Articles Related to Fatca


Lief offered six recommendations for good offshore banks that are still accepting U.S. clients. Then he offered a non-recommendation for one bank that we'd formerly done business with personally. This bank sent us the dreaded "We're closing your account" letter last year. They provided no explanation for why they were throwing us out and closing our account and gave us but 30 days to move the money.

"The worst part," Lief explained, "was that this was the one instance where I hadn't taken my own advice. I didn't have a second, backup account for this corporation, so I had to scramble. I spent a good number of the 30 days I'd been allowed knocking on the doors of banker-friends, trying to find one who'd open a new account for me before the deadline. I finally found one (it's one of the banks on my top six list)."

One symptom of the shake-up (shake-down?) taking place in the offshore banking world right now is rising fees. Banks are passing along the costs of complying with FATCA rules to clients.

"One bank in Panama," Lief explained, "is now charging a fee of any foreigner interested in opening an account with them. This fee is payable up front, before any other discussion takes place. If, after reviewing your paperwork, the bank decides it will not open an account for you, the fee is not refundable."

Lief closed his offshore banking remarks to the group with three pieces of advice:
  • Create redundancies. For every foreign bank account you have, you need a second, backup account...
  • When you have the opportunity to open an offshore account...open it. "You're here in Belize this week," Lief said. "I suggest you take advantage of this opportunity to start the process of opening an account. Two Belize banks are represented here at the event. All you have to do is stop by their tables in the exhibit hall..."
  • Don't close any foreign account you have if you don't have to—even if you have no immediate need for it. You never know when or if you'd be able to replace it in the future...

Kathleen Peddicord

P.S. Peter and Lief's remarks and recommendations for where and how to bank offshore in our post-FATCA world were recorded and are being edited now, along with the recordings of every other presentation from last week's meetings in Belize City. Together, this timely bundle of resources will create our new Wealth Building and Diversification Kit.

Right now and for the next 72 hours only you can reserve your copy of this everything-you-need-to-know-to-diversify-offshore program pre-release for 50% off the regular price.

This discount expires at midnight on Nov. 2.

Continue reading: The Cost Of Buying Property In France

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To understand why diversifying in this way is so important given the world we live in, consider Argentina. Over the last century, Argentina's economy has been a roller coaster, with wild ups and downs to do with inflation, currency restrictions, price freezes, and other economic woes and complications. A friend, an Argentine, helped to put Argentina's situation into perspective when he told me once, "In my lifetime, 13 zeros have been knocked off my country's currency.

"You are an American," he continued. "You haven't had to live through the experience of watching your currency be devalued like this.

"Yet."

Thanks to this long experience with economic and political instability, any Argentine with any excess cash sends that cash to another country. He takes it offshore.

Holding at least some of your cash in a bank in another country is a more and more sensible idea all the time no matter who you are or what country's passport you carry. Argentines have this understanding bred into them. Cypriots acquired it the hard way last year. Most Americans think this is a lesson they don't need to learn. Americans tend to take for granted that the government will continue to bail out banks to keep the U.S. economy from collapsing. 

For some reason, the U.S. government thinks that it's okay to continue to increase its debt as long as the output of the country is growing faster than that debt. Maybe I missed that in my Econ101 class as a strategy for long-term stability.

Recognizing the reality of the current fiscal state of the U.S. government, where would the money come from to bail out U.S. banks from another crisis? More to the point, why would you, as an investor, as a citizen, choose to sit around to find out the answer to that question?

Whether you believe it's possible the U.S. government could implement a "one-time tax" as they did in Cyprus or not...whether you think the liquidity ratio of your banking system is adequate or not (it likely isn't)...whether you're worried about currency controls or not...you should have some of your money, at least part of your nest egg, sitting in another jurisdiction.

That is to say, the first, easiest, and most pragmatic step everyone should take for going offshore is to open a bank account.

For us Americans, thanks to FATCA and the related new IRS rules for foreign banks to comply with FATCA, it is getting harder and harder to take this simple step. The unfortunate reality right now is that many banks around the world won't open an account for a U.S. citizen. Some will, and I suspect that more will accept U.S. clients again after they have had a chance to sift through the FATCA mess.

Meantime, again, despite everything that is going on right now, it is not illegal for an American to have a bank account offshore. 

However, as an American with a bank account offshore, you end up with reporting requirements. At a minimum, you have to indicate on Schedule B of your Form 1040 that you have an account offshore. If you have more than US$10,000 in aggregate in financial accounts offshore, you'll also have to complete the Foreign Bank Account Report. If you live in the United States and have more than US$50,000 (US$100,000 if you file a joint return) in foreign financial assets (which includes bank accounts), then you'll also have to complete Form 8938.

