Category Archives: International taxation

Articles found here are more general in nature than in Cross Border. Here you will find proposed American Tax laws, Senate and Congressional hearings, comments on US Government official statements.
Cross Border is the advance sub category of International Taxation. Both are written by Brian Dooley, CPA, MBT.

IRS Publication makes the U.S. a Tax Haven for the U.K. Entrepreneur

America, the Tax Haven  for the U.K. Entrepreneur

We all know that the U.S. is a VAT tax haven.   No VAT means goods and services are only 3/4 of the cost as in the U.K.  The automobile that costs 30,000 pounds is only 22,500 pounds in the U.S.  Everything is cheaper.  

However, the U.S. is also an income tax haven for the U.K. citizen. Continue reading

Provocative International Tax News

offshore tax planning, offshore tax strategies, controlled foreign corporation,

Tax Planning Small Business Are Taxed at 14%

Government Report Shames Businesses Paying More than 14% in Taxes.    Hard to believe that Senator Bernie Sanders  (who paid tax at 13%) released the report.  It states that a business that plans its taxes are taxed at 14%. Here’s what’s going on.   

International tax planning for the Contract Manufactuere

International tax planning for the Contract Manufacturer

Fantastic tax savings for importers of contracted manufacturer of their products.  This new IRS law gives tax savings to small businesses.  Learn more on this link and send it to your CPA.

Small businesses are now reaping significant tax savings.  Importers, exporters, and e-commerce business can use the same loopholes as big business. I wrote my book to teach you these tried and true strategies in an easy two-hour read.

International tax planning

Buy at Amazon for only $9.50.

But, I did more.  I had an audiobook created.  It downloads onto your smartphone so that you can listen while you are commuting.   Get the 2017 edition of  International Taxation in America for the Entrepreneur for $9.50 at Amazon on this link.

 

saving taxes, how to save taxes, tax planning,

Saving taxes with an IRS approved tax plan is called a private letter ruling.

International Gift Tax Plans with this IRS internal letter on this link. Fantastic legal tax avoidance for the foreign person with family in the U.S. is explained in this letter.

  • Avoiding state income taxes this new IRS  designer  Nevada trust.  IRS tells how to use your Nevada corporation as your trustee to legally stop paying state taxes on your investment income. Here’s what’s happeningon this link.

New- Saving foreign taxes with this letter from the U.S. Department of the Treasury letter to the U.K. tax authorities on tax planning in the U.S. for UK and EU companies.

Tax planning, with the Supreme Court common tax laws

Tax planning with Supreme Court common tax laws

18th Century Supreme Court case destroys IRS tax penalty law. Using this case, the Tax Court gave the IRS a significant defeat.  Here is what happen.   The Supreme Court is the “Law of the Land.”  It rules over the IRS and Congress.   

It works both ways.  The blog on this link explains the most missed Supreme Court Doctrine use by the IRS to blow up this offshore plan.

international tax planning, international, tax, planning,

International tax planning and international tax savings with this Treasury Department report. 

The secret report on tax savings international tax plans that the IRS cannot stop was issued by the U.S. Department of the Treasury (a branch of the White House).

They reported the successful foreign tax plans of international businesses. We have obtained a copy.  It is on this link.   Here you will learn the legitimate foreign tax plans that Congress likes. 

offshore trust, foreign trust, nevada trust, estate planning trust, esbt,    Since the Middle Ages, the wealthy have capitalized on trusts to avoid paying taxes. During the Great Crusades, upon the death of a knight, his entire estate went to the king.    Nine hundred years later, things have not changed much except the ‘King” takes only half.

Trust are the most efficient tax tool. International tax planning should start with a Nevada trust to own the foreign company.  Learn trust tax planning and asset protection in this easy to read blog post.    It has the blueprint for successful trust tax planning.   IRS memo on asset protection and tax planning with an offshore trust.  Get it now on this blog post.

internet tax planning, saving taxes, cloud tax planning

Saving taxes with the cloud-based

Cloud tax planning. Learn how businesses are using the cloud to avoid taxes on this link.  E-commerce companies are avoiding state income taxes and in some cases deferring U.S. taxes.

Be an IRS tax wizard with our new custom Google search, on this link.  This custom Google app to read 400,000 pages deep inside the IRS’s website and the tax court’s website.

What You Need to Know to Do Business in the United Kingdom

Saving taxes, United Kingdom claims U.S. LLC is a tax haven company.

Saving taxes with international tax planning in the UK

The U.K. is a fantastic European headquarters.  Of course, they left the EU and despite this, the U.K. is my first choice.   Both Switzerland and The Netherlands would like to be your headquarters.   But they are missing the tax infrastructures that best fits the American tax laws.

