon the IRS would get their cut!)>
spoken by someone who has never done it. go ahead and contact a reputable non-US broker (ie: someone where a trader would put his money and would trade thru- that includes having commissions that aren't 5x what you pay now)). even with the shitty commission places, they want all that KYC AML stuff= ID's are needed. hell, they even ask for utility bills. to the other guy: this is the kind of guy i was referring to as 'one of those guys'!
on the irs tax form one of the questions is"do you have any interests in any foreign corporations". if you answer yes they ask for details. if you answer no you are making a false statement.