Invest Offshore

Frozen Cash Value Life Insurance - Invest Offshore

2012-09-06T00:09:49Z

A University of Miami School of Law (LL.M) graduate named Craig Hampton is responsible for developing the concept of the Restricted Cash Value Life Insurance (aka frozen cash value life insurance) policy back in October 1994 when he wrote an article in Offshore Investment magazine. His article called The Hampton Freeze is well known among a small group of tax and estate planning attorneys. This development was ahead of its time. The private placement life insurance (PPLI) industry for high net worth individuals was in its beginning stages and awareness of PPLI among client advisors was also missing.

The time for Frozen Cash Value life insurance is now! The future tax landscape is clouded with problems for taxpayers. The expiration of the Bush tax cuts at the end of 2012 (before any actual tax reform) will result in an immediate tax increase for high net worth investors. The top marginal tax bracket will increase to 39.6 percent. The addition of the new Medicate tax will increase this to 43.4 percent for high net worth individuals. The long term capital gains rate will increase to 20 percent. The Medicare tax will increase this to 23.8 percent. Additionally, most states tax long term capital gains rates as ordinary income. As a result, most investors will be looking at a combined rate for long term capital gains rate of 27-30 percent. High net worth investors in New York and California are facing combined income tax rates in excess of 50 percent. Additionally, a Millionnarie's tax of 5.6 percent is being considered that will bring the total federal rate to 49%.

On the estate and gift tax front, rates will increase to 55 percent with the exemption being decreased to $1 million per taxpayer. The President's budget proposal calls for an exemption equivalent equal to $3.5 million. It is questionable if any taxc changes are made before the 2012 Presidential election.

The prospects for corporate tax reform are also very high. It is well publicized that most multi-national corporations pay far less than the highest marginal tax bracket of 35 percent. Additionally, corporations are able to defer taxation on on their non-U.S. income. This article will also address the possibility of using frozen cash value life insurer in corporate owned life insurance (COLI and Bank Owned Life Insurance planning.

The planning need for legal tax structures which provide for tax-deferral is high. The Frozen Cash Value (FCV) policy is unique planning opportunity to maximize tax-advantaged wealth accumulation.

II What is Frozen Cash Value Life insurance?

Frozen cash value life insurance ("FCV") is best known as a flexible premium variable adjustable (universal) life insurance policy that is issued by offshore life insurance companies domiciled in tax-haven jurisdictions such as Bermuda or the Cayman Islands. Recently, a new specialty life insurer has emerged in Puerto Rico that offers both traditional PPLI as well as FCV policies.

The policy is intentionally designed to violate IRC Sec 7702, the Internal Revenue Code tax law definition of life insurance. The other legal considerations are imposed under the insurance laws of the jurisdiction where the coverage is issued. Generally speaking, all of the carriers issue the coverage as variable life insurance.

]]> In the beginning FCV policies were only issued by life insurers that had not made the election under IRC Sec 953(d) to be treated as a U.S. taxpayer. This election is important since the life insurer's separate account is treated as a non-resident alien for income tax purposes. Without the election, certain categories of investment income would be subject to withholding taxation under IRC Sec 871(a) at a 30 percent rate. Recently, several life insurers have started issuing FCV policies in their IRC Sec 953(d) electing companies.

Under most FCV contracts, the death benefit is equal to the sum of guaranteed specified amount of death benefit plus the cash value on the claim date plus the policy's mortality reserve value on the claim date. This amount is essentially the cumulative premiums plus or minus investment experience along with a death benefit corridor which most carriers express as a fixed percentage between 102.5% - 110%. A Puerto Rican life insurer referenced above issues policies with a fixed amount of coverage - $1 million above the initial premium and mortality reserve. In my view, no solid legal authority exists to support a minimum level of death benefit corridor.

The cash value under most FCV policies is defined as the fair market value of all assets constituting the policy fund, less any policy loans and less any accrued unpaid fees or expenses due under the terms of the policy. The "Cash Surrender Value" of the of the Policy is the lesser of (a) the cash value or (b) the sum of all premiums paid under the Policy, computed without regard to, any surrender charges, and policy loans, under the terms of the Policy.

The cash value increases or decreases depending upon the investment experience of the policy fund. FCV policies do not provide for or guarantee any minimum cash value. The insurer holds the appreciation of the assets (in excess of the amount of cumulative premiums) held in the separate account as a mortality reserve within the insurer's separate account solely for the purposes of funding the payment of the death benefit payable under the FCV policy.

Under most FCV contracts, the policyholder may take a tax-free partial surrender of the policy cash value up to the amount of cumulative premiums within the policy. The policyholder may also take a policy loan up to 90 percent of the policy's cumulative premiums. The policy loan terms will vary from company-to-company. The significance of a partial surrender versus a policy loan is that the partial surrender will not leave the policy with a liability. The surrender and loan proceeds are tax-free under any circumstance and provide the policyholder with access to policy assets on a tax-free basis.

The tax authority for FCV policies is very straight-forward. Several large national law firms have opined favorably on this type of policy. The legal analysis is straight-forward in IRC Sec 7702(g). The policyholder is taxed on any inside build up of the cash value and mortality charges except that the policy be definition does not provide for any inside build up.. The mortality corridor is also very small. IRC Sec 7702(g) states that a tax-defective policy still receives income tax-free treatment for the death benefit under IRC Sec 101(a).

III. Overview of Planning Scenarios

A. Use in the High Net Worth Marketplace

One way to look at the FCV policy is that it effectively is like a variable deferred annuity only with better taxation for the taxpayer. Similarly, it is like a Modified Endowment Contract (MEC) without being subject to the MEC rules.

