Investing Internationally

Over the past several weeks, I've mentioned various tidbits on how to improve you investment returns or reduce your tax liability or both. Investing internationally can do both, but there are also some laws and rules that you need to be familiar with before you can determine the best course of action for you.

First of all, since 9/11, the world has become a different place. This is also true with respect to the banking and tax laws in regards to the Patriot Act of 2001 and others. The Patriot Act permits U.S. courts to confiscate the U.S. assets of foreign banks, without convicting, much less accusing, the bank or any of its depositors of a crime. This is sad, but true. For this reason, foreign banks are much more reluctant to do business with US customers, or at least impose increasingly stringent restrictions on their ability to trade foreign securities and require "full disclosure" to the IRS.

Also, another problem is that the IRS impose a draconian 30-31% withholding tax on both income and gross sales proceeds on U.S. securities owned by foreign banks. This tax can only be avoided if the foreign banks enter into a one-sided "qualified intermediary" agreements with the IRS to enforce U.S. tax laws. The IRS requires that taxpayers report their worldwide income.

Furthermore, the Securities and Exchange Commission (SEC) prohibit unregistered securities from being marketed in the United States. This means that many international banks are reluctant to permit U.S. citizens from buying U.S. securities, even if the orders are unsolicited. For example, there are over 55,000 mutual funds available for investing around the world; however, only about 11,500 mutual funds are available for marketing in the United States.

Thus, there are considerable reasons why foreign banks are biased against doing business with US customers. Fortunately, there are a number of ways US citizens can avoid these restrictions.

• You can invest through a U.S. tax compliant insurance or annuity policy formed outside the United States, or through an international entity such as a international business corporation (IBC), an international limited liability company (ILLC), or an international trust or private interest foundation (PIF).
  
• You could have a legal residence outside the United States.
  
• You could arrange for correspondence and trading instructions to be sent from outside the United States.
  
• You could consent to having the bank or another third party outside the United States to manage the investments in the account.

So, despite the fact that there are obstacles for US investors to obtain much higher returns through international investments, there are solutions. To obtain a legally structured international entity or a second passport and citizenship in another country will require preparation and a substantial cost on your part, but the increased returns and other benefits are likely to be very well worth it.

With the erosion of the value of the US dollar and some of the globalists' plans mentioned last week in this blog, if you don't take positive steps to protect what you have, you will likely lose most of your assets in the coming years. As always, the choice is yours.

There will be more on these topics this week. Stay tuned ...

Righteousness goes before him
and prepares the way for his steps. Psalm 85:13 (NIV)

If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com