[ Offshore Tax ] Does the Portugal Tax Office Pay Attention to Americans on the NHR

The Portuguese tax authorities are keeping a close eye on Americans who are part of the Non-Habitual Resident (NHR) scheme. A report published in June 2023 highlighted two instances of fraudulent activities involving structures based in Malta.
In both cases, the income was generated in Portugal but was attributed to Maltese companies. It’s clear that the tax authorities are vigilant about these Maltese structures, even those owned by individuals under the NHR scheme.
(Page 137) Special Actions “Misuse of Other Jurisdictions”
The authorities continued their efforts to monitor and curb the misuse of foreign jurisdictions by Portuguese taxpayers, with the aim of reducing their tax liabilities within Portugal. Two cases were particularly noteworthy:
In the first case, an individual with NHR status in Portugal used a Maltese company to artificially relocate income that was actually generated in Portugal. This income was then returned to the individual as dividends. As a resident of Portugal, this individual was subject to a total exemption method, resulting in zero taxation. This is in stark contrast to what would have happened if the dividends were distributed directly by a Portuguese company, where they would be taxed at a rate of 28%.
In the second case, a taxpayer introduced a Maltese company into the invoicing process between its main supplier and its Portuguese company. This was done to inflate the “costs” of the Portuguese company, thereby reducing its profits and consequently, the taxes payable in Portugal.

TIMESTAMPS:
0:00 INTRO
0:45 US ex-pats moving to Portugal
1:00 Portugal is soft touch as many people think
1:55 Tax officers auditing Expats in Portugal
2:50 OUTRO

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[ Offshore Tax ] Challenges of Banking for BVI Companies in Singapore

There are a few reasons why it is difficult for companies incorporated in blacklisted jurisdictions, like the BVI, to open a bank account:
Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations: Banks are required to comply with these regulations, which mandate them to identify and verify the identity of their customers, as well as monitor their transactions for suspicious activity. Banks are more likely to be held responsible for violations of these regulations if they open accounts for companies in blacklisted jurisdictions, which are considered high-risk customers.
Reputational risks: Banks may be reluctant to do business with companies in blacklisted jurisdictions due to the reputational risks involved. If a bank is found to be doing business with companies involved in illegal activities, it could damage the bank’s reputation and lead to financial losses.
Legal risks: Banks may also be concerned about the legal risks associated with doing business with companies in blacklisted jurisdictions. For example, a bank could be held liable for any fines or penalties imposed on a blacklisted company by its government.
As a result of these factors, many banks are reluctant to open accounts for companies incorporated in blacklisted jurisdictions. Even if a bank is willing to open an account for a blacklisted company, the company may be subject to additional fees and scrutiny.

TIMESTAMPS:
0:00 INTRO
0:45 Banking for BVI Companies in Singapore
1:36 Banking in top-tier jurisdiction
2:44 Caribbean banking for BVI companies
3:23 OUTRO

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[ Offshore Tax ] Tax and Banking Challenges of Having a Panama Structure while living in the US EU

There are a number of potential consequences for using a company on the EU blacklist, such as Panama. These include:
Increased scrutiny and audits by tax authorities: EU member states are required to implement enhanced due diligence measures for taxpayers who have transactions with companies in blacklisted jurisdictions. This may include increased scrutiny of tax returns and financial statements, as well as audits.
Restrictions on tax deductions: Some EU member states have introduced restrictions on the deductibility of costs for certain payments made to companies in blacklisted jurisdictions. This can make it more expensive for businesses to conduct business with these companies.
Increased difficulty accessing EU funding: Companies in blacklisted jurisdictions may be ineligible for certain types of EU funding, such as grants and loans.
Reputational damage: Being associated with a blacklisted company can damage a business’s reputation and make it more difficult to attract customers and investors.
In addition to these consequences, businesses that use companies on the EU blacklist may also be at risk of being complicit in tax evasion or other financial crimes.
Here are some specific examples of the consequences that businesses have faced for using companies on the EU blacklist:
In 2020, the Dutch tax authorities imposed a €15 million penalty on a Dutch company for failing to adequately disclose its transactions with a company in a blacklisted jurisdiction.
In 2021, the German tax authorities audited a German company for its transactions with a company in a blacklisted jurisdiction. The audit resulted in the German company having to pay an additional €5 million in taxes.
In 2022, a French bank was denied a license to operate in the EU because of its ties to a company in a blacklisted jurisdiction.
Businesses should carefully consider the potential consequences before using a company on the EU blacklist.

