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Setting up assets overseas
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PixelFree Offline
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Post: #1
Setting up assets overseas
I'm looking to do some regular share investing. Simple low cost index / FIRE type stuff.

My financial planner was just going to do one here in Australia but I'd like to know of other options here.

Would this be better for me to do so overseas in a privacy minded country (Singapore) under a corporate entity?

OR do we think just keep the bulk of it locally (for ease of convenience and any tax advantages) with a small portion (10-20%) outside of your local governments control (bitcoin, precious art, rare coins, etc).

Keen to hear from anyone who has actually done this.
(This post was last modified: 11-28-2019 09:52 PM by PixelFree.)
11-28-2019 09:48 PM
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Winston84 Offline
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Post: #2
RE: Setting up assets overseas
Its a lot more complicated than most people realize and it really comes down to your personal financial situation. A corporate entity in a foreign jurisdiction is going to come with annual costs. Singapore for example you can expect to pay about $4500-$6000 SGD a year just to maintain a company with a bank account. Hong Kong is not much better and its the case for most premium offshore jurisdictions Im afraid. The cheap jurisdictions have crappy banking, the good banking jurisdictions come with a higher cost. And their accounting and reporting requirements are more stringent because these are not tax havens or tax shelters.

Another thing to consider is that you have very little privacy now. FACTA and CRS have just about killed what privacy there was. Its getting harder and harder as governments around the world run out of money and need to chase tax payers down. You best bet is to hide in plain site and be strategic in what you do and dont declare and its now more a case of how you structure holdings than what they do and dont know about. Bitcoin needs to be declared and collectibles need to be sold (which means a record of the transaction will pop up unless you are a jewel thief and you know how to fence things at 50% of the market value) - there is no hiding anymore. You need to get it out of your head unless you are sitting on millions and millions to cover the costs and risks related to secrecy.

There are no tax advantages to be had in Australia either. Capital gains taxes are some of the highest in the world and if you are day trading you are looking at 49% for any asset you have held for less than 12 months if you are in the upper tax bracket. Sure there are strategies if you are stuck there, but any adviser who says there is more benefit to doing it in Aus rather than abroad (for tax reasons) is an adviser you need to be walking away from - again, this is dependent on your net worth and how much you are talking about. If you are starting on a low base, then its good advice because the costs to establish and maintain an offshore setup will kill any returns you are seeing and tax you think you have saved.

You would see tax advantages by incorporating and operating in a jurisdiction that does not steal from you under the guise of capital gains taxes, so incorporating in a foreign country does have its benefits if you have the resources to justify the costs associated with headache of setting things up.

So assuming you do, a simplified approach is to:

1: Establish an LLC or Trust in Cook Islands, Delaware or somewhere like Nevis - this will hold the shares in the companies you own, you wont hold them personally.
2. Establish a company in a low cost country like Cyprus, Panama or BVI - these companies will hold your assets, you dont hold the assets personally nor do you own the shares in the company, you are just the manager of the company. These locations also have very lax accounting and reporting standards. All the shares in this company will be owned by your LLC or Trust, not by you personally.
3. Establish a bank account in a decent jurisdiction that will give you access to services like brokerage, multi currency, decent online banking, etc - Singapore, Switzerland, Panama, etc are options but they will tend to have large deposit requirements. It can be done with foreign companies, they dont normally care if you are coming with money.

- You pay taxes on personal income. But unless you bring that money back into Aus as declared earnings, they cant tax you. Its company profit and it stays in the foreign company. The cash is an asset in the company, likewise any other holdings (property, shares, bonds, collectibles, etc) and until such time as its distributed to shareholders its considered to be assets held under the tax jurisdiction of the country the company is in.
- Unless the company pays dividends to shareholders (your LLC or Trust in this case) then the LLC or Trust sees no income either, so you dont have to declare income on your personal tax returns because YOUR assets have not generated any income. You should have no reason to ever do this either.
- The only way to get the money back into Aus is to declare it as income so that you can pay tax on it, OR you have to run a lot of your expenses through the foreign company (hence the lax accounting requirements) and also own your assets in that company (buying your house, car, boat for example)

Nothing I have outlined above is illegal. Its not even a grey area, just a rough idea of how its done. I cant call it a crash course its really just simplified basics, but I hope its helped a bit.
12-01-2019 12:58 AM
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Deepdiver Offline
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Post: #3
RE: Setting up assets overseas
Check out solutions at nomadcapitalist.com


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(This post was last modified: 12-01-2019 10:40 PM by Deepdiver.)
12-01-2019 10:37 PM
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fktax Offline
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Post: #4
RE: Setting up assets overseas
I think you will find that Australia and Singapore are well in each other's pockets.

If you are an Australian resident, I really wouldn't recommend any silly business. They have one of the most aggressive tax offices in the world.

But, if you want to pursue this anyway, I'm told Angel the best opportunities right now for holding companies, which it sounds like you want include:
12-04-2019 11:12 AM
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BB1 Offline
Robin
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Post: #5
RE: Setting up assets overseas
(12-01-2019 12:58 AM)Winston84 Wrote:  I cant call it a crash course its really just simplified basics, but I hope its helped a bit.

Excellent post Winston, check your Private Messages.
12-08-2019 09:07 PM
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