FCV policies are extremely efficient for accumulating wealth with a minimal cost "drag" due to the policy's low mortality cost for the net amount at risk in the policy. Whether a carrier has a fixed percentage corridor of 105-110 percent or a fixed amount corridor of $1 million, the FCV policy is very efficient for wealth accumulation purposes. The death benefit ultimately delivers the investment accumulation in excess of the initial premium on a tax-free basis. The policyholder is able to take withdrawals or loans from the FCV policy on a tax-free basis in amount equal to 90 percent of his cumulative premiums in case the taxpayer needs to access his investment.

The policy is well suited for taxpayers whose single premium would exceed the available reinsurance capacity for an insured. This amount is believed to be approximately $65 million on a world wide basis. The tax -free death benefit is a much stronger result that the taxation of a deferred annuity at death.

A future blog post will discuss how FCV policies can be combined with inter-generational split dollar to accomplish substantial and income and estate tax savings. All tax proposals under discussion look to limit the minimum term of years for grantor retained annuity trust and possible sales to intentionally defective grantor trusts.

(2) Use in the Corporate and Bank Owned Life insurance Marketplace

To the best of my knowledge, FCV policies have not been used in the COLI and BOLI markets. Generally, large corporations use life insurance as a cost recovery mechanism to reimburse the corporation for its obligations under non qualified deferred compensation programs. Banks use life insurance to boost the investment return on Tier I capital. FCV policies because of its reduced requirements for mortality coverage can enhance the internal rate of return within the policy an additional 30-50 basis points. The tax compounding of this effect of 20-30 years is very substantial and worth considering.

Additionally, these companies insure a large number of employees who may or may not be employed by the corporation at the time of death. IRC Sec 101(j) was added to the Code in 2006. The provision taxes the net amount at risk as income to the corporation. Several key exceptions apply if the insured is employed within 12 months of the employee's death or alternatively, if the employee is among the highest 35 percent of employees, or is a highly compensated employee as defined under the pension rules. Frozen cash value can minimize the amount of taxation at the death of the employee as a result of the lower face amount.

IV Summary

FCV policies are a niche product that have much wider planning application than is currently being utilized. When you consider that the retail variable annuity market is a two trillion market, it would seem that FCV provides for a much better planning result for high net worth taxpayers. Future blog posts will illustrate how this product can be used in tax planning.

Authors Note: The above article was written by Gerry Nowotny, a tax and estate planning attorney with a JD and LL.M in estate planning from the Univesity of Miami School of Law and was originally posted in Trust and Estates.

Why Most People Pick the Wrong Funds for Their IRA/401k - Invest Offshore

2012-09-02T02:52:04Z

What You Can Do About It!

This is Your Invitation to the World of Regulated and Registered Investment Opportunities-USA and Offshore!

Your Retirement assets are yours but you DO NOT have Global Choice to All Securities with an ISIN (number)?

Do you know why you are not able to search for the best investments both from within the USA and from Offshore?

To Learn How to Break the USA Person Blockade that currently restricts you from shopping Offshore request our Go Offshore MAP-which guides you safely and correctly via the IRS, Treasury and avoids FATCA withholding and allows access to offshore funds without them being defined as a PFIC.

Similar to the fact that you can not buy at COSTCO without a COSTCO Card you need a proper Offshore Admission "Card" to put you in the "driver's seat" to find the best registered securities from the World's Top Financial Exchanges and to be in position to select from the World's most successful Investment Managers. All IRA/401k Custodian plans are structured for USA registered securities only.

I have never met a Person who comparison shopped their Retirement Plan around the World. USA Retirement Plans all offer a Restricted Menu Only....Why do they do that???

All the "What's Wrong with the 401k" are easily found: Forbes article, "Six Things Your 401(k) Provider Doesn't Want You to Know", Smart Money Article " 10 Things 401(k) Providers Wont Tell You", and 60 MINUTES T.V. BROADCAST "401k Fallout" all list reasons why investors financial futures may be at risk in the 401k they are holding.

The USA Tax Law permits a roll-over of your IRA or Employer's 401k Retirement Plan into a self-directed IRA LLC and you may even move it Offshore BUT ONLY IF YOU HAVE A "MEMBERSHIP CARD" to purchase Offshore Registered Securities without change in Tax Benefits. The Self-Directed IRA LLC without our structuring will not give you access to Offshore Investments BECAUSE the Offshore provider WON'T SELL them to YOU, your TRUST or to your LLC!

Members may request a free report, mind map and video to explain how easy it is to protect and grow your tax deferred retirement account assets with global choice and management choice both Onshore and Offshore.

The Individual Retirement Plan must have a USA Custodian who reports to the Internal Revenue Service. But USA IRA Custodians provide a USA Fund only short menu when it comes to investment selection. An IRA LLC Onshore AND Offshore provides global choice of investments and managers because the Offshore Regulated, Registered, Recognized Administrator is Excluded from FATCA and Foreign Financial Institution issues!

Request our video which explains how this structure provides the following benefits. You can Buy and Sell from wherever you want the security you want (Onshore or Offshore)

Your investment choice is NOT a "Fund Menu". Buy any Financial product with an ISIN, or Stock or Bond.
You can Diversify your investment currency.
Protect your retirement from any potential USA Government requirement to hold US Government Securities.
Take full advantage of Institutional Purchasing Power that is usually only available to the super-wealthy.
Access the out-performing power of global hedge funds...and do it for far less than the normally-prohibitive minimums.
Broaden your asset diversification choice to maximize your portfolio's safety and security.
Take advantage of special institutional "only" investment programs.
Expand your wealth manager selections both in terms of strategies you'll use for income and capital growth as well as the Global contacts you need to implement them.
Take no chances with your money. Diversify does not mean many eggs in ONE basket; it means Different locations, financial institutions, managers etc!
Discover that the most lucrative fund managers are Offshore.
Pack your portfolio with fund selections from a pool 5 times larger than U.S. funds alone.
Expand your portfolio to include international stocks your broker will never tell you about.
Take advantage of business and entrepreneurial Funds around the world.

