The Top 3 Foreign Tax Shelters

Tax Shelters American citizens who wish to minimize their tax burden often turn to foreign tax shelters. These financial vehicles are typically located in nations that have, on average, lower tax rates than the U.S.. Such places are informally referred to as tax havens, and they are the home base for many such investments. In almost every case, tax havens allow for anonymous banking transactions for investors. Three of the most common types of are trusts, foreign business investment, and private banks, or credit card programs.

How Foreign Trusts Work

With the same inner-workings as standard trust funds, foreign trusts are legally based in the tax haven location. An investor places any asset into the fund, which then flows out to a beneficiary, also known as a trustee. Since the asset, and any accumulated interest, are physically located outside the U.S., laws of the tax haven dictate who pays taxes on the appreciation and payout, or if any is paid at all.

Setting Up a Foreign Business

As with foreign trusts, this type of shelter works in essentially the same way as it would in the U.S., except that the business is set up in an offshore location and is subject to the tax laws of that locality. As long as the business is physically located outside of the home country, the citizen/investor enjoys privacy and asset protection. For investors who have significant investment income, this kind of arrangement is common.

Credit Card Programs as Tax Shelters

Foreign banks, as well as credit card programs, allow smaller investors to use a flow-through entity to achieve transaction privacy. Because they are legally structured within the nation where they are based, these types of programs allow individual U.S.-based taxpayers to achieve tax treatment much like those who utilize foreign trusts. Many such credit card and banking programs are located in Central American nations and the surrounding area.

U.S. citizens often look for secure, financially advantageous investment vehicles. There are literally hundreds, perhaps thousands of investments, and combinations thereof, which allow prudent investors to minimize taxes and enjoy security at the same time. In many cases, such persons look to overseas monetary arrangements like those mentioned above. While a complete list of every offshore investment opportunity could take up many pages of text, keep in mind that as the economic and political climate changes from year to year, foreign tax arrangements constantly transform to meet the needs of investors.

 

 

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Caye International Bank Limited (CIBL) was granted an Unrestricted "A" Class International Banking License on September 29th, 2003 by the Central Bank of Belize and is regulated by the Central Bank of Belize which set the standards for liquidity and capital adequacy.