Hi, I am planning investing in the US stock market. I know you can avoid capital gain if you are a non-resident alien. However, IRS will still withhold 30% on interest and dividend. Do you know which country IRS will give a more favorable tax rate on these two incomes? Many thanks.
It think its called someplace offshore. If your American there is no place you can go to avoid taxes, though you might defer them.
no, I am not a U.S. citizen or resident. I like to set up a company in a tax-friendly country. IRS don't tax on capital gain, however, withhold the interest and dividend tax.
Actually not entirely true. If you are an American citizen or perm resident and move somewhere else you can make up to 90k single or 180k as a couple and avoid taxes. But if you are trading in the US it would be difficult to avoid taxes unless you evade them through the use of an offshore corp. The restrictions are stringent though. You must be in that other country for like 95% of the time otherwise the IRS says no no. I am considering moving to my wife's home country in Eastern Europe and trading. If you search google you will find info on websites for expatriates like escapeartist.com and sovereign society.com
Most likely, the answer depends on your residency and citizenship. For example, the U.S. and Canada may have a favorable treaty in this regard, but Canada and your resident country may not. Consequently, the best answers to your question might be found from resources within your own country, especially if you plan to repatriate your profits.
It is not about me because I cannot change my citizenship at will. It is about the company I am going to set up.
With a US broker there is no way to avoid withholding interest, dividend taxes, but you can get them back filing for taxes from your offshore location and asking for a refund. Tax treaty means the IRS will send your info to your home country's tax authorities. Go to an offshore broker if you don't like tax withholding.
Thanks, that is good to know. I am considering expatriating and trading under an IBC, but wanted to use a US broker, now after reading that I am not so sure. I guess I could say live in Easter Europe, have a Panama IBC and not worry about taxes since the US would exchange info with Panama which shouldn't collect taxes since I am operating out of Europe, not Panama. Come to think of it, does the tax info sharing apply to IBC's or just individuals? Buzzy, do you know of any good offshore futures daytrading firms? I am looking at daytradeaustria.com and Thales Securities in Panama, but Thales dome is poor compared to Ninja and X Trader. Maybe daytradeautria as they offer X Trader. Thank you in advance. Dan
My comments apply regardless of the entities or individuals in your taxation chain, because profits will be ultimately delivered to you.