Best offshore setup / jurisdiction for US person living on US soil?

[boy20hki]

Hi everyone

I would like to ask this for a friend of mine, what is the best offshore setup for a US citizen/green card holder who lives and wants to run/operate the business from within USA soil?

Considering that an US person is taxed on worldwide income and has to report all offshore assets (incl offshore companies he/she owns) I find information here overwhelming regarding this matter.

The goal is to minimize corporate tax and personal income tax. Reduce paperwork and more privacy.

Is Dubai working for this? Would it be a local US LLC owned by a mother foreign company set up in a no-tax/low tax jurisdiction?

How is doing a digital-only business having no US staff versus having US office & US staff affecting the best setup option?

Thanks

Last edited: Apr 2, 2023

 

[latindev]

Tell your "friend" 😉 to don't do it, as simple as that. Is not worth the risk unless it's a business with enough presence outside in order to prove is not being managed from within the US

 

[Mr Gus]

You can't

In the US there are quite some possibilities of deductions and tax credits, just make sure to maximize them.

 

[Martin Everson]

For the love of God tell your friend to abandon this idea and quickly. Otherwise you will be signing up to JPay to send him money every other week.

https://www.jpay.com

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[JohnnyDoe]

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[boy20hki]

Martin Everson said:
For the love of God tell your friend to abandon this idea and quickly. Otherwise you will be signing up to JPay to send him money every other week.

https://www.jpay.com
Click to expand...

What do you think about setting up a few companies in jurisdictions with zero/low corporate income tax whose director/owner is not actually living there all year around (but live just enough X days to fulfill residency requirement) then have those companies invoice the main company (US LLC, for example)? So money is moved to those jurisdiction and stay in business bank account, then could be sent to personal account in safe place like Switzerland later on. US owner gets paid a normal salary on paper with the main US LLC company's small net profit and keep most of his wealth in those offshore accounts.

Mr Gus said:
You can't

In the US there are quite some possibilities of deductions and tax credits, just make sure to maximize them
Click to expand...

I saw some old posts about holding companies in places with low/no divided tax. Also trust, foundation as well regarding this matter...

 

[Martin Everson]

boy20hki said:
What do you think about setting up a few companies in jurisdictions with zero/low corporate income tax whose director/owner is not actually living there all year around (but live just enough X days to fulfill residency requirement) then have those companies invoice the main company (US LLC, for example)? So money is moved to those jurisdiction and stay in business bank account, then could be sent to personal account in safe place like Switzerland later on. US owner gets paid a normal salary on paper with the main US LLC company's small net profit and keep most of his wealth in those offshore accounts
Click to expand...

This is clear profit shifting which goes against BEPS which is not a good idea. Really not a good idea in 2023. And Switzerland in 2023...forget about it.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Simon4466]

boy20hki said:
What do you think about setting up a few companies in jurisdictions with zero/low corporate income tax whose director/owner is not actually living there all year around (but live just enough X days to fulfill residency requirement) then have those companies invoice the main company (US LLC, for example)? So money is moved to those jurisdiction and stay in business bank account, then could be sent to personal account in safe place like Switzerland later on. US owner gets paid a normal salary on paper with the main US LLC company's small net profit and keep most of his wealth in those offshore accounts.



I saw some old posts about holding companies in places with low/no divided tax. Also trust, foundation as well regarding this matter...
Click to expand...

It is 2023 now as noted above. The moment your American friend gets anything that resembles a bank account FATCA kicks in and all his info including balances is sent to the US government on a yearly basis.
And no, being in a zero tax jurisdiction does nothing to prevent this.
Tell your friend to move out of the US, or lower his taxes legally there by taking advantage of the American tax laws that are already in existence. Do not try to break the law / outsmart the IRS.

 

[boy20hki]

Simon4466 said:
It is 2023 now as noted above. The moment your American friend gets anything that resembles a bank account FATCA kicks in and all his info including balances is sent to the US government on a yearly basis.
And no, being in a zero tax jurisdiction does nothing to prevent this.
Tell your friend to move out of the US, or lower his taxes legally there by taking advantage of the American tax laws that are already in existence. Do not try to break the law / outsmart the IRS.
Click to expand...

Martin Everson said:
This is clear profit shifting which goes against BEPS which is not a good idea. Really not a good idea in 2023. And Switzerland in 2023...forget about it.
Click to expand...

Well regarding the FATCA for US citizen/GC holder, I can understand the problem. FATCA is much harder to get away with than CRS, and FATCA catches all US people. Unless one has family member who can move to tax heaven, set up company and back account under their name, and can do profit shifting easily from US to tax heaven...but again, there is a lot of risk with this.

What do you think of just relocating & forming LLC in no-personal-income-tax states like Florida & Washington? Bothtwo states seem most livable options. LLC owner there has to pay
0% state personal income tax,
15.3% federal self employment tax (this includes social security, medicare,...)
0 % local sales tax (if selling digital services, no physical goods).
Washington has an extra Business % Occupation tax (B&O) that can be about 1k-4k annually so it seems like Florida can save more cost over Washington. Well 15.3% is the rate, probably there are more local tax methods that can be used to further optimize tax.

Mr Gus said:
You can't

In the US there are quite some possibilities of deductions and tax credits, just make sure to maximize them.
Click to expand...

 

[koohl]

latindev said:
Tell your "friend" 😉 to don't do it, as simple as that. Is not worth the risk unless it's a business with enough presence outside in order to prove is not being managed from within the US
Click to expand...

I can only agree with you!

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[princeofprofits]

I have a friend in a similar situation and he very quickly came to the realization that he needs to renounce his citizenship. His current challenges are:

a) minimizing his financial footprint in the US and structuring a "personal exit" for his businesses
b) obtaining his birth right citizenship
c) finding a jurisdiction that is granted visa free travel to the US for a secondary travel document (he has some family who will remain in the states)

Tough luck. I'm in a similar situation in a country with CRS and global taxation. I'm working on a similar strategy. No pain no gain!