251–260 of 358 posts
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
Now, 10ys later, if I sell that stock, to whom do I pay taxes on them? How do I take out taxes already paid in US when I bought said stock?
Thanks!
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
For example, if a California resident Bob injects capital into a foreign company, say $20,000 for 1% of the brand new company as it is formed in the UK, and receives preferred stock and passes voting power by proxy onto other investors, what are the personal tax and filing implications?
My understanding is that any tax impact is only when the preferred stock is converted to ordinary stock and sold for a capital gain or loss. No different from buying and selling regular stocks from ETrade.
Regarding filing, form 5471 does not apply, as Bob would have 10% then Bob would need to file 5471 and translate the accounts of the foreign company which is a major pain (and accounting expense thus reducing the return on investment)
In a nutshell, US residents should only invest small amounts in any foreign companies and make sure equity ownership and voting power is minimal?
p.s. Thanks in advance.
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
Thanks so much for doing this! Here's my situation: I've been working on a pretty successful project with a friend (selling eBooks), and we're thinking about incorporating (up to now we've been taking in income separately through our own personal companies). Given that I live in Japan, and he lives in Australia, does it make more sense to incorporate in the U.S., in one of those two countries, or somewhere else (Hong…
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
I may form a corp which would have many casual, occasional, remote (often lesser-developed country) individual contractors. The US IRS requirement to get an ITIN is a big burden on them, so I, a US citizen, am considering an overseas incorporation.
Are there any countries worth researching for low complexity and low paperwork when using overseas contactors? (I'd happily pay more in local payroll or withholding if it could free the contractors themselves from worries about faraway-country compliance issues.)
Earlier quoted context omitted.
Thanks so much for doing this! Here's my situation: I've been working on a pretty successful project with a friend (selling eBooks), and we're thinking about incorporating (up to now we've been taking in income separately through our own personal companies). Given that I live in Japan, and he lives in Australia, does it make more sense to incorporate in the U.S., in one of those two countries, or somewhere else (Hong…
fwiw you can now use stripe in Aus :)
Earlier quoted context omitted.
Labor also moves relatively freely in the US. Here in Germany, I get the impression that an employee is incredibly "safe" compared to the US -- is it the same elsewhere in the EU? This has the double effect of probably making any one community more resilient to small market movements, but I have a hunch it also suppresses the volume of desirable candidates in the unemployment pool. I'd wager that a robust, high-turno…
In Poland when you want to hire someone "as it should be" with a proper work contract it is quite a pain in the ass for the employer. 1) Many rights for the empolyee, not so many for the employer, 2) VERY high real costs of employment (only ~40% of total employment costs lands in the hands of the employee to his/her disposal). That's why many companies are using some "alternative" ways to hire someone still legally w…
That alternative way is verboten in Germany. If the Finanzamt finds out you will have to repay social taxes on your "contractor" and he will have the right to sue you to employ him properly.
AFAIK in Poland social security payments are mandatory for self employed people so it's no real difference if you are employed or a subcontractor - you still have health insurance, pay into pension funds, etc.
In Germany on the other hand only health insurance is mandatory for self employed people. So being a "subcontractor" with only one customer is treated like cheating the social net out of money. (Because even people who won't pay into the social net are protected by it if stuff gets serious).
Oh, btw. a question about the Polish tax system: I read that Poland has the option to opt into a 19% flat personal income tax. Is this of any practical use? My Polish is not up to reading legal texts so I couldn't find out what the drawbacks of this option would be.
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
I also disagree that the international tax system is insane. It's about as complex as dealing with multi-state tax issues and (with regards to US+foreign setups, like US+China, or US+Australia) its far less complex than trying to manage a multi-national corporation in the EU. It's not simple, by any means, but it's definitely not the worst place to be located.
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't…
Do you think bureaucracy and regulations make it (deliberately) hard for US residents to invest in seed stage companies abroad? For example, if a California resident Bob injects capital into a foreign company, say $20,000 for 1% of the brand new company as it is formed in the UK, and receives preferred stock and passes voting power by proxy onto other investors, what are the personal tax and filing implications? My u…
If you contribute post-tax earnings its usually a very simple event. Depending on your ownership stake, you have some information reporting, i.e., Form 5471, Form 926, but that's about it. If you don't have to deal with Form 5471 because you own a very small stake in the company, you'll want to have an accountant look into PFIC reporting, especially if the foreign company is engaged in "passive" activities like renting, licensing, investing, etc.
People are scared of Form 5471, but it's really not a big deal. It's also not very expensive, in the scheme of things. If paying roughly $100-$250 for a Form 5471 is too great an expense, you probably don't have the financial leeway to be making the foreign investment in the first place.
Also, Translating accounts is not very difficult. You simply apply the appropriate exchange rate (the average rate, or the year-end spot rate, depending on whether you are translating the income statement or the balance sheet). It takes at most a few minutes if you use any sort of organized accounting system or software.
Earlier quoted context omitted.
You are one of the lucky few. :-) Be sure not to invest your savings in mutual funds. Form 8621. Be sure to avoid the local equivalent of an IRA if you want to do retirement savings. The IRS might not think it is a tax-free pension. And they might think that employer contributions are taxable income to you. Don't own stock in a foreign corporation. Don't become an officer with signature power over the corporation's b…
Is that what you have to do if you're a citizen? Or does it apply to permanent residents as well?