In summary, The IRA Passive Custodian in the USA and an Active Custodian overseas Investment Account. The Tax Deferred Foreign Active Investment Account current value is reported on FBAR and on IRS 8938 the value is reported as "Zero Value" unless a withdrawal has been made during the year.

This particular Foreign Investment Account Administrator is specifically excluded from reporting under FATCA. Therefore the Active Custodian has no USA reporting or withholding requirement. No withholding or reporting requirement is the reason the Active Custodian is willing to open an account for a USA person.

NOTE: There are no USA Person Offshore Fund Choice Restrictions and no PFIC nor FATCA issues.

Free no-obligation consultation, available upon request.

Offshore Investment with a 401K - Invest Offshore

2012-08-29T22:55:53Z

(Transcript of an interview) Now today, we're going to be talking about the investments of people living in the USA. They're looking to see how they can invest their retirement plan offshore to securities and how they can report it to the IRS with '0' value.

How can this be the case Advisor?

Advisor: Well, we're talking about qualified retirement plans of which there are hundred millions in the United States with funds of 11 trillion. That's 11 with 12 zeros behind it.

And basically, when you have a qualified plan, the IRS or Internal Revenue Service guarantees the tax-deferred benefits of the plan. So, therefore, if a client was investing offshore it would be listed as '0' value on the IRS form, which is the Foreign Asset Form 8930(a).

Now, it's also important to know that some people have the wrong impression about going offshore. They think that they've talked to an attorney they can open up a Limited Liability Company or in other ways, invest offshore.

But the problem is what's called a Passive Foreign Investment Company (PFIC).

Now, I'm sorry to get into these details but they're really important to know, because if you're not working offshore, anything you're earning that's not from your active participant at work is considered passive foreign income.

And regardless of your own personal income, it will be taxed at 36.9% which as you know is higher than the highest tax rate. In addition, to a lot of paperwork that your accountant would have to file, it's very difficult to understand.

So, that's the other advantage with going offshore through a qualified retirement plan is that there's no PFIC issues, because PFIC issues only is for individuals not for qualified plans. Therefore, you can go offshore with your investments and be able to report it as '0' value because it's a tax-deferred growth.

Reporter: So Advisor, can you tell me more about the 401(k) and what it was designed to do.

Advisor: Well, that's a very good question Reporter because a lot of us are probably too young to remember or maybe we do remember, and that is the 401(k) was started and designed in the late 70's as a supplementary tax shelter savings plan.

It was never designed as a retirement plan.

At that time companies had employed benefits as part of the employee benefit package through a pension. And that pension was determined based on the number of years that they worked for that company.

And so much percentage each year would be earned and the final income would be based upon that total percentage. So the other thing at that time was the employee also had social security benefits.

That's when the company thought, 'What a great idea! We'll supplement it with a tax-sheltered savings plan.' And what we have then is called a three-legged stool, a very firm foundation for retirement.

]]> Reporter: What are the main challenges affecting those who are using it then?

Advisor: Well, the main challenge for those who are using it is that companies no Advisorger have a defined benefit pension plan. So now, there's only the 401(k) and social security. No Advisorger a three-legged stool, it's now a little bit wobbly, a little bit shaky.

So that's all they have and that's what has been creating a lot of problems for individuals.

Reporter: What other options are there out there to solve these problems then?

Advisor: Well, there are other options and everyone should look at considering other options because some of the problems with the 401(k) are dependent upon the list, the menu list that your employer has decided upon that would be most suitable for you.

Well, that's pretty difficult and sometimes that list is only 15 or 30 items.

One of the biggest news broadcast is a program called 60 Minutes and they came out and said, 'Well, a lot of those funds are mediocre. They're not really the best choice.'

Again, the best choice is difficult to determine because everybody is at a different age. What might be good at 25 might not be so good at 55.

So that's where the problem has come with the 401(k). It's very restrictive in choice.

Reporter: That sounds a little bit daunting. Are there any other alternatives?

Advisor: Of course, the employer sponsors the 401(k), but if they get to the point where they could roll that 401(k) into an IRA then they would have the menu choice of the IRA service providers, which again may be a difficult and daunting task.

So what do we do?

We've looked around at all the IRA service providers to find the best menu. How do we handle that? It's becoming a problem for everyone, particularly, you have to remember that when the 401(k) began there were less than 200 mutual funds.

Now there's probably over a hundred thousand worldwide. Big difference!

Reporter: Are there any other choices for your IRA then?

Advisor: Well, there are people that are talking about an IRA where they add an LLC to it.

Now remember if it's a foreign LLC or a domestic LLC, probably won't make any difference because it's a qualified plan, but the LLC is promoted on the basis that gives you self-direction.

It's your IRA passport so to speak or a 'checkbook IRA.'

But that also can create problems because the IRA has made a ruling, so listeners can do the search engine on this, it's Ruling 4975. And basically what it says is that the IRA is determined at some other time that if you're the custodian of the IRA, then they'll disallow all the tax benefits.

So that would be a pretty wrong choice or decision to make.

Also, some of the self-directed so-called IRAs have a lot of risky investment choices. Your unemployed risky next door neighbor could come to you for a loan and you could make that loan to him under a self-directed IRA.

Or you could purchase crop, livestock, commodities, a lot of things that are very risky if you're not very knowledgeable about it. You could do tax liens, stock writes and warrants. Again, huge risky possibilities!

So I think those are really not the best choices considering retirement planning.

Reporter: You mentioned global choice and also geo-diversification. Could you tell me a little bit more about FATCA? What does it mean?