That all may seem complicated, but it isn't. It's not difficult. It's paperwork. And, as intimidating as it can seem at first, I beg you:

If you're an American, don't let the growing compliance concerns and expanding restrictions scare you away from opening the offshore bank account you probably should have. The downside risk is too great and growing. Whether it's the U.S. economy, the collapse of the dollar, another U.S. banking crisis, or some other right-now-maybe-unnamable calamity, you need to diversify. It is the only way to take control of your future and to protect yourself and your family long term.

A bank account is the first step, but there are others you can consider. 

Lief Simon

Editor's Note: Lief and over a dozen of his most trusted asset protection and wealth management experts are on the scene at Lief Simon's Global Asset Protection and Wealth Summit this week in Belize. We'll continue our live coverage over the coming few days, including more from Lief on how you can get started on your own global diversification plan.

Meantime, we're recording every presentation at the event. That includes all five of the comprehensive Getting Started Education Workshops, as well as over two dozen individual sessions. Altogether, the entire library of recordings will be bundled to create our new 2014 Wealth Building and Diversification Kit. Watch this space tomorrow for more information on how to reserve your copy for over 50% off. 

 

Continue Reading: Reaching Out To Expat Groups Overseas

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They go to her and say, “Give up your U.S. citizenship, sell your stock for US$800 million, and in Austria you will owe no capital gains tax. You will have it all tax-free.”

The new princess expatriates, sells her stock (again, without talking to Dad), goes back to Austria, and lives happily ever after with her loving prince husband.

Unfortunately, that’s not the whole of the story. Guess who happens to be the best friend of the father of the heroine in our tale? Lyndon Johnson.

So the father crawls into the White House complaining to his buddy. LBJ sics the IRS on the girl. LBJ and the IRS declare: You cannot expatriate in order to avoid income tax. The case goes to the Supreme Court, and the princess wins. She and princey walk away with US$800 million.

Ever since, the IRS has gone after expatriate taxes. Now, we have to pay an exit tax to get out of the United States or its citizenship.

This little story explains why the government wants to know about absolutely every detail of what’s going abroad and why you need to be so careful about filling out the forms the IRS demands of you. This isn’t a volunteer situation.

The point of FATCA is to filter all money going out of the United States. Unless the bank is the same on both ends of any transaction over US$50,000, a 30% withholding is to be imposed. In theory, it is that simple. In practice, of course, it’s a big mess.

Why are foreign banks complying? Because the U.S. dollar is still the global reserve currency. Everything goes through the United States, even if it doesn’t have to do with the United States. Money going from Austria to Italy goes to NYC first.

The entire exercise is a waste of money. And it’s sad. But there’s no way around it now. It is what it is, and it doesn’t need to hurt you. As Lief Simon succinctly put it when he brought me to the stage this morning, ours is no longer a hide-and-seek world. Now it’s show and tell. Your only option is to comply. Report and comply. Unless you want to go to jail.

However, and this is the critical point: This truly means nothing for offshore strategizing and structuring. You have legal, compliant options. None of what we are telling you about here at this conference this week is a tax scam, and nothing we’re talking about breaks any law. I can give you 25 reasons why this was all so important before FATCA, and I can give you the same 25 reasons for why it’s still so important. My advice isn’t changing based on FATCA. My advice is about being smart and being in control of your own money and your own future. FATCA doesn’t have to change any of that.

Chris Braun

Editor’s Note: International tax attorney Chris Braun’s remarks on understanding, surviving, and thriving in the face of FATCA, presented as part of Lief Simon’s Offshore Summit taking place in Panama City, Panama, this week, were recorded, along with every other presentation of this three-day event.

This library of recordings will be bundled to create our new Offshore Summit Home Conference Kit, to be released just ahead of the Jan. 1, 2014, FATCA compliance deadline.

Meantime, you can purchase your copy of this important and timely resource pre-release and save 50%. Do that here now.

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“In 1999, there was a global banking conference, which I attended, during which the world of offshore banking was changed dramatically. One specific outcome of that convention, for example, was the end of the numbered account. Ever since, if you want to bank with Roscoe, you've got to reference your account number,” Peter assured the group.

The offshore banking industry is right now experiencing another dramatic upending, this time not in the interest of cleaning up banking dumps but with the clear and straightforward agenda to track the movement of money around the world more tightly and to tax every possible dollar along the way.

In July of this year, the U.S. IRS finally released its requirements for foreign banks to be compliant with FATCA rules. Now banks are working to try to meet those requirements by the fast-approaching deadline of Jan. 1, 2014.

“Which banks won’t comply?” Lief Simon asked the audience at the conference this morning.

“That is,” Lief continued, “maybe you’re thinking that you’d like to identify those banks that don’t intend to comply with IRA regs and do business with them alone?

