Best Country for Trading (Tax efficiency)

Discussion in 'Taxes and Accounting' started by ET873, Feb 3, 2010.

  1. you can "buy" some citizenship easy.. therefore you can trade as a foreign national..
    #11     Feb 6, 2010
  2. Buzzed


    Make a contract. You give "bob" that is a citizen of "country x" money. Under the terms of the contract, bob must hire you to trade this money for him on the stock market. It's his account and his money. The terms of the contract also state that bob does not have control of the account. All control is passed on to you. The terms also state that the full amount of the account must be withdrawn and given to you on a specified later date.

    Now you can trade from inside the U.S.A. and have the tax benefits of a citizen of the other country.

    I'm not sure how tax laws apply to joint accounts though. If I can think up a loophole as simple as this, I'm sure others have too, and most likely there are laws preventing it.
    #12     Feb 6, 2010
  3. promagma


    Would be Bob's account, not a joint account, so I think you just have to be able to trust Bob 100%.

    BUT how would the IRS view it when Bob wires a large sum of money into your bank account?
    #13     Feb 6, 2010
  4. paulxx


    The arrangement with Bob is like a simple Power of Attorney available through most offshore and I think even onshore banks and brokers. You had better trust Bob 100% and he had better have a non OECD passport if offshore. It's similar also to nominee directors for trusts and corporations - which is very common and involves a secondary contract with them relinquishing any control.
    #14     Feb 7, 2010
  5. It sounds like an Offshore Asset Protection Trust. Under US Tax Code, they have no effect on taxes so you'd still have to pay. Reporting requirements are a huge pain though.

    The only real solution to pay zero tax to the IRS is renouncing citizenship and moving out of the U.S.

    If you still want to live in the US and keep your citizenship, you could also give all your assets away (in a tax efficient manner) to a non-OECD citizen living in a tax haven with zero foreign source income taxes zero capital gains and zero wealth tax. You must renounce to all control and beneficial ownership, present and future. Could be a wife, or in-law or distant cousin. You should not be legally entitled anymore to the money, so it all comes down to trust and the verbal agreement you have with this person, who must be also willing to declare in court that no such agreement exist.

    This still works, but who knows, judges might rule tomorrow that no sane person would engage in such transactions unless it's to pay less tax, so they are null and void and you still have to pay tax.

    Meanwhile you could defer, or take advantage of deductions, otherwise there is no way of using loopholes. Even if you find one, they close it retroactively later.

    Another option is trying to hide the money from the IRS but you know how risky it is these days.
    #15     Feb 7, 2010
  6. #1. Worry about becoming seriously profitable first. A lot of these "renounce your citizenship" come with a lot of longterm unexpected impacts on them. For example, what kind of job would you expect if you move to the Bahamas and gave up your citizenship?

    99+% of would-be traders will be breakeven, losing money, making modest amounts, or giving up in the near future anyway.

    #2. If in USA (Canada? elsewhere?) Put your money into an IRA. You can trade many things into this, and not worry about taxes ever (Roth) or until later (standard IRA), and stay where you are.
    #16     Feb 7, 2010
  7. I don't think so, that is just an urban myth or a scam.

    If " easy " means pay up to $100,000 and wait 3-5 years that i can believe.
    However , as long as you keep US citizenship, you are taxed anyway.
    #17     Feb 7, 2010
  8. I like the way you think on the Roth IRA, that is a clever way towards tax efficiency. The cynical part of me would keep my eye out for a possible renig on the governments promise not to tax this. In theory, that's good, very good.
    #18     Feb 7, 2010
  9. TZ has it all correct. Work toward sustained profitability (not 90 days of "good luck") and, once you have real confidence in your methodology look at a Roth IRA.

    A Roth has the risk of the government reneging on their commitment to not tax but at worst they will impose a levy (almost certainly less than the tax rate at the time) and you will still be way ahead.

    Do not look for zero taxation or absolute certainty look for a good bet on tax efficiency. For many, Roth is that bet.

    #19     Feb 7, 2010
  10. And there is similar risk that fleeing to a banana republic or another country will wind up taxing you or other problems, anyway.

    Take a look at Venezuela and Chavez. This is what you can get in a tax haven or foreign country. Take a look at Rhodesia and other African countries, where whites had their farms nationalized. Sarajevo had the Olympics. A decade or so later, the country was wracked with war as it disintegrated. Look at what happened to Argentina.

    Right or wrong, a tax refugee who gives up their US or western citizenship trying to save a few bucks is a very misinformed individual.

    If anything, having dual citizenship is a good thing. People go through the wringer cycle, trying to get US citizenship. Maybe they know something the tax refugee has failed to consider.
    #20     Feb 7, 2010