Advisor: Well, that's a very good question Reporter because when it comes to global choice, how much global choice does a person actually have?

As we talked about earlier regarding a foreign investment company problem, we don't have that situation if we doing it through a qualified retirement plan. But now, over the last year something new has come up.

The Foreign Account Tax Compliant Act (FATCA).

Now this is where the United States has asked the foreign financial institution to report who their US clients and beneficiaries are. A lot of paperwork.

Who are these people? You need to report it and if you don't report, any transfers from the United States to you will be withheld by 30%.

Kind of forcing people to do a lot of reporting.

So what that had meant then is if a US person goes outside the US, goes to a foreign financial institution, starts any kind of security platform or trading plan, that basically says, 'No, sorry, we don't want USA persons.'

It creates too much work. It's too expensive. We don't want to get involve.

So on the one hand, you can go offshore because of the PFIC rule, but on the other hand, you can't buy anything when you get there.

Reporter: So what about the catch-22 there? Isn't there any way to solve that FATCA problem?

Advisor: Well, in fact there is.

If you're using an IRA LLC, which gives you worldwide choices, you can eliminate the FATCA problem by making sure that your custodian, your overseas custodian, is a pension plan, a foreign retirement plan custodian.

Because a foreign retirement plan custodian is one of the 5 things exempted by FATCA, so if you have your IRA and you're a domestic US custodian whom we call the 'Passive Custodian reporting to the IRS', and now you have your foreign custodian, your trading platform, your offshore purchasing vehicle and that custodian is a pension plan, foreign retirement plan, regulated, registered and recognized foreign retirement plan custodian, then it is exempted from FATCA.

Therefore, the investment provider will be willing to do business with you.

Nice huh?

Reporter: In that case, what steps can people take to ensure their retirement fund's future?

Advisor: We would really prefer that a client work with regulated, registered and recognized funds where they have a track record, they're accountable to someone and they're regulated in a very strong financial area.

Reporter: All very interesting points there Advisor. Thank you for your insights today.

Advisor: You're welcome.

Reporter: Now that's all we have time for at the moment, but click back to DukasCopy for the latest news and interviews like this one. For now though, goodbye.

How NOT to invest offshore - Invest Offshore

2012-08-27T22:44:33Z

Why Luxembourg for Investor Protection

Correspondence with an asset protection professional.

Hi Invest Offshore, My clients, and those from my law firm, are looking to get out of the U.S. and as far away from the U.S. as they can. The best solution for them is to use a foreign corp for foreign investments and a U.S. LLC for U.S. investments. Nearly 100% of the law practice clients select the offshore LLC option. Of course, they realize they need to file certain forms with the offshore company, but they are free and clear of the U.S. if the shift hits the fan. Regards Asset Protection Attorney,

Dear Asset Protection Attorney,
Perhaps you would explain to me then:

Why you use a Nevis LLC? (seems like an IRS red flag to me)
How to make sure your clients avoid a Section 4975 problem?
And your client's other how to "invest offshore" problems?

Our structure elicits none of these questions as an issue.
Sincerely,
Advisor

Side Notes

An attorney who is not thinking about what the person is restricted to for investment choice with his Nevis Corporation....his choice is all that high risk junk that ends up disappearing off the face of the earth and there is no police to prosecute those offshore scam artists...Yes, it sounds like I am marketing fear but in fact fear is real in the uncontrolled, not regulated, not recognized offshore registered stuff...you can register anything in Granada and when you collect enough money you can run off with it and no police will accept the problem as being in their jurisdiction....you see you were a bad boy and went offshore, away from your home country and now they are happy that you lost all of your money!

We are talking peoples retirement savings, not some 300 millionaire who plays the casino! This is all the money they have and they are going to dump it into crap with no investor protection...why have these people never heard of Luxembourg, because the scam artists don't need a license and they are the promoters to USA persons offshore!

He is an Attorney ...whoops they didn't teach him about investments in law school! People would be better off going to a heart specialist!

Response to the Asset Protection Attorney:

That USA person's want assets outside of the USA is exactly what we do in cooperation with Your Work.

Well, the point is that Regulated, Registered, Recognized funds/Asset Managers/trading platforms/securities dealers (those not registered with the S.E.C., AND if they want to get out of the USA then they better not be using a S.E.C. registered broker or dealer!) will not sell investments to a USA person or an LLC,Trust, IBC or other attorney created structure that has USA person beneficiary. Do a google on the best offshore hedge fund, or other funds or regulated financial structures offshore and you will read that no USA connected persons are allowed. I am not talking about something registered outside of the worlds largest 24 Financial Securities Exchange.

Our Clients want the best and the best also have strong regulatory investor protection. For Example, the 2nd largest number of funds are registered in Luxembourg and not one of those funds will accept a USA person or LLC or Trust with a USA beneficiary. Which means your client can go offshore with his Foreign Corporation, impress his friends at a cocktail party, but end up buying gold, and other non-securities.

With RESTRICTED investment choice your clients must accept huge risk which is not suitable for their Retirement Funds? I know they are mad at the USA but they will become more mad when their high risk investment turns into dust and they have no recourse. Meaning that your foreign corporation owner can not access any of the best offshore money managers....do a google, read the prospectus.

Our Structure gives your clients access to Regulated , Registered, Recognized Financial Markets without USA person restrictions nor FATCA withholding issues!

Free no-obligation consultation, available upon request.

Tax Deferred Foreign Retirement Account - Invest Offshore

2012-08-26T00:33:46Z

Sure a USA person can set up an IRA LLC, or a USA person can set up and LLC Offshore, and a USA person can open an Offshore Trust. The fact is that the companies that sell these products are creating them for USA customers about the same record pace they were pre-FACTA. Brilliant Internet marketing strategies, mostly using currency collapse or government seizure fear tactics, have gathered momentum and developed large membership bases to promote the cold-war style "secret agent" type IBC (International Business Company).