“That’s not a practical strategy,” Lief explained. “A non-compliant bank won’t be able to bank in the United States or to transact business in U.S. dollars. In other words, any bank that wants to deal in U.S. dollars will be compliant. I’m not sure which banks that fact leaves out, but I’m guessing you aren’t going to be able to conduct whatever business you want to conduct through them.

“One way for a bank to comply with FATCA rules,” Lief said, “is to have no U.S. account-holders. A number of banks around the world are going this route, but not all, of course, and the American looking to diversify his banking offshore still has good options.”

Lief offered six recommendations for good offshore banks that are still accepting U.S. clients. Then he offered a non-recommendation for one bank that we’d formerly done business with personally. This bank sent us the dreaded “We’re closing your account” letter two months ago. They provided no explanation for why they were throwing us out and closing our account and gave us but 30 days to move the money.

“The worst part,” Lief explained, “was that this was the one instance where I hadn’t taken my own advice. I didn’t have a second, backup account for this corporation, so I had to scramble. I spent a good number of the 30 days I’d been allowed knocking on the doors of banker-friends, trying to find one who’d open a new account for me before the deadline. I finally found one (it’s one of the banks on my top six list).”

One symptom of the shake-up (shake-down?) taking place in the offshore banking world right now is rising fees. Banks are passing along the costs of complying with FATCA rules to clients.

“One bank in Panama,” Lief explained, “is now charging a fee of any foreigner interested in opening an account with them. This fee is payable up front, before any other discussion takes place. If, after reviewing your paperwork, the bank decides it will not open an account for you, the fee is not refundable.”

Lief closed his offshore banking remarks this morning with three pieces of advice:
  • Create redundancies. For every foreign bank account you have, you need a second, back-up account...

  • When you have the opportunity to open an offshore account...open it. “You’re here in Panama this week,” Lief said. “To open a bank account in Panama, you need to visit the bank in person. So, again, you’re here. I suggest you make an appointment with one of the Panama-based banks I’m recommending to start the process of opening an account while you have this chance.”

  • Don’t close any foreign account you have if you don’t have to—even if you have no immediate need for it. You never know when or if you’d be able to replace it in the future...

Kathleen Peddicord

P.S. I and others of my Panama-based editorial team are on the scene at this week’s Offshore Summit, and we’ll continue our live coverage over the coming few days.

Meantime, we’re recording every presentation, including those on offshore banking from Peter Zipper and Lief Simon this morning. The entire library of recordings will be bundled to create our new Offshore Summit Home Conference Kit, which will be available two weeks following the close of this week’s event.

Meantime, you can arrange to purchase this important resource pre-release for more than 50% off the regular price here now.

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Over three days last week in Panama City, Lief Simon led discussions with the world's leading offshore tax, banking, asset protection, investment, and business experts to help attendees at our Offshore Summit understand how to navigate and prepare for what lies ahead. What's coming down the tracks.

In fact, though, the truth is, what's coming is already upon us.

Saturday morning, Lief and I traveled with a group of 18 from the conference out to Los Islotes, Lief's development-in-the-making on Panama's Pacific coast. We had a great time showing our new friends around (I'll tell you more about our adventures out on the Azuero Sunset Coast tomorrow). When we returned to Panama City late this afternoon, I downloaded e-mails and found the one I reference above from a friend.

"How do I find out if my bank in Colombia is going to comply with the coming regulations?" asked an attendee at last week's conference.

"What transactions will be subject to the 30% withholding? ATM withdrawals?" wondered another.

The unfortunate reality is that no one knows the answers to these questions. What we do know is that the global banking and financial landscapes are changing. For all of us. I wouldn't say for the better. More restrictions. More hassle. More cost. Fewer options. What can you do?

First, understand what's coming and the potential implications. Joel Nagel, one of the best-schooled attorneys in the world on these issues, tax attorney Chris Bauer, tax advisor Tom Rowley, and Lief Simon spent a lot of time this past week talking through the facts, the consequences, and the strategies for positioning yourself to prevail in the face of them.

Second, diversify. That's the key. It's a necessity of the world we're living in.

But...diversify? What? Where? How?

Those were the big-picture topics of discussion this week in Panama City. As you know, we recorded every one of them—every presentation, every panel discussion, and every question-and-answer session. Our team is editing these recordings now. While that work is in process, you can purchase a pre-release copy of this new Offshore Self-Preservation Kit for more than 50% off the retail price. More details are here.

