Plant Your Flag Offshore ASAP!
If you are thinking about living or working abroad, or just want to diversify out of the United States, I suggest you get your first flag in the ground as soon as possible. The U.S. government has been working for years to limit your investment options and is getting very close to closing off a number of international banking options.
- Note that this is not a Republican or Democrat issue. While these attacks might be coming to fruition under Mr. Obama's tenure, they began with the Patriot Act, signed in to law by George W. Bush, in 2001, and have thus been in the works for years.
For example, most experts agree that it will soon be impossible to get your retirement account out of the United States. If the government wants to move retirement accounts under their control, they will start by blocking the creation of offshore IRA LLC structures. Without the LLC option, you will have no way to move your account out of the grasp of politicians.
Another example is the Foreign Account Tax Compliance Act (FATCA), which requires all foreign banks to report U.S. held accounts to the Internal Revenue Service. Failure to comply, or making an error in identifying American owned accounts, results in significant penalties and (essentially) being forced out of the banking business.
International banks have two options: 1) close all American accounts, which many institutions have done, and 2) implement the same annual reporting systems for the IRS as all U.S. banks do now. Compliance is expected to cost these banks hundreds of millions of dollars and will smash privacy for anyone holding a U.S. passport.
Once fully implemented, any non-compliant banks will be subject to 30% withholding on transfers from the United States. So, if try to send your money out of the reach of Uncle Sam, he might just take a 30% cut off the top. Obviously, these regulations will make it near impossible to transact business.
- FACTA comes in to full effect on July 1, 2014, so get your accounts opened now, before it becomes even more difficult.
The most important aspect of planting your first flag offshore is to create a conduit to move assets. How much you want to diversify is up to you, but creating a structure to support you long term objectives is imperative.
One option is to move your IRA or other retirement account offshore. This will allow you to invest your savings as you see fit while maintaining your account's tax preferred status. For example, you can invest in foreign real estate, international startups, stocks, bonds, and/or hold cash in any currency you like.
• For an introduction, see my article on Offshore IRA LLCs
• For a different take, see my article on Making Your IRA Confiscation Proof
• For the tax benefits of taking your account offshore, see Tax Benefits (about half way down, in the section titled Take Your Retirement Account Offshore).
For after tax money, I suggest an offshore corporation. This will provided asset protection, maximum privacy, and that conduit I describe above. Your corporate entity will afford a level of asset protection not available in the United States and create a platform from which you can invest abroad. Here are some links to get your started:
• The basics can be found in my article titled Offshore Corporations
• For information on tax saving opportunities, see Eliminate US Tax in 5 Steps
• Worried about getting scammed or in to trouble with an offshore structure? Checkout my article Offshore Asset Protection Scams and How to Avoid Them.
I will close with a couple of tips and by reminding you that the most secure and "confiscation proof" investment you can make is foreign real estate. Your property investment can't (usually) be seized by any foreign government and it is unthinkable that the U.S. will take action against its citizens who hold such investments. Once you are buy in, you are as secure as you can be so long as you hold a United States passport.
I note that there are three exception to this rule. The IRS has the authority to levy and sell real estate at auction in Canada, France and the U.K. While this is a relatively unknown section of these U.S. tax treaties, the IRS is aggressive in seizing what they can in these countries.
• For the benefits of investing in offshore real estate, please read US Tax Breaks for Offshore Real Estate.
• For information on Panama, checkout Is Panama the Next Singapore?
• For information on Belize, checkout our Escape Artist portal
You should also be careful in which banks you place your money. The IRS has the right to issue a levy and seize any account at any bank, anywhere in the world, that has a branch in the U.S. So, if you have an account at HSBC in Panama, the IRS can issue a notice to HSBC New York and empty your account in Panama. Therefore, be sure the conduit you create is secure and held in a bank with no ties to the good 'ole U. S. of A.