TIMESTAMPS:
0:00 INTRO
1:00 Having a Panama Structure while Living in the US EU
1:30 Banking Challenges for Panama
2:30 Tax and banking consequences
3:30 Panamanian Foundation in Spain
4:22 OUTRO


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[ Offshore Tax ] Tax Implications of Using a BVI Structure as a Spanish Resident

There are a few reasons why it is difficult for companies incorporated in blacklisted jurisdictions, like the BVI, to open a bank account:
Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations: Banks are required to comply with these regulations, which mandate them to identify and verify the identity of their customers, as well as monitor their transactions for suspicious activity. Banks are more likely to be held responsible for violations of these regulations if they open accounts for companies in blacklisted jurisdictions, which are considered high-risk customers.
Reputational risks: Banks may be reluctant to do business with companies in blacklisted jurisdictions due to the reputational risks involved. If a bank is found to be doing business with companies involved in illegal activities, it could damage the bank’s reputation and lead to financial losses.
Legal risks: Banks may also be concerned about the legal risks associated with doing business with companies in blacklisted jurisdictions. For example, a bank could be held liable for any fines or penalties imposed on a blacklisted company by its government.
As a result of these factors, many banks are reluctant to open accounts for companies incorporated in blacklisted jurisdictions. Even if a bank is willing to open an account for a blacklisted company, the company may be subject to additional fees and scrutiny.

TIMESTAMPS:
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0:42 Living in Spain with BVI structures
1:20 List of blacklist countries
1:50 Tax Implications of Using a BVI Structure
2:39 OUTRO


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[ Offshore Tax ] Can a Caribbean Passport Save Me Money on US Taxes?

Yes, the United States is one of a few countries that taxes its citizens on their worldwide income, regardless of where they live. This means that if you are a US citizen or resident alien, you must report and pay taxes on all of your income, including income from foreign sources. Having a second passport does not relieve a US taxpayer of their responsibilities.
There are a few exceptions to this rule. For example, if you are a US citizen living and working abroad, you may be eligible for the foreign earned income exclusion (FEIE), which allows you to exclude a certain amount of your foreign income from taxation. You may also be eligible for the foreign tax credit, which allows you to reduce your US tax bill by the amount of foreign income taxes that you have paid.
However, even if you qualify for the FEIE or the foreign tax credit, you are still required to report all of your foreign income on your US tax return.
There are a few reasons why the United States taxes its citizens on worldwide income. One reason is to prevent tax avoidance. If US citizens were not taxed on their foreign income, they could easily avoid paying taxes by moving their assets and income to offshore jurisdictions.
Another reason is to maintain equity. If US citizens were not taxed on their foreign income, they would have an unfair advantage over US residents who do not have foreign income.
Finally, the United States relies on the tax revenue from its citizens’ foreign income to fund its government programs and services.
If you are a US citizen living and working abroad, it is important to consult with a qualified tax advisor to ensure that you are complying with all of your US tax obligations.

TIMESTAMPS:
0:00 INTRO
0:55 Citizenship by Investment in the Caribbean
1:28 Saving money when having a Caribbean passport
2:20 Foreign income inclusion for US ex-pats
2:42 OUTRO


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[ Offshore Tax ] Taxation Strategies for Foreigners Buying Real Estate in Beverly Hills