However, once the offshore structure is complete the owner can't purchase any offshore investments by means of either his offshore trust, his offshore LLC, or his offshore bank account - PROBLEM is - he can't find an offshore bank account to open his account in because FACTA has shut him down.

In comparison, as an example; if you are familiar with a Costco Membership Store....Anyone can walk into a Costco Store and fill up cart as high as he/she want but when they arrive at the Cash register they can not purchase any of it because (in this comparison) the USA person doesn't have the Costco Membership Card.

We've had some people look at our Regulator Asset Protection Structures and they say; "oh this looks good and seems very simple" but they don't fully realize how good it is unless they've previously attempted to open an offshore bank account or purchase any offshore investments. Even if they own an Offshore LLC, or IBC (International Business Company) which may have an existing offshore bank account, they still can't buy any investments.

"In summary, The IRA Passive Custodian in the USA and the Luxembourg Active Custodian Investment Account eliminates the IRC Section 4975 problems of the "Checkbook" IRA LLC because you are managing the LLC but you are not acting as a Custodian.

The Tax Deferred Foreign Retirement Account is reported on FBAR and IRS Form 8938 is "Excluded" from Reporting by the IRS because it is an IRA Account.

The Foreign Retirement Plan Administrator is specifically excluded from reporting under FATCA Law. Therefore the Luxembourg Investment Account Custodian has no USA reporting or withholding requirement.

No withholding or reporting requirement is the reason the Active Custodian is willing to open an account for a USA person in Luxembourg.

There are no USA Person "Offshore" Fund Choice Restrictions and no PFIC nor FATCA issues."

Why Hong Kong is a leading International Finance Center (IFC) - Invest Offshore

2012-08-23T20:01:38Z

With the rising economic power, China has been gradually undergoing slow but steady financial modernization. The economic success of Hong Kong is the indicator to it. The territory has established itself as strong financial sector in the last two decades. Hong Kong yearly incomes have been one of the highest levels in the world. The financial GDP share has increased from 12% from the year 2003 to close to 20% in the last year enabling the movement of finance to all sections of the markets. This rise in economy has been crucial in counterbalancing the gradual movement of the industry of Hong Kong and reach mainland over the same period.

In this regard, you can say that the success of being a major international financial sector is because of their strong and rigid banking and financial laws. The basic law of Hong Kong provides that the government of HKSAR (Hong Kong Special Administrative Region) will give right economic and legal environment for maintaining the status of Hong Kong as international financial centre. More importantly Article 110 states that the administrative body of HKSAR can formulate monetary and financial policies on their own to safeguard the operation of the financial markets and maintain them in accordance with the law.

Hong Kong has an organized system of financial institutions which provides wide range of flexible financial services and products to local and international investors. Hong Kong has ranked as top financial centre and came third among 75 participating financial centers including London and New York. The success in Hong King Equity market has been quite impressive. The equity market capitalization and trading turnover is estimated to have reached US$21,077 billion in 2010 making it seventh largest in the world. Today Hong Kong can boast about 152 approved banks. The foreign exchange market of Hong Kong is the largest and free market in the world. Hong Kong insurance and gold future market has been rapidly growing since then.

Another interesting development in Hong Kong financial market is the steady growth and internationalization of the Renminbi (RNB) .This has resulted in the movement of the economic magnitude from the west to the east of the mainland. Hong Kong has the advantage of having skilled labor and strong regulatory financial body with high quality of business services to provide financial support to China. The advantage of "One country, Two Systems" principle has made Hong Kong a testing ground for internationalization of RNB.
The year 2004 has been pivotal for RMB growth as credit cards and deposits were introduced in that year. Gradually gold trading, bond insurance and other settlement services were extended under RNB making Hong Kong offshore investment in Asia and beyond.

Today Hong Kong has emerged to be Asia's No 1 City. While helping China to improve their financial business activities and administrative efficiency, it has outnumbered Japan to be the first largest economy and financial hub. Hong Kong stands as an important part in the growth of China in the present times.

Offshore Gold Storage in Canada - Invest Offshore

2012-08-22T15:31:20Z

Canada as an offshore tax haven? For sure, as long as you're not a Canadian resident or citizens.

Recently a leading Canadian newspaper published the article:
A Canadian's best tax haven? The U.S.

The U.S. Is a Good Tax Haven for Canadians
The U.S. meets virtually all of the requirements of a good tax haven for Canadians but it is rarely mentioned when discussing worldwide tax havens.

In response to the story "A Canadian's best tax haven? The U.S." We now have some exciting news for U.S. citizens, or anyone else who believes that Canada could be a safe offshore tax haven:

GoldMoney is pleased to announce that you have further diversification options for storing your metals with GoldMoney. In addition to their existing storage facilities in Hong Kong, Switzerland and the UK, you can now also store your gold and silver in a high-security vault operated by Brink's in Toronto, Canada.

Further to the above, they have recently partnered with Rhenus Freight Logistics to offer you another gold storage option in Switzerland. The Rhenus vault is located in the secured zone of Zurich Airport and offers superb security, plus the option to inspect your gold.

Storage at the newly added vaults in Canada and Switzerland is available at our lowest fees. You can select your preferred storage location when placing your buy order.

Finally, you may be interested to know that you can take delivery of any number of gold, silver, platinum and palladium bars from any of the vaults, as well as personally collect your bar(s) stored in the Hong Kong, Switzerland and UK vaults.

