I'll have to agree with tomcole here... I myself had attempted to start a thread in regards to something similar to what you were talking about. Being that I'm a systems trader, internet marketer, and small Fx fund manager... I could run my businesses completely electronically from my pda after it's out on a few servers. That really was the whole idea of my post, and all I could get was nominal advice and a flamer that got mad at me about ruining his 300 million dollar scheme yesterday... What you're talking about doing is and can be legal... I actually spoke to a lawyer today... It just has to be structured properly and stayed on top of by a lawyer... As it being I'm in the same boat PM me if you want anymore info as I get it... Believe me when I say posting will be a waste of your time... Not to say that some of the heavyweight posters here didn't offer you good advice, because some of them have lead my way to becoming a good trader over the last 2 years of looking at forums before I graduated...
Offshore Inc. for tax-avoidance trading?
- Thread starter malaka56
- Start date
Just keep in mind that all offshore accounts where you have a signature authority (if more than $10K kept in total overseas) have to be reported to the IRS...
Yes you're right in that but if you look at how nononsense replies to the statement malaka56 made. You'd understand why I said if you have an attorney to stay on top of things you would understand why it's perfectly legal... Most major corporations in the U.S. use some sort of foreign tax structure or corporate laws to protect themselves for various reasons... From what I'm getting from the originator of this thread they're not looking to do anything illegal either... Just take advantage of the loopholes...
Perfectly legal but incredibly expense to do right and maintain.
Most people aren't ready to spend 80K on first class legal setup for a Master Feeder and 15basis pts of AUM (15K min) p/a for offshore administration and 12K for auditing annually and 25K p/a for on going legal. Initial and on going expenses are very real.
The fact is that this sort of thing must be done absolutely to the letter. Otherwise one lawsuit ( and you'll have no chance of winning) will bankrupt you forever because of the multitude of judgements. Donât let anyone tell you that there are sort cuts in doing this .... there are not.
Further, as I said before it takes rather substantial AUM to get the economies of scale to make this work.
Good Luck.
Most people aren't ready to spend 80K on first class legal setup for a Master Feeder and 15basis pts of AUM (15K min) p/a for offshore administration and 12K for auditing annually and 25K p/a for on going legal. Initial and on going expenses are very real.
The fact is that this sort of thing must be done absolutely to the letter. Otherwise one lawsuit ( and you'll have no chance of winning) will bankrupt you forever because of the multitude of judgements. Donât let anyone tell you that there are sort cuts in doing this .... there are not.
Further, as I said before it takes rather substantial AUM to get the economies of scale to make this work.
Good Luck.
I hope sir you didn't think that I hadn't agreed with you there... Mind you I have no idea how much money this person has...You were one of the people I thought besides nonosense that gave realistic good advice. I've been an internet marketer since I was 18 and was fortunate enough to be part of it's heyday... Like I said I didn't know how much this person had available in funds
no worries mate....wasn't speaking to anyone in particular. Itâs just that I've played in this sandbox before. It can be done and there are substantial benefits to the Fund's Management/Advisory company...but it ain't easy nor cheap.
Cheers
BTW: congrats on the internet marketing thingâ¦.wish I had been smart enough to get in on it.
Cheers
BTW: congrats on the internet marketing thingâ¦.wish I had been smart enough to get in on it.
My, God, thank you, someone that not only thinks before they speak, but really knows what they're talking about. The whole reason why I even posted a question like the one I did in the thread I had started was to hopefully meet someone like yourself... Although I've managed to accumulate a little money for myself... Guys like you will save you thousands of dollars in advisory fees (not to mention the load of crap someone might have to offer). Just because you liked what someone had to say one day...
Thanks for the congrats on my marketing biz... I probably still have one of your old email addy's
Now it's strictly opt-ins my friend... That is unless you live in the Dominican :eek:zhivodka is correct about the offshore hedge fund being the only loophole. Malaka, the reason that works and opening a company doesnt is two fold. First the company has to be greater than 50% foreign owned, which with a hedge fund means over 50% of the money has to be foreign owned, but for some guy opening a company it would mean he would have to sign over control off all the money to someone else (something more than a few slimy caribbean firms are more than happy to do). Second, even with foreign ownership of your hedge fund your management fee remains taxable. It is your inscentive fee that that can be paid out as shares of a foreign owned corporation directly into a deferred compensation plan allowing you to defer taxes for up to 10 years. This effectively allows you to compound your fee's exponentially as there is no tax up front and when tax finally is due it is a long term capital gain! Of course Congress is working dilligently to undue this loophole, but so far, to no avail. Offshore fund administration alone by any reputable firm is 50K/yr minimum and the audit is another 50K min. Now add in the tax work and ongoing legal fees and you can see why people are saying you need a good chunk of change to make it worthwile, oh, and you need to have pleanty of foreign investors in your rolodex!
Yes, itâs done and itâs legal. From my research it will cost about $7,000 USD in legal fees on the State side to set up IF you work with a legal firm that specializes in this. You would pay about $35,000 USD or more if you ask a firm that does not specialize in this to re-invent the wheel as it were.
I am not sure what the offshore costs are, but something similar I would assume. This does not include ongoing annual legal and reporting fees.
To qualify the offshore entity as the principal office, you would need to satisfy the following 10 criteria:
1. Communication with investors is originated from the offshore office. - Monthly statements, investment reports etc..
2. Communication with the general public must also originate from the offshore office.
3. Soliciting investments must be from the offshore office.
4. Accepting and processing of investments must be from....
5. Accounting and processing records must be managed from ....
6. The fund's books must be audited offshore
7. Disbursements must .....
8. Asset value per share must be published offshore
9. Board of shareholder's meetings must be held...
10. Fund investments must be redeemed offshore.
Qualifying for these requires continual administrative fees and those fees needs to be compared to the cost savings and tax deferrals gained from this approach.
I am not sure what the offshore costs are, but something similar I would assume. This does not include ongoing annual legal and reporting fees.
To qualify the offshore entity as the principal office, you would need to satisfy the following 10 criteria:
1. Communication with investors is originated from the offshore office. - Monthly statements, investment reports etc..
2. Communication with the general public must also originate from the offshore office.
3. Soliciting investments must be from the offshore office.
4. Accepting and processing of investments must be from....
5. Accounting and processing records must be managed from ....
6. The fund's books must be audited offshore
7. Disbursements must .....
8. Asset value per share must be published offshore
9. Board of shareholder's meetings must be held...
10. Fund investments must be redeemed offshore.
Qualifying for these requires continual administrative fees and those fees needs to be compared to the cost savings and tax deferrals gained from this approach.
another much simpler way to do this is what i'd call a double-expatriate scheme... i.e. open a bank account in a tax-friendly jurisdiction (e.g. HK but not only, u don't need to be a resident there, don't even need to go there to open the acct) and live in a country other than your home country (there are liveable places outside of the US, yes there are!), not so difficult to get permanent visas in v.decent countries (i live in Japan, pretty decent place...)... then open trading accts which whichever brokers you want (preferably their non-US branches) this way yr profits can be repatriated in HK where they r tax-free and nobody knows what you are doing... just food for thought....