Kathleen Peddicord

P.S. It's the tail end of the rainy season here in Panama, but we enjoyed a day of glorious sunshine out at Los Islotes yesterday. The hills and mountains all around were a blanket of green, thanks to the rains of the past several months, and the Pacific Ocean offshore from them was blue, glistening, and crashing. Our son Jackson and friend Alexandra played in the surf while we grown-ups walked the beach, planning, imagining... As soon as this rainy season concludes, we're ready to start moving dirt. More tomorrow..

P.S. What else this week?

  • I'm reviewing and clarifying my ideas related to the Five Flags theory of diversification in preparation for my opening remarks tomorrow at this week's Offshore Summit in Panama City. If you're new to the idea, the "Five Flags" are to do with residency, citizenship, banking, assets, and business. Not everyone needs all five flags planted in different jurisdictions, but the goal should be to plant whichever ones you do need in different jurisdictions. Moving to another country and taking all your cash, investments, and business activities with you to that new country doesn't achieve the real goal of going offshore.

Fortunately, different countries shine for different reasons. Some are better for banking, others for investing, some for residency, and yet others as places to incorporate your business. No country gets A ratings on all fronts. Panama is one country that gets close...

  • As promised, at 8 a.m. Wednesday morning, Lief Simon took center stage in the meeting rooms of Panama City's Veneto Hotel to begin leading discussions that will continue over the coming three days. The topic?

Options and opportunities for diversifying your life, your assets, and your future.

"You understand the realities we're facing right now," Lief began, "thanks to the so-called Patriot Act, the HIRE Act, FATCA, and the coming 30% withholding that's going to be imposed on any U.S. person trying to transfer money to what the IRS deems a 'non-compliant bank.'

"There was even, recently, legislation proposed that would have made it possible for the IRS to take away the passport of any U.S. person it accused of owing US$50,000 or more in back taxes. The IRS wouldn't have to prove the accusation...just make it. And the American in question would find himself without a passport..."

  • This week's Offshore Summit has been organized around a series of panel discussions, one for each of the Five Flags being considered.

Yesterday morning, Mark Nestmann, one of the world's leading experts in offshore residency and second citizenship, led a panel discussion related to choosing where you might want to establish foreign residency or obtain a second passport and the particulars for how to go about it. Mark detailed nine criteria to consider when shopping for a place to establish a second, "back-up" residence and discussed the top choices today for second citizenship (by ancestry, residency, or investment).

Then, yesterday afternoon, five gentlemen took the stage--Joel Nagel, Tom Rowley, Chris Braun, Mark Nestmann, and Lief Simon--with, among them, nearly a century-and-a-half of experience helping Americans abroad address, manage, and mitigate their global tax obligations. These five guys are the heaviest hitters you'll find in this arena. Having them on stage, together, to answer attendee questions for an hour, was, alone, worth the price of admission...

  • Perhaps the most important thing to understand about the offshore world, as the speakers at this week's Offshore Summit in Panama City are reminding those assembled again and again, is that it's forever changing.

Tax laws and treaties, residency visa requirements, opportunities for obtaining second citizenship, documentation required to open a bank account, currency controls and exchange restrictions...as well as the political and the economic landscapes jurisdiction to jurisdiction...all these things change all the time.

Unibank, a Panama City bank that we've been recommending as a good choice for foreigners looking to open accounts in Panama, decided two months ago that it would no longer accept foreign clients who haven't been resident in Panama for at least two years...

I just got back from the beach, and I wish I could turn my car around and go back to where I just came from. Coronado, only about an hour outside Panama City, is what I'd consider the most turn-key, most expat-ready ocean-front lifestyle available in Panama. Foreign retirees living in Coronado have already paved the way, leaving you little to do for yourself to create a familiar, comfortable, English-speaking atmosphere.

It's fear of the unknown that keeps many people from making the move overseas. In Coronado you can rest assured you'll find like-minded folks, all living out their dream retirements on the beach, ready to mingle and welcome new neighbors.

I arrived in Coronado on a quiet Friday afternoon. Residents of the area were out at lunch, busy shopping in the new El Machetazo (the closest thing to a Walmart here in Panama), or lounging by the beach. The sun was shining, not yet allowing the dark, rainy season clouds to push their way into town. Four vendors had set up shop at the entrance to the community, selling everything from bunches of assorted flowers to plantains, tomatoes, pineapples, and garlic. Trucks were loaded with fruits and vegetables.

I'd hoped for a weekend like this, calm and quiet. Holiday weekends can see loads of families from Panama City flocking to their vacation homes on the beach, crowding the grocery store parking lots and filling up the restaurants. For many years, that was Coronado's main purpose, to serve as the vacation getaway and weekend home for those who could afford a retreat outside the capital. Over the past few years, though, as Panama City has grown busier, dirtier, noisier, and generally harder for many retirees to take day-to-day, Coronado has transformed into a full-time retirement community...

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Kathleen Peddicord

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter.

Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

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