Invest Offshore in Collectibles and avoid FATCA

Two days ago the colourful painting of two Tahitian women by Paul Gauguin was sold by a Swiss family foundation to a group of state museums in Qatar for nearly $300 million, a record sum for a single work of art. The price would best the roughly $250 million that Qatar paid three years ago for Paul Cezanne’s “The Card Players,” and underscores the purchasing power and ambitions of the nation. The New York Times reported the amount and said two dealers pegged Qatar Museums as the buyer of Gauguin’s lush, 1892 double portrait, “Nafea Faa Ipoipo (When Will You Marry?).”

It’s hard to know without specific research about FATCA as it relates to collectibles. For sure offshore gold has been a PFIC (passive foreign investment company) as defined under Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, in recent years and expects to continue to be a PFIC in the future. However if the collectible or valuable work of art is purchased via an entity-trust, offshore company, a nominee account of some type, then for sure it would be a PFIC and subject to tax. If you just walked in to an art dealer and purchased a collectible; now sorry but this is only my common sense talking…. I really don’t see how it would be traceable. For sure you are to report a capital gain when you sold it and for sure you would not be able to deduct a capital loss if you sold it at a loss but the issue is about exposure to FATCA taxation, and that’s why the U.S. Gov invented the PFIC distinction.

Black money in Swiss banks rushed out and purchased gold bricks, so for sure the black money out there is increasing the price on collectibles. It’s a good guess that one of the reasons gold prices went up was do to escaping black money from Swiss Banks. Same as we know see with the collectible art. Also, hear stories about there being tough times for Swiss banks/and there ”wealth managers” although the Swiss try to disguise that fact…its obvious. Meanwhile records are set in all classes of collectibles, Rolls Royce sales and luxury real estate.

There are over 30 types of non-qualified deferred compensation plan structures and it is the foreign trustee that causes it to be a 402(b) non-qualified deferred compensation trust. However, very few feature the exclusion of 402(b) reporting on IRS Form 3520 (information). No Form 3520 or 3520(a) reporting with a specific structure. No IRS Form 5500 reporting with a RAPS (regulated asset protection structure). For the tax-savvy collector, if they design the correct structure they’ll never report the collectible, as the the key is IRS Form 8939 (information gathering) where the collector would be legitimately reporting ”zero value”. That is the essence of what defines the perfect 402(b) RAPS structure. Ultimately, it’s that simple to invest offshore in collectibles, or anything else. You just need to learn the FATCA facts, and your assets will be properly protected.

So it’s a matter of evaluation and that needs an experienced Attorney, we provide consultation with legal specialists and encourage clients to invite their own advisors to attend the phone consultation, or the recording we provide from our virtual meeting. W8-BEN-E at box 29E is where you find our knowledge invaluable, like on IRS Form 8957 (information) that reads ”limited conditional”. Note that a GIIN is not possible for certain foreign pensions. FATCA registration Identification Number yes, but not a GIIN.

We recommend that the art collectors structure be ”limited conditional” due to FATCA recognized secrecy laws, as well it’s important to understand that IRS Section 83 rules on ”substantial risk of forfeiture”. Our RAPS 402(b) is compliant to the letter of this code.

Contact us and we’ll help you invest offshore.