Once outside your home country as a non-resident and without visible assets, you pay no more taxes.
Considerable thought to “doing it right” must go into the implementation. Go over this chapter leisurely and in detail. The “banking passport” indicates one way in which an “alternate identity” may be established to collect fees, royalties, etc. The purpose of a banking passport is to make “your” assets disappear into the accounts of your alter egos (you under different names and citizenships). We have explored the Netherlands Antilles and do not find the solution of setting up a company there or anywhere else for that matter as effective as a “silver bullet”. New laws in the US have made the diversion of earned income to tax haven holding companies not something that can be done legally. But a second passport with alternate identity might be something to explore! It may not be strictly legal, but it’s more private and less expensive.
Lawyers and accountants want to keep you around forever paying their annual retainers. I try to get people off on their own, conducting their business affairs in COMPLETE PRIVACY. That is why I do not usually recommend setting up trusts, foundations, holding companies and any such structures requiring:
A) Involvement of others who really shouldn’t know your business.
B) Unnecessary overheads, legal registration and annual tax charges.
Offshore corporations and such are mostly worthwhile only where an active business is involved and there is no better way to get a regular cash flow of royalties, commissions or interest out of a given country without paying withholding taxes. We regard setting up such legal entities only as a last resort! The exception to this is when you work with someone who lets YOU run the show, who DOES NOT want to get any signing powers or a say in your business and who shares our view that the more you can do yourself, the better. Most offshore advisers will milk you every year with hefty annual fees and charges.
Usually, offshore centers are rich in crooked “corporation mills” that chum out steep bills but do not care about you or your business. We would be happy to advise you and help you to achieve limited liability and anonymity through cheap and serious company formation agents offshore. For many clients, this has been one way of achieving confidentiality and tax- freedom. Ask Scope for details.
Many Americans do not realize that there is nothing illegal about transferring all their shares of stock, cash or other assets to a custodian bank based abroad. Even real estate may be transferred to a foreign based corporation. British based corporations cost only a nominal sum to establish and run. It used to be the rule that if they did no business in the UK, they were tax- exempt in the UK. The US and other OECD countries pressured the UK into lifting this rule in 1988. Now, all UK companies have to file and pay British taxes regardless of where their source of income may be. Neighboring Ireland, however, was swift to take advantage of the new British rules. When the UK closed down tax-exempt companies, the Republic of Ireland passed legislation allowing for tax-free Irish non-resident companies. If no directors live in Ireland and all source of income comes from outside Ireland, then the Irish company does not pay any tax at all! The US has many reporting requirements for its citizens who own shares of foreign corporations or bank accounts, but you can kiss all the forms and filing requirements goodbye forever if you become a PT.
There are no restrictions on the free flow of capital in and out of the US, at the present time. This freedom to transfer assets abroad exists in most of Europe, Japan and the “free world”. Reporting requirements are a different matter. For instance: if you cross the US borders in either direction with cash (not recommended), amounts of around US $5000 are supposed to be reported. If you are searched by customs officials and are carrying undeclared cash, it may be confiscated. But if you carry cash or checks abroad, as to tax-paid, legally earned money, you can take US $100 billion – as long as you report it (or attempt to report it) at the time you cross the border. Many clients tell us that US customs officials at many border points do not have the proper report forms. They tell the traveller who asks for them to “forget about it”. Thus, as is typical with governments, Big Brother’s iron fist is often rendered impotent by bureaucratic bungling at the front line. Big Brother is not invincible or all-seeing. Like me, bureaucrats are buried under an avalanche of information and forms. They are brought together only if you do something “high-profile” to trigger a look at your affairs.