What's so Great about the Grand Duchy of Luxembourg? - Invest Offshore

2012-08-22T00:11:47Z

Why We Recommend a Luxembourg Regulator For Investor Protection

The banking crisis in 2008 undermined the financial strength of institutions such as banks and insurance companies, and people are now once again concerned about the safety of their savings. The only certain way for investors to achieve security from institutional failure is through a state controlled investor protection regime.

Luxembourg stands out among EU Member States with its exceptionally strong culture of investor protection. It has a regime which provides maximum security to investors without limit. The Grand Duchy is in the top 10 financial centers worldwide. It is the second largest investment funds Centrex after the US and the leading private banking Centrex in the Eurozone. It has attracted banks, insurance companies and investment fund promoters from across the world. Many of its institutions specialize in unit linked life assurance, an increasingly popular vehicle for wealth management.

It has built a reputation for investor protection, tax certainty, anti money laundering practice and banking confidentiality.

Historically many high net worth individuals used offshore financial centers for confidentiality and tax mitigation. However, apart from a lack of regulation and investor protection, they have also been under attack from European and international bodies, with the result that investors who use them are placing their assets at risk for no real or sustainable benefits.

In contrast, Luxembourg's regulations are governed by EU directives that require strict financial controls and supervision to provide investors with a secure onshore regime that still offers tax benefits.

Luxembourg was one of the founding members of the European Economic Community (now the European Union). It also participates in the Schengen Group (named after the Luxembourg village of Schengen where the agreements were signed), whose goal is the free movement of citizens among member states. At the same time, the majority of Luxembourgers have consistently believed that European unity makes sense only in the context of a dynamic transatlantic relationship, and thus have traditionally pursued a pro-US foreign policy.

Luxembourg is the site of the European Court of Justice, the European Court of Auditors, the Statistical Office of the European Communities ("Eurostat") and other vital EU organs. The Secretariat of the European Parliament is located in Luxembourg, but the Parliament usually meets in nearby Strasbourg. Luxembourg has especially close trade and financial ties to Belgium and the Netherlands (Benelux), and as a member of the EU it enjoys the advantages of the open European market.

As of 2011 Luxembourg was the second richest country in the world, the most important private banking center in the eurozone and Europe's leading center for reinsurance companies. With $138 billion (February 2012), the country ranks tenth in the world in holdings of U.S. Treasury securities.

Luxembourg is ranked 13th in the Heritage Foundation's Index of Economic Freedom, 24th in the United Nations Human Development Index, and 4th in the Economist Intelligence Unit's quality of life index. In recent years the Luxembourg government has aimed to attract internet start-ups, with Skype and Amazon being two of the many internet companies that have shifted their regional headquarters to Luxembourg.

In April 2009, concern about Luxembourg's banking secrecy laws, as well as its reputation as a tax haven, led to it being added to a "grey list" of nations with questionable banking arrangements by the G20. In response, the country soon after adopted OECD standards on exchange of information and was subsequently added into the category of 'jurisdictions that have substantially implemented the internationally agreed tax standard.
Investor protection

Luxembourg's investor protection is unique within Europe. The cornerstone of this regime is the legal requirement that all clients' assets must be held by an independent custodian bank approved by the State regulator, the Commissariat aux Assurances (CAA). This arrangement involving the CAA, custodian bank and investor's bank is known as the "Triangle of Security".

These are the key points:

The regime ensures that the legal separation of clients' assets from the account holders company's shareholders and creditors, so investors are protected from exposure to the company's credit risk.

The account holders company maintains a register of all assets and how they are invested, which is monitored by the CAA.

All account holders assets are deposited with a custodian bank.

The bank is required to ring-fence clients' securities (eg investment funds, shares, bonds etc) - i.e. they are off its balance sheet. If the bank fails, these securities remain in segregated client accounts.

The bank is bound by the regulator's legal powers to protect the assets on behalf of investors.

100% of the account holders securities are protected. Cash deposits are not securities and so are not segregated, but cash held in monetary funds is treated as securities and so are protected.

Over the years Luxembourg has finely tuned its financial services industry into one offering unparalleled investor protection, client confidentiality and legitimate tax planning opportunities.

Free no-obligation consultation with a Luxembourg Registered Advisor, available upon request.

Brazil Offshore Investment Funds Summit - Invest Offshore

2012-08-20T21:09:24Z

Join us in Sao Paulo next month for the 2nd Annual Offshore Investment Funds Summit hosted by DMS Offshore Investment Services.

TOPICS

Capital Raising Offshore
20 September, 2012

LOCATION

Intercontinental São Paulo
Alameda Santos 1123
São Paulo
SP - 01419-001
Brazil

For more information, please contact Francine Balbina: fbalbina@dmsoffshore.com

How to Invest Offshore - Invest Offshore

2012-08-10T01:24:33Z

We provide a One World USA Passport solution to holding and reporting global investments without the expense of a Tax Attorney, Tax Consultant or Tax Filer Because the Whose is it? What is it ? Why is it? Where is it? All Tax Deferred is all managed by Single Entry reporting!

Our Services are especially beneficial for CLIENTS:

Living, Working or Investing abroad
A FATCA exclusion
A PFIC exclusion
Who are Holding a 401k or IRA.
Who want to Reduce current year Tax and maintain Tax deferral on Gains and Income
Who desire single entry USA tax reporting
Whenever a Double Tax Treaty is applicable
Whenever a Double Tax Treaty is not applicable
Having partners or family members abroad who may leave them money
Owning a business that operates in the U.S.A.
Owning a business that operates in a Foreign Country
Cross Borders inheritance planning
Protecting Assets from USA Tax prior to USA Emigration or Immigration.
Incorporating a foreign business in the United States or in a Foreign Country
IRS Compliance, IRS Reporting Transparency and IRS Tax Benefits.
Needs a foreign account excluded from FFI withholding, PFIC Ruling and from FATCA.
Use foreign assets in an estate planning tool without FFI or FATCA issues.
Set up a company that is owned by the client without PFIC or FATCA issues.
Must deal with any sort of foreign inheritance or gift
Enter into a cross border license of intellectual property or other intangible products
Want to reform an existing offshore trust for Asset Protection and Tax benefit purposes.

