Offshore Inc. for tax-avoidance trading?

Quote from 2manywhiners:

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The account has to be held by a citizen and/or legal entity of Switzerland.
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Doesn't sound right.
A legal entity of Switzerland would definitely be taxed by Switzerland on profits (capital gains or not) for anything held in its own name.

A citizen of Switzerland would not be taxed on capital gains as long as he is an "infrequent trader". Under the applicable standards, any form of daytrading or frequent portefolio adjustments would place this "private Swiss" person into the business/professional category taxwise. That's what the law says. In the past, some nasty complicated court cases ran about these matters. I'm not sure about the the final outcome - if any yet - of all this. Some seem to suggest not to declare capital gains and nobody will bother you.

Further, I don't believe it matters whether you are a Swiss citizen or a non-Swiss legal resident.
 
Quote from nononsense:

Some seem to suggest not to declare capital gains and nobody will bother you.
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Even worse than that : in Switzerland nobody asks you to declare capital gains. There's no place on your tax filing where you can write them.
 
Quote from 2manywhiners:

...
The account has to be held by a citizen and/or legal entity of Switzerland.
...
More...
Doesn't sound right.
A legal entity of Switzerland would definitely be taxed by Switzerland on profits (capital gains or not).

A citizen of Switzerland would not be taxed on capital gains as long as he is an "infrequent trader". Under the applicable standards, any form of daytrading or frequent portefolio adjustments would place this "private Swiss" person into the business/professional category taxwise. That's what the law says. In the past, some nasty complicated court cases ran about these matters. I'm not sure about the the final outcome - if any yet - of all this. Some seem to suggest not to declare capital gains and nobody will bother you.

Further, I don't believe it matters whether you are a Swiss citizen or a non-Swiss legal resident.
 
Hi,

Not being a US citizen or resident what happens if I open an account with -let's say- Rydex.

Will Rydex withold 30% on profits and then pay taxes or can I submit one of these W8 forms that Rydex requires to be exempt from any withdrawal and subsequent tax payment?

Would the same principle apply if I open the account through an offshore corporation ?

Thanks
 
I read somewhere that if a US citizen only only 9 percent of a foreign Company, he doesn't have to report anything.

Say if I have a close relationship in Vietnam, would I be able to set up such that I own only 9 percent of a foreign struction in Cayman ? I guess then the person in Vietnam have to worry about reporting to the Vietnamese government. I wonder if the brokerage firm such as IB would report the trades to the Vietnamese government.
 
Quote from Adobian:

I read somewhere that if a US citizen only only 9 percent of a foreign Company, he doesn't have to report anything.

Say if I have a close relationship in Vietnam, would I be able to set up such that I own only 9 percent of a foreign struction in Cayman ? I guess then the person in Vietnam have to worry about reporting to the Vietnamese government. I wonder if the brokerage firm such as IB would report the trades to the Vietnamese government.
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IB would be doing business with the Cayman entity. The point is that due to IRS regualtions if you own OR control an offshore account you are supposed to report it to them. But the truth of the matter is that if you don't report it, no one else will either.
 
Controlled Foreign Corporation (CFC). An offshore company which, because of ownership or voting control of U.S. persons, is treated by the IRS as a U.S. tax reporting entity. IRC 951 and 957 collectively define the CFC as one in which a U.S. person owns 10 percent or more of a foreign corporation or in which 50 percent or more of the total voting stock is owned by U.S. shareholders collectively or 10 percent or more of the voting control is owned by U.S. persons.
 
Like all tax matters it comes down to a definition. In this case, what do you call voting control? If you are the one making all the trades then technically you have 100% control even if you only own 9%.

But once again, how are they to know if you don't tell them?
 
I think your real issues start when you attempt to repatriate the money. Then you raise flags, especially if you are dumb enough to wire transfer money onshore to a personal account from an offshore account. That will most likely generate a suspicious activity report from you onshore bank.
 
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