(Planning for funds that cross a US border)
Investment or funding across a border generally entails a number of specific tax consequences, both to the investor and the recipient.
Investment into the US generally entails consideration of the purpose to which the funds will be put and the related structure to determine the tax treatment of the funding in the US, whether the income on the funding may be tax deductible, and whether withholding taxes may need to be paid on this income or on profits flowing from the funding.
Depending on the circumstances, investing into the US may entail additional specific considerations.
Forming a US Entity?
Non-US corporates and individuals who wish to form a US entity face a number of decisions both as to the type of entity and in which US state it should be formed. We assist clients select and form the entity best suited to their needs.
Investing in the US Real Estate?
Investing in US real estate entails a number of tax and structural considerations for non-US resident investors.
Nonresident investors in US real estate are subject to special US tax rules, with the result investment of this nature requires specific attention.
Aside from the US tax position, consideration also needs to be given to the tax position in the investor’s home country, as well as the impact of any relevant Tax Treaty. Planning for these issues is fundamentally important, but so is correct proper compliance and reporting.
Opening a US bank account?
Individuals who do not have a social security number or any party that does not have a US tax number may have difficulty opening a bank account in the US. We can generally assist clients who fall into these categories.
Applying for a US Tax Number?
We assist clients in obtaining US tax numbers. While US tax numbers can be obtained in a variety of situations, much depends on the facts as in some instances the IRS refuses to issue a tax number.
Although each question is considered relative to the specific facts and related tax rules, one factor is universally true: the more information the client provides, the better it allows us to deal with the question and determine the best result.
Investment from the US to another country entails consideration inter alia of the type of income that will be earned from the funding, the type of US structure, and whether income tax as well as withholding tax that may have been paid in the foreign country can be claimed as a credit in the US.
Depending on the circumstances, investing from the US to another country may entail additional specific considerations.
Non us Entity?
Non-US entities require highly specific US tax treatment in many situations, including cases where they conduct business in the US; own US entities; are owned by US taxpayers; are funded by US taxpayers; make distributions to US taxpayers; or are managed by US taxpayers.
Care needs to be taken to avoid US taxpayers from being taxed on the income earned by some foreign entities, for example, certain Controlled Foreign Corporations (CFCs) or Foreign non-Grantor Trusts.
Care also needs to be taken to avoid US taxpayers from penalties or other harsh tax treatment often accorded to investments in Passive Foreign Investment Companies (PFICs) such as certain foreign hedge fund investments.
We can advise you on US tax planning and US tax reporting relating to non-US entities.
Foreign Trust?
Of all non-US entities, foreign trusts require the most careful consideration due to the US tax consequences attaching to foreign trust transactions, and the highly specific US disclosure requirements in many situations, including where a foreign trust has one or more US beneficiaries, or is funded by US taxpayers.
The US distinction between Grantor Trusts and Non-Grantor Trusts is fundamental, yet does not exist in other countries. Special classification rules apply to trust classification where the Grantor is a foreign (non-US) taxpayer.
Where individuals will be moving to the US, pre-immigration planning generally requires a review of their foreign trust interests as early as possible and in any event before they become US tax resident.
Foreign Accounts?
Foreign (non-US) bank and other financial accounts (including pensions, annuities, endowment and some life policies) require special US disclosure and treatment for taxpayers who file US tax returns.
“U.S. owners of foreign accounts (including the entities they own) should generally file Foreign Bank Account Reports (FBAR’s) with Treasury.”
Under recent FATCA (Foreign Account Transaction Compliance Act) legislation, taxpayers filing US returns are required to make certain additional disclosures.
Where foreign account(s) have not been disclosed in US tax returns, in most cases we assist clients to make voluntary disclosure of the account(s) and have significant experience dealing with the IRS in this regard.
Whether or not the foreign account(s) have been disclosed, owing to the sensitive nature of this type of matter, you simply need to provide us your contact details and we will contact you.
Foreign Trust? and Foreign Accounts?