In response to the single most common question we’re asked at Invest Offshore:
I would like to take funds out of the country, going through the regular channels and obtaining tax clearance, to invest with an offshore bank or banks via platforms for investing in overseas markets. What options do I have as an investor for doing this?
The first step in creating a global account that is a tax compliant geo-diversified, asset protection structure, is to organize your business ownership, command and control, to be a tax recognized resident in a 402(b) foreign retirement plan.
[box type=”info”]It is not possible in most foreign jurisdictions to bolt together a U.S. Internal Revenue Service IRC 402(b) on the individual tax compliant level with the tax deductible employer contribution level that is tax exempt at the individual tax level until received by the member.[/box]
Internal Revenue Code 402(b) – Page 1091 Title 26
[box](1) Exclusion from income
If—
(A) any portion of the balance to the credit of an employee in a qualified trust is paid to the employee in an eligible rollover distribution,
(B) the distributee transfers any portion of the property received in such distribution to an eligible retirement plan, and
(C) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed, then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid[/box]
We recommend a Hong Kong 402(b) which is tax deferred on gains and accumulation. It is a foreign regulated, registered and recognized retirement plan that is also acknowledged in the Foreign Account Tax Compliance Act (FATCA) as exempt from withholding. It is recognized in the O.E.C.D. Common Reporting Standard and Intergovernmental Agreements globally as exempt from reporting.
The correct first step is paramount because, for example, if you have a foreign company owned by a BVI, Panama or Cayman Island company, then what you have is a disguise that backfires on you because you are saying where the company is controlled from, therefore the company is only a device for tax evasion.
[box type=”alert”]BVI, Panama and Cayman Islands are included in the list of countries that do not have the legal basics to establish an occupational pension plan compliant to IRC 402(b).[/box]
The legal basis for a pre-tax contribution and deferred-on-gain accumulation 402(b) client really boils down to three things:
- It needs to be a foreign government regulated, registered and recognized occupational retirement plan.
- It needs to be an employer tax deductible retirement plan contribution rather than an after tax capital injection.
- It needs an exempt beneficial owner because of the government agreement with that foreign financial entity.
Once you’re inside the 402(b) RAPS you’ll have a One World USA Passport solution to holding and reporting global investments without the expense of a Tax Attorney, Tax Consultant or Tax Filer Because the Whose is it? What is it? Why is it? Where is it? All Tax Deferred is all managed by Single Entry reporting!
The 402(b) is ideal for those people who want to structure a tax complaint mobile employee retirement plan to cross USA, EEA, or any other borders, works perfectly for PRC people too.
Leave a Reply