Foreign individuals who own U.S. stock or U.S. real estate, among other things — so-called “U.S. situs assets” — are subject to U.S. estate tax on those assets at their deaths. Unlike U.S. residents and citizens, who are exempted from U.S. estate tax on over $12 million of assets, foreign individuals are exempt from U.S. estate tax on only their first $60,000 of U.S. situs assets, unless they benefit from an estate tax treaty.
However, U.S. estate tax on these assets can be legitimately avoided through prudent estate planning. Stock in a foreign corporation is not considered a U.S. situs asset for estate tax purposes, unlike U.S. stock, even if the corporation owns U.S. assets. Thus, it can serve as an effective estate tax blocker for U.S. situs assets owned by foreign individuals. Care must be taken to ensure that the corporation is respected for U.S. tax purposes and the U.S. income tax consequences for income-producing assets must be considered.
Alternatively, if a foreign individual would like to transfer wealth to family members prior to his or her death, a trust may be a more suitable option and may result in less income tax than a corporation. An added benefit of both structures is that they can avoid the cumbersome administrative and reporting requirements involved in transferring assets upon the death of the foreign owner.

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0:39 Foreigners buying real estate in Beverly Hills
1:23 Setting up an LLC in California
2:36 OUTRO


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[ Offshore Tax ] Child Tax Credit & Standard Deduction as a Way to Lower US Tax for Expats with FEIE

Here’s what you need to know about the Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC), the refundable portion:
Beginning with the tax year 2018 and through the tax year 2025, you may be able to claim the Other Dependent Credit (ODC), a new nonrefundable credit for each eligible dependent who can’t be claimed for the child tax credit.
For CTC/ACTC, you should know that:
The maximum amount of CTC per qualifying child is $2,000.
The refundable part of the credit, ACTC, is worth up to $1,500 for each qualifying child.
A qualifying child must have a Social Security Number issued by the Social Security Administration before the due date of your tax return (including extensions).
CTC/ACTC begins to decrease in value if your gross income exceeds $200,000 ($400,000 for Married Filing Jointly).
ACTC is not allowed if you or your spouse (if filing a joint return) file a Form 2555 or Form 2555EZ (excluding foreign earned income).
A qualifying child for CTC/ACTC must:
Be under 17 at the end of the tax year.
Meet the relationship and residency tests for a uniform definition of a qualifying child.
Not provide more than half of his or her own support for the tax year.
Have lived with you for more than half the tax year.
Be claimed as a dependent on your return.
Not file a joint return for the year (or file the joint return only to claim a refund of taxes withheld or estimated taxes).
Be a U.S. citizen, a U.S. National, or a U.S. resident alien.
Have a Social Security Number issued by the Social Security Administration before the due date of your tax return (including extensions).

TIMESTAMPS:
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0:56 Child Tax Credit & Standard Deduction
1:25 US Tax for Expats with FEIE
1:50 OUTRO


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[ Offshore Tax ] Can I Use a US Trust for Asset Protection When Moving to France?

How does the French trust regime work?

Foreign trusts that are subject to the French trust regime must make an annual declaration to the French tax authorities. Additional declarations must be made if the trust has been modified, for example, through the distribution of income or capital, or brought to an end.
Severe penalties apply if the declarations are not made. There is a fine of the higher of 20,000 euros or 12.5% of the total trust assets for non-declaration, and the authorities can go back up to 10 years. In cases of deliberate failure to file, criminal sanctions of up to 5 years in prison and a 500,000 euro fine can also apply!
The trust may also have to pay an annual French wealth tax charge. This is charged at a rate of 1.5% of the worldwide trust assets if either the settlor or any of the beneficiaries are French residents. If this isn’t the case, then the annual charge is 1.5% of any French assets held within the trust. The wealth tax can be avoided in certain cases where the assets have been correctly declared, but the rules governing this are extremely complicated.
What about French inheritance tax and other taxes? The trust may also be liable to French Inheritance Tax rules when the settlor dies, or when assets leave the trust during the settlor’s lifetime. The rate of tax will vary depending on the circumstances but can be as high as 60% of the worldwide trust assets.
Any income distributed from the trust to a French resident will be subject to French income tax. There may also be other French tax consequences in certain circumstances, such as stamp duty and capital gains tax.

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1:00 US Trust for Asset Protection When Moving to France
2:18 Advantages of getting a tax team for asset planning protection
3:13 OUTRO


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