US based investor with Seychelles IBC and trust distributions

[littleLordBusiness]

Hi,

I am an investment company based in the United States that engages in a wide variety (stocks, commodity, crypto) trading through a Seychelles IBC and I am looking to transfer ownership to a Seychelles-based trust with me and my family as the beneficiaries. Is there any way we could get "tax advantages" on distributions from that trust, and if not, how would I pay taxes personally on distributions from that trust?

Thanks

 

[CyprusLawyer101]

Are you based in the US?

 

[littleLordBusiness]

CyprusLawyer101 said:
Are you based in the US?
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Yes, I am based in the US but all my operations are done through my Seychelles IBC

 

[CyprusLawyer101]

Most probably trust distributions wouls be taxable. But in any event you should consult a US international tax consultant as I see quite a few tax risks to your operation which needs to be addressed.

 

[littleLordBusiness]

CyprusLawyer101 said:
Most probably trust distributions wouls be taxable. But in any event you should consult a US international tax consultant as I see quite a few tax risks to your operation which needs to be addressed.
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Can you tell me some of the basic tax risks you see? And my question is HOW the trust distributions would be taxed?

 

[Sols]

If we remove the trust, think of your IBC as a C Corp.

It's not quite that simple. However, if you are a US person conducting business activities from US soil, all the activities of the IBC would likely considered taking place in the US which means it's all taxable in the US.

The trust may or may not make a difference. How much control you exercise over it and how beneficiaries are paid can be crucial in determining the validity of the trust.

If the trust is accepted and your distributions are deemed coming from the trust and not the IBC, you need to determine if it's interest or distribution. IIRC, the general rule is that IRS assumed taxes have been deducted prior to being paid to the beneficiary. Not sure how this would work with a foreign trust.

You should really speak with a legal adviser about this.

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This is the probably the answer to your question.

 

[littleLordBusiness]

Sols said:
If we remove the trust, think of your IBC as a C Corp.

It's not quite that simple. However, if you are a US person conducting business activities from US soil, all the activities of the IBC would likely considered taking place in the US which means it's all taxable in the US.

The trust may or may not make a difference. How much control you exercise over it and how beneficiaries are paid can be crucial in determining the validity of the trust.

If the trust is accepted and your distributions are deemed coming from the trust and not the IBC, you need to determine if it's interest or distribution. IIRC, the general rule is that IRS assumed taxes have been deducted prior to being paid to the beneficiary. Not sure how this would work with a foreign trust.

You should really speak with a legal adviser about this.
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Thank you. I think I should be fine if the trust uses nominee trustees and overseas bank accounts, but I wonder which lawyer i should speak with...