Advice requested on brokerage account

[paulsnail]

Hello! I have been trading in the financial markets for some decades and have attained consistent and rather significant profitability as of the last several years. While I believe in fair taxation, writing checks to the IRS in the amount of a house each year seems excessive. Naturally, I would prefer to legally and ethically pay less in taxes.

I have explored trading in the name of a US corporate entity, my preference being a C corp, but I wonder if I can do better by creating an offshore structure.

I'm completely new to this process and have noticed that the various vendors have strong opinions about what structure to create (and it's always an expensive and complex one). I would like to set up what is best for my needs, not those of the vendor.

Offhand, I am considering creating a corporation in some jurisdiction that does not tax foreign capital gains, then open a brokerage in the name of that corporation in a non-US jurisdiction (thus avoiding the IRS altogether). Any advice on the best corporate jurisdiction to assure brokerage account opening would be appreciated.

I have also thought of founding a New Zealand Foreign Trust and setting up a brokerage account under its name. (Capital gains from foreign, non-NZ sources are not taxable.)

I have noticed that some vendors and advisers recommend creating a corporation owned by a trust, then setting up the brokerage in the name of the corporation. Isn't that superfluous, however? Why not just set up a corporation or a trust--why both? (I don't believe I have any particular need for asset protection, as a single person with no debt and little risk of judgements.)

Will I have to show my ID documentation when setting up a brokerage for my offshore corporation or trust? If so, is it possible to use a US broker like Interactive Brokers (my favorite) without the IRS knowing? If I must show my passport, etc., would it suffice to open an account with Saxobank under the name of my corporation or trust, and can I expect that they will not contact the US government?

These are numerous questions here. I am not confident where to look for accurate information or who to trust. Any advice from this community would be most welcome.

Thank you.

 

[aniglo22]

Hey , it would be nice if you would specify which instruments you are trading . Do not commit tax evasion it's the dumbest crime someone can do . It will get reported under FATCA .

You cant really escape the taxation without renouncing your citizenship . Because you as American are taxed on worldwide income .

But I'm not a professional , so take it with a grain of salt .

If you trade futures you can look into Section 1256 .

Last edited: Jun 4, 2024

 

[paulsnail]

Yes indeed, the instruments traded make a difference in the choice of brokers, I can see. I trade equities, ETFs, and options on those. Currently just US markets, but I can switch over to European tickers if necessary. I find the liquidity of the US instruments somewhat preferable, but that could have changed since I last looked.

To your point about tax evasion, I would like to legally reduce my tax burden, not illegally evade taxes I owe. I hope I haven't offended you are anyone by seeking to optimize my tax burden while remaining compliant with the letter of the law. Having said that, I would prefer to sidestep the IRS altogether and avoid having to defend myself against them. That is the reason behind an IRS-opaque structure.

I don't think I would be flagged for FATCA if the corporate entity or trust is of a non-US jurisdiction.

Yes, I do take advantage of 1256, which reduces the federal tax burden from 39.6 to 23%. But there's still the state. Either way, a C corp in Wyoming pays only 21%, although there's the issue of double taxation on any profits distributed. I think I can do better offshore, but don't know how.

Last edited: Jun 4, 2024

 

[ImKing]

I have a strong suspicion that you are a US citizen? If that is the case, you will face many issues registering as a user/customer on these platforms in Europe. Many have restrictions as soon as it involves US citizens because it eventually causes problems for them with the authorities.

One thing you can be certain of is that regardless of which platform you want to be a customer of, and among those you mention, it is completely mandatory to submit the following:

• Passport
• Utility bill
• Tax identification number
• Company documents
• Ownership structure in the company

And no, you cannot avoid being reported under FATCA ”“ no one can, especially when you hold an American passport. Uncle Sam has really done his job well.

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[paulsnail]

My intention is that through an entity I will be able to open a brokerage account, despite my US citizenship. I hope the fact of managing the entity does not dissuade a brokerage from doing business with me. In a conversation by chat with Saxobank, I was informed that I could open an account in the name of a Belize corporation even while personally a US citizen.

If FATCA is a cause for concern, would it suffice to hold accounts at financial institutions in any of the 94 non-FATCA countries? North Macedonia is both non-FATCA and non-CRS.