Our services are especially beneficial for a FOREIGN COMPANY with dual tax status:
* A foreign company that wants to open an office in the United States
* Those who have used in their Estate plan a trust (especially an offshore trust)
* Who want to structure a tax complaint mobile employee retirement plan to cross USA, EEA, or other borders
* Use of a controlled foreign corporation

Offshore Investment Platforms - Invest Offshore

2012-08-08T01:04:18Z

We can assist the most difficult USA Connected person with the Asset Protected and Tax Saving structures. This can also be accomplished for individuals of a number of different countries, taking into consideration their nationality and their country of residence. What is more exciting though, is what the structure can do, once the owner is ready to begin investing.

Allow us to introduce the most compelling reason for an offshore investment account - it's the genesis of Offshore Fund Platforms, Discounted Fund Platforms, Offshore Fund Supermarket and Online Investment Platforms, we call it simply: the "Offshore Investment Platform".

This best-of-breed Offshore Investment Platform provides portfolio management software designed to give an investor the maximum choice of global financial instruments and the maximum flexibility. It's easy to set up, has competitive costs and is simple to run. The key to this offshore investment platform is that it allows an individual to invest for many purposes, in one plan, and provides online access to your portfolio with full confidentiality.

We put the 402(b) Regulator Asset Protection Structure, with an Offshore Investment Platform, through a hypothetical stress test, by presenting the concept to a leading U.S. tax attorney, and here's a sample of what we learned.

Question: Since My LLC in your IRA LLC RAPS structure would be purchasing foreign mutual funds then why would those not be considered a PFIC which has a deemed distribution each year and is taxed annually at 36.9% and requires special IRS reporting?

Answer: Since the U.S. LLC owns 100% of a Foreign Entity-the investment account on the trading platform - the Owner of the U.S. LLC is an IRA, which is exempt from tax, no U.S. Tax is due on the deemed dividend (Internal Revenue Code Section 1248.

With respect to reporting, there is an *FBAR exception for IRA Accounts, however, since the Foreign Entity (Offshore Investment Platform) would be only indirectly owned by the IRA through the LLC we suggest that the client complete the *FBAR even though there is a filing exception for IRA Owners and Beneficiaries.

Note the IRS Form 8938 is only for U.S. Individuals so that would not be applicable.

**The FBAR Foreign Bank Account Report is filed with the Treasury Department (It is not filed with the IRS).

36 Benefits of Offshore Investment - Invest Offshore

2012-08-07T00:34:36Z

Would you like to Add All of the following Values to Your Current Financial Plan?

Our Structure is Asset Protected and Tax Deferred which means

1. You can invest without hesitance due to Short-Term /Long Term tax considerations--you sell when the market is right.

2. Don't limit your investment choice to a "Fund Menu"

3. Earn the highest yields on earth...no matter where they may be offered OnShore or Offshore

4. Diversify your investment currency

5. Protect your retirement from legal or government actions.

6. Take full advantage of all the resources that are usually only available to the super-wealthy.

7. Access the out-performing power of global hedge funds...and do it for far less than the normally-prohibitive minimums.

8. Secure your wealth behind an impenetrable shield of protection. Never be harassed by ex-business partners, ex-spouses, ex-clients or anyone else who would take what's rightfully yours.

9. Keep your wealth with the ones you want not the government even after you're gone without having to lose control for your own choice and benefit.

10. Achieve legitimate tax management.

11. Broaden your asset diversification choice to maximize your portfolio's total return.

12. Take advantage of special institutional "only" investment programs.

13. Make your Estate rock-solid and keep it out of probate's prying public eyes.

14. Add layers of protection to your wealth and allow for tax-deferred distributions.

15. Create your own personal Cross-Border empire when you spread your investment locations and interests across multiple countries or even continents.

16. Expand your wealth manager selections both in terms of strategies you'll use for income and capital growth as well as the Global contacts you need to implement them.

17. Take no chances with your money. Diversify means Different!

18. Different means Separate it ! Country, Institution, Fund House, Managers, Asset Types, Advisors Currencies you name it!

19. Cash in on the strongest trends in the world for the best opportunities.

20. Diversify your investment portfolio with foreign currencies and maximize your returns whether the dollar is soars or gets crushed.

21. Earn the highest yields on earth...no matter where they may be offered.

22. Escape the dangers of being tied to the dollar when you diversify into elite investments unknown to ordinary U.S. investors.

23. Discover the most lucrative offshore funds. PLUS the most effective and profitable ways to take advantage of them.

24. Pack your portfolio with mutual funds selections from a pool 5 times larger than U.S. funds alone...

25. Protect and assure your access to certain U.S. securities even if U.S. exchanges are closed for emergency measures.

26. Expand your portfolio to include international stocks your broker will never tell you about. Companies that far outperform their U.S. counterparts.

27. Take advantage of business and entrepreneurial Funds around the world.

28. Make your wealth invisible to predators.

29. Take advantage of special institutional rates to save money and tap into exclusive institutional investment strategies.

33. Defend your wealth from any dollar devaluation by holding multiple currencies.

34. Forget the FDIC. Never worry if your deposits are covered when you bank in countries with the MOST stringent financial supervision.

35. Keep your finger on the pulse of global markets beyond just stocks and bonds.

36. Discover conservation investments that are 2-TIMES better than bonds. Opportunities that pay a higher yield AND give you real principal security.

