Hi guys. Interesting post I dug up here. I've been looking into opening an IBC (international bank corp.) to do my trading. I found a company that will help you get set up for trading purposes. I don't know anything about this co. Just wondering if anyone's ever heard of them or if what they are saying is legit. Here are a couple of email transcripts I had with them. Email reply 1: Hello Dan If you are considering stock market trading or wishing to buy into offshore mutual funds through your offshore IBC there are a couple of options available to you: 1. Open a mainland brokerage account in the name of your IBC. It will then be treated the same as any other foreign company trading on the US market. Trade online or manually. 2. Trade online or manually with a brokerage account opened offshore. Our banks have brokerage accounts which are opened in the name of your IBC. A brokerage account ensures your privacy and total secrecy as the offshore bank place orders on your instructions but in the bank's name, rather than your IBC's name. Masking a client's stock market trades or mutual fund purchases is a traditional way of doing business offshore and is done by most of the major offshore banks we use. Naturally, clients have to provide their account number and secret coding to the bank at the time of placing any order. Using offshore Banks' brokerage accounts you will be able to trade on most stock exchanges in the world at a cost equivalent to that incurred using mainland brokers without paying tax on the profits. U.S. stocks, bonds, options, currencies and mutual funds are frequently bought through offshore companies because they are not liable to U.S. capital gains taxes. Treasury bonds, bank CD's, futures and commodities are also purchased through offshore companies. No U.S. withholding taxes are payable on such incomes as long as the IBC does not open an office or carry on other business in the United States. Offshore IBCs legally have no income tax returns to file with the United States IRS as the IBCs are not CFC's (Controlled Foreign Corporations). We have all the IBC's paperwork couriered back to you within about three business days. Our fee of $1949 includes full IBC incorporation with all Government fees paid, giving you total protection with an offshore corporation, an offshore bank account and the tools to trade Globally with an offshore brokerage account. Please let me know if you need further assistance. Rodney Brewer IBC Services, Inc. Shopcom Holdings Ltd. ph 1-250-656-4490 http://belizetaxhaven.com http://dominica-taxhaven.com * (I spoke with IB and they said you can open an account with them in the name of an IBC. Don't know any other details about it though and how the taxes would work). Email 2 and reply: Hello again, I have another question about trading through an IBC. You mentioned in your previous email that there are two ways to do it. 1) is to open the account here in the name of the IBC or 2) use one of your brokerage accounts and open it offshore. Are there any advantages to number 2? Also, do you have a list of the brokerages you can set up through? Thanks a lot. Dan Hello Dan With option 1 the mainland broker may want to get details of the IBC's owner so your identity could be compromized. With having the brokerage account totally offshore, there is no way to trace back to you. Trades cost a little more but you will be paying no taxation on the profits. Most clients have their brokerage accounts at our offshore banks' brokerage departments. We give you a choice of 5 banks in The Bahamas, Dominica, Belize and Grenada as well as two speciality brokerage houses we use. Once your IBC has been setup we courier you all the banking and brokerage documents. Best wishes Rodney Brewer IBC Services, Inc. Shopcom Holdings Ltd. ph 1-250-656-4490 http://belizetaxhaven.com http://dominica-taxhaven.com
huby, one thing we are all certain of is that tax evasion is illegal. When opening an account you are signing a W9 or W8 form attesting to a number of declarations. Knowingling making a false declaration would be breaking US law. Keep in mind also that money laundering is also a major concern these days and what may be private today may not be private tomorrow. lets assume you do extremely well. Retriating your money is another issue. There are ways around it but these days everything we do leaves a paper or electronic trail. So beware, if/when the auditor knocks on your door you'll have to explain the nice house, car, trophy wife, etc.
If the US is similar to Canada, it is not merely sufficient to move offshore and trade to be free of domestic taxes. You are required to clearly demonstrate that you have broken all ties with the home country. This means no appartment for the occasional visit, no cottage for summer vacations during the summer market doldrums, no club memberships, no residual business interests, etc. I also suspect that if you try it for a couple of years and don't like it they might come after you for taxes owing. The tax departments tentacles are everywhere and transborder communcation between them is common. When my aged mother came to live with us several years ago from the UK, she left behind a very modest savings account in a trust company. Sure enough after a couple of years Revenue Canada wanted details of this account.
...marry a native american...move to a reservation.... ...you could open a casino with your trading profits... ...then you wouldn't even have to trade anymore...
Thanks for the replies guys. Sounds like this definitely wouldn't be worth the risk. Even if I could get away with it if it's definitely illegal I wouldn't want to do it anyway. So I guess all these offshore companies out there who help you get set up are just flat out lying about the privacy and the legality?
While it IS possible to "get away" with trading offshore and not paying taxes through a device like an offshore corporation, BUT "getting away with it" (at least until you're caught) isn't the same as "legal". There are regulations that come into play if you're the majority owner of an offshore corporation and you're also supposed to identify all offshore or offshore ownded accounts over which you have control. You could probably create the facade of being on the up and up by setting up an offshore corp in some place like Belize or the T&Cs and then setting up a US corp and then getting your US corp designated to act as manager for the foreign corp's trading account and getting paid to do so (and paying taxes on that revenue). But a US citizen exercising control over a foreign owned trading account might also trigger scrutiny. And if the IRS managed to find out that you owned the foreign corp you'd probably get slapped with charges. Also note that an officer of the foreign corp would have to at a minimum sign documents to open the account - so you'd probably automatically prove the IRS's case of tax fraud if you signed the forms using a fictitious name. Essentially, you could go for years (or even forever) without getting caught or you get caught immediately. No way of telling. Good luck.