The best time to optimize your global tax bill is before you become a U.S. resident for income tax purposes.
Tax and tax adjacent considerations should be an integral part of the pre-arrival planning for a foreign individual; a foreign company management would be negligible not to consider it in the pre-market-entry phase of its operations. Individuals planning to immigrate to the U.S., as well as those who will become U.S. tax residents by virtue of partaking in the EB-5 program or as a result of being granted one of special visas, should have their investment portfolio reviewed in the context of minimizing tax exposure in the United States. In case of business entities, the balance sheet may contain the items that one day might prove detrimental to achieving a lower global tax bill.
An unintended creation of a permanent establishment (PE) in the U.S. can be triggered by actions of a company, but also by the actions of an individual. Income attributed to such PE, which would not be necessarily limited to the income effectively connected to the trade or business within the United States (a term of art), would be subject to U.S. taxation. Careful planning in this domain can save a bundle.
IMPORTANT DISCLOSURES
The presented here information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Moreover, the information is presented here for educational purposes and is not specific to any individual’s personal circumstances. As such, this information should not be used for the purpose of avoiding penalties that may be imposed by law. In matters relating to the Offshore Voluntary Disclosure Program, or any continuation thereof, it is generally recommended that a determination as to how one's specific circumstances may relate to the presented material should be made by means of a consultation with an attorney that specializes in these matters.
Cezary Tchorznicki, CPA LLC does not provide legal or investment advice.