Offshore Gold Storage and U.S. Citizens - Invest Offshore

2012-08-04T23:45:06Z

Physical gold storage offshore is in some cases being sold on the basis that the USA person does not need to report it to the IRS. There must be some risks in the purchase of physical gold that many people would not want to accept. Here's is what one offshore advisor had to say about Offshore Gold Storage and U.S. Taxpayers.

Dodd-Frank Law effective July 15, 2011 eliminated some types of gold trading for USA residents. Keep in mind that in a Life or Annuity Policy the institution is making the purchase. The client holds a policy in exchange for the Insurance Company holding the assets and valuing his policy based on the value of those assets...which means that trading in anything on a registered exchange anywhere in the world would be done in the name of the Insurance Company and not the name of the policyholder. Therefore, purchasing through a insurance policy eliminates PFIC (passive foreign investment company), and any other USA person restriction.

The important FATCA (Foreign Account Tax Compliance Act) issue for those currently holding foreign life policies are 3 things:

a) The insurance company may decide to be FATCA compliant and in that case the name of USA persons are given to the IRS.

b) The insurance company may decide to not be FATCA compliant and in that case the policy holder would need to report the annual gains as a PFIC and pay 39.6% tax and further penalties, interest and tax if he failed to report it, and if he never reported it then he exposes himself to Criminal prosecution for income tax evasion. Discovery while he holds it or when his beneficiary reports receiving funds from a foreign life company, and the IRS measures every banking transaction of 3,000 USD so for sure if the money ever came into the USA the IRS would be asking questions. Bottom line: not reporting it is a bad idea for someone eventually.

c) A 1035 transfer to a 953(d) is not reportable and then in having rehoused this money he eliminates the problem in (b). He eliminates the problem in (a) because IRS form 8938 reporting life policy cash values to the IRS does not occur until this April's tax filing. Therefor reporting a value that was not required to be reported before is not going to cause any interest.

Note: The above information was written prior to the past tax year. Expert advisers are available to assist you with issues related to reporting of offshore assets.

Offshore Banking and Panama TIEA - Invest Offshore

2012-08-04T00:37:17Z

united states currency (Photo credit: kevindean)

The recent Tax Information Exchange Agreement (TIEA) between Panama and the U.S. will only have an effect on bank accounts held by U.S. citizens in Panama. Panama companies and foundations are simple to set up as 100% anonymous vehicles just as before as there have been no changes to the law that governs these vehicles. Also you have full protection under attorney-client confidentiality since we are a law firm. The strategy is then simply to open accounts in other jurisdictions which do not have any TIEA's in place, such as Belize, Andorra or Hong Kong. Of course one can also form companies and trusts in Belize and other similar jurisdictions as an alternative option although it is a good idea, in any case, to consider a multi-jurisdictional strategy with perhaps a foundation in Panama owning a Nevis or Hong Kong corporation with bank accounts in Belize, St. Vincent, Andorra and/or Hong Kong - for example. If you have further questions I am more then happy to answer them. "

An Adviser's response to the legal advice (above):

I can't say I agree with him on the fact that the TEIA only affects US persons, certainly the intent is to capture US persons but keep in mind the contra flow of data?.I see a flow of data going to the US and finding its way back to any other LATAM country that has a TIEA with the USA which consequently will affect many other Latin American individuals.

Keep in mind also if you are an Ecuadorian for example that owns a bunch of real estate through a Panama foundation, is he telling me that the IRS will disregard that data? I doubt it very much, in the same way I doubt the Ecuadorian tax authorities will disregard same data. Also the anonymity of the foundation is incorrect as in some LATAM countries, again using the example of Ecuador if you settle a foundation you must disclose it and report it 2-3 steps up the structure?the window is very narrow for them and I see his approach as short term.

What about distributions from the foundation, where do they go, how are they classified and how are they received? We see this issue all the time currently with some clients and prospects we have. Again he is not incorrect about setting up his bank accounts but these to me are reactive positions without any long term strategic approach, where will he go once these jurisdictions are all being looked at?

He has not really addressed the issue of compliant money or non compliant money.

Contact us today, if you need assistance, or just a second opinion on your foreign financial accounts compliance.

Offshore Retirement Plans for Expats - Invest Offshore

2012-08-03T01:20:16Z

There are cases in which offshore retirement plans can provide a perfect solution for people who move to a foreign country for work and then move back to their home country. While living abroad, we call these people Expats.

A green card holder works a number of years in the USA, perhaps has the intention of living there forever, but then later (i.e. people from India fall into this category), they miss their culture and , again i.e. people from India, they decide to go home having earned and saved enough to do so. Many people from India save intensely in order to retire by mid-40's even and of course I.T. engineers often can do that. The point is that the company they worked for had them in a 401k and over a 10 year period they could have accumulated 250,000 USD or more. If they want to take that money with them they will need to pay a 10% penalty plus income tax on the full amount, meaning they end up with about 150,000...so they don't do anything but wait to make a decision as to what to do.

You can roll your 401k into an IRA and then into an offshore Retirement Plan without any tax consequence, from there it will be easier to move their money to what they want to do with it even buying a home as example - which is something not possible in the 401k or IRA. The point being that it's a good idea to transfer OUT of a 401k and it can be done without negative tax consequence.

In Europe there is exactly the same problem; when an Expat leaves the country where they were working the country wants the taxes. They can Transfer it Out for the benefits as in the above example. Each country has names for their similar to 401k plans and we can make a list of those but the point is that the Expat wants to do a legal, compliant, tax free exchange of the Pension they accumulated when working abroad. For sure there are thousands of Expats working in China (40% tax), USA, the EEA.

If you're interested to learn more about how you can transfer your 401k, or foreign pension plan, into an offshore retirement plan, so that you can put that money to use, then contact us today.