The Big Tax Strategies of the U.K. are:
1.   They treat the U.S. limited liability company (LLC) as a passthrough.  The U.K. is the only country that has the identical treatment as the United States.   The cornerstone of small business international tax planning is the foreign tax credit.  

The foreign tax credit is the method of avoiding double taxation.   For example, you earn a $1,000 in the U.K. and the tax is $2,000 (the U.K.  has a low tax rate).   The U.S. tax on the $1,000 is $3,900.   The $3,900 is reduced by the $1,000.

U.S.-U.K. Income Tax Treaty and the Friendship, Commerce and Navigation  (FCN) Treaty Tax Planning and Strategy

This is big.  You can use domestic (I prefer Nevada) LLC for your international business.  An early  1900 treaty (FCN) allows the LLC the same rights in the U.K. as a U.K. company.

The British Inland Revenue changed their regulations to match the IRS regulations regarding the American LLC.    This allows the income tax treaty’s permanent establishment clause to protect you from U.K. taxation.    While the foreign tax credit does mitigate U.K. taxes, it is nice to be exempt from taxation.

The U.S. LLC Without a U.K. permanent establishment is treated as if it was only doing business in the U.S.    As you read below, the word term that is vague is “office”.    When tax treaties were envisioned, an office would have staff completing orders along with a “place of management”.  With E-commerce websites placing orders, I suggest that the computer server is kept in the U.S. 
The term “permanent establishment” includes:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop; and
f) a mine, an oil or gas well, a quarry, or any other place of extraction of natural
resources. 

The term “permanent  establishment” does not to include:
a) the use of facilities solely for the purpose of storage, display or delivery of
goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
d) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise, or of collecting information, for the enterprise;

Avoiding IRS Form 5471 Controlled Foreign Corporation

Form 5471 is a complex tax return.  CPA fees start at $5,000.  Next, tax planning for the controlled foreign corporation is tricky.   Even the best tax planners can miss the target.

Using the foreign tax credit to reduce your taxes is by far the best way.   When a domestic LLC is used you do not file the Form 5471.  Matter of fact, if you are the only owner, you do not file any IRS form.  The LLC  files a partnership return,  Form 1065, when more than one person owns the LLC.

Section 988 and Currency Devaluation from the Britain to Australia

foreign corporation, IRS audit, saving taxes, how do I save taxes, tax planning

Tax planning for currency exchanges.

Seems like I am getting a call every day on U.S. taxation of home loans in foreign (non-U.S.) currencies.   As a foreign currency drops in value, the value of a debt (in U.S. dollars) decreases and the IRS wants to tax this windfall.

For example, I owe you 1 (one) British pounds.  When I made the loan, the one pound cost a U.S.$1.50.   Now, the pound is worth $1.00.  So, I only have to spend a dollar to pay you back.  The IRS issued a ruling (which is merely an opinion), that repayment of the loan creates $.50 in taxable income.
Continue reading

The Nevada or Delaware Limited Liability Company (LLC) for International Business

The domestic LLC is the worst entity for the small business owner with a foreign operation.  Doing business in countries that have a tax treaty, with the U.S. requires the use of a corporation or a partnership.

The limited liability company is an American tax entity.  Other countries do not have the U.S. tax concept of the LLC.    For example,  you are planning to operate in Europe.  While the Dutch has a fantastic tax treaty with the United States, the American small business owner can fail to get all of the intended tax benefits.   The major tax treaty benefit is avoidance of paying tax in the foreign country and not filing a tax return with the foreign government.

Here is the international tax problem with the LLC

The permanent establish article does not reference a limited liability company.   The small business owner is in a risky position.   If the/she can lose the U.S. foreign tax credit if they fail to pay the foreign country’s tax when the tax is due.   For example, you are based in the Netherlands and you decide not to file a dutch income tax return for the LLC for year 2017,

In 2021, the Dutch audit you.  Since you never filed a return, they can charge you the tax.   In 2023, you make the decision that the legal fees of fighting the tax are too expensive.  So, you pay the tax.   Since the U.S. taxable year was 2017, you are six years late in claiming the foreign tax credit.

You end up paying tax twice.  First, to the IRS in 2017 on the Dutch income.  Then in 2023, you pay the tax a second time to the Dutch government.

The Best Small Business International Tax Structure and Entity

The United States Department of Treasury decided to help the small business owner obtain the maximum tax benefits by allowing you to treat your foreign corporation as a domestic corporation.  This process is known as a domestication.    As a domestic corporation, the American can elect taxation as a subchapter S corporation.

Tax treaties give corporations permament establishment protection.  If you do pay a foreign income tax, the IRS foreign tax credit rules apply to a subchapter S corporation.  The foreign tax credit allows you to offset your IRS taxes with the tax you pay to a foreign government.

Below is a short video on the domesticated foreign corporation.  While the video is about Mexico, the same rules apply to Europe.