Tag Archives: inversion

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.    

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- Department of the Treasury letter to the U.K. tax authorities on U.S.  tax planning for UK and EU companies. Here is the letter from the U.S. to the U.K. 

Be an IRS tax wizard with our new custom Google search, on this link.  This custom Google app to read 300,000 pages deep inside the IRS’s website and the tax court’s website and it is free!.  Find the answers to your tax question quickly and accurately.

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 used 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.

Trusts 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 offshore cloud computer. 

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.
Is the U.S. a tax haven for citizens of the UK, Sweden, Belgium, Canada, Luxembourg, and Austria?  Yes, says the IRS in its Publication.  Learn the magic Tax Treaty words for these lucky citizens of The UK, Sweden, Belgium, Canada, Luxembourg, Austria on this link.

The Transfer of “ Know-How” To a Foreign Corporation and International Tax Planning with the IRS’s Definition of “Know-How”.

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

The United Kingdom is beating America as the better business country with a 17% tax rate.

Jeff is the founder of a new computer based start-up.  The business is virtual in that it has no store front.  The business is e-commerce.  Its website determines the walking score of locations.   His customers are real estate website, large apartment complex promoting their location and hotels by showing a good walking score. 

Jeff is expanding into England and Ireland and would like to tax advantage of Irelands 12% tax rate.  He is in California and the businesses effective tax rate is 44%.  He needs unique e-commerce tax planning. 

Here is Jeff’s tax issue of converting his business to an Irish company.

“The tax code section 367 attempts to keep a successful domestic business within the U.S.  Small businesses want to expand into new markets and not pay U.S. tax on their non-U.S. income.  

Section 367 provides that if intangible property (also known as intellectual property) is transferred to a foreign corporation, the tax savings are reduced.  Know-how is one of the types of property and is included in this law. 

The other intangible properties are trade-secrets and those created by a government such as a patent, copyright, trade name, and trademark. 
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Inversion Tax Savings for the Small Business wanting International Tax Planning

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

The United Kingdom is beating America as the better business country

I am watching President-elect Trump. He is promising to tax business more and punish them if they leave while he is in office.  

However, the law is targeting only publically traded corporations. A small business can continue to convert to a non-U.S. corporation and avoid taxes on their non-U.S. income.

 Small It takes a year or more to convert your corporation to a foreign corporation to operate your business offshore.  The tax term to this for this is “inversion.”

 Inversion tax savings with publically traded companies changing their headquarters to London and Canada seems to be stampeding.  The press reports are clear.  

Small business owners want to jump on the bandwagon. The owner can live in the U.S. while his business lives in Ireland, Canada or the U.K.  The business can have its administrative offices in the U.S. 

Here is how it is done:   One method (and many methods exists) is to sell the most valuable part of your business to the United Kingdom domiciled company.  “Domicile” is an Irish, Canadian and  UK concept.

I point this out so that you understand that you will need an innovative UK chartered accountant to work with your innovative American CPA.  The UK and the US have very different tax law. If you need some names of a chartered accountant, then call me.

When I say “most valuable part,” I am not talking about your book value.  I am speaking about what allows you to make more than your competition.   Burger Kings inversion is a good example.  The burger joints remain here in the U.S. The assets of the franchise business (all of which are intangible) moved to Canada.  

The most valuable part of a small business is the owner, the key employees, the customer data (especially if you are using big data to increase sales and profits), your reputation,  your method of doing business and your critical software.  If you are a manufacturer, this may be your cost accounting and inventory.   If you are an E-commerce business, this is your website and e-commerce software.   For each of you, this will be different.  

Next, you will form and own create and own a foreign corporation.  It may be in the U.K. Canada, Puerto Rico or a tax haven such as the British Virgin Islands. My favorite country is Ireland with its 12 percent tax rate and its low crime (more on this link).  Manufacturers and distributors like to do business in  Canada.  Its tax rate is between 15%  and 25%.  NAFTA allows easy importing into the U.S. 

If you are starting a new business, consider forming a foreign corporation at the inception. My favorite country for a new business or an existing business is Ireland, with its 12 percent tax rate and relaxed lifestyle (more on this link).

Lastly, you will transfer the assets of the corporation owning the intangible property to the foreign corporation. If you operate the business properly, the income will be “foreign source” income and not taxable by the U.S.   

If you need help with your international tax concerns, then please email me, Brian Dooley, CPA, MBT at [email protected]   As I wrote above, many types of tax inversions as possible.  Each business is unique and thus so is its tax planning. 

Lastly, move quickly.  Congress is panic over the loss of taxes and the loss of jobs.  Congress wants an “exit tax” … a penalty for moving your corporate headquarters.   The “exit’ tax exist for Americans that expatriate.   

If you are starting a new business, then look into forming a foreign corporation to own your business.   The pending inversion tax law will not apply to a new business the starts in a foreign corporation.

Learn more about international tax planning for the entrepreneur with my  easy to read book available at Amazon on this link for $9.50

Eight Hours International Tax Seminar for the California Society of CPAs – Live & Webcast on September 28th

international tax strategy,

International tax planning conference on September 28th, live and webcast from San Francisco.

If you are on this page now, it means you missed the seminar.  However, I have some of the videos and information for your education.  

This is what has happened to the IRS: The courts are hammering the IRS in most international tax issues. From captive insurance companies to cost sharing agreements (the most popular method to shift income offshore), the courts are hammering the IRS. Inversions (moving your headquarter or computer server offshore) continue to provide tax savings.

The Key to Saving Taxes is the IRS Tax Form: Originally used to allow the IRS to track big publically traded multi-nationals, these forms now provide the blueprint to tax savings. Each time the IRS loses in court, they place a question regarding the tax method on a tax form. They think this will scare you away. But, tax planners are reverse engineering the IRS questions and are fine tuning their methodology.

If you have thoughts of going offshore or have an international business, then suggest you spend two hours with my offshore tax book.  Below is the first chapter.  The book is available as an audiobook, Kindle or paper.   It is by far the best international tax book on the market.

You can get the Kindle edition of the best offshore tax book at Amazon for $9.50 on this link.  

Here is  the Form 1040NR, taxation of the nonresident alien and foreign trust, video.

Saving Taxes with the Pfizer Pharmaceutical’s International Tax Plan

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

Saving taxes with Pfizer international tax planning in the UK

As I write this blog, both the U.K. Government and the U.S. Government are bewildered by the pending merger of Pfizer with a UK firm.  The tax term for this as an “inversion.”

The American Congress cannot believe that a major U.S. firm is willing to live in foggy London to save billions of dollars in taxes.

The Pfizer international tax plan is one of many that you never find on the internet (until now).   If you want to brainstorm your tax planning ideas, then please call me, Brian Dooley CPA MBT, at 949-939-3414 for a free one hour consultation.

Here is what is going on.   

The United Kingdom is an attractive low tax haven.  It provides an exception to the U.S. controlled foreign corporation rules because of its tax rate (up to 21%).  But there is more. 

Until 1960, the Western world (Western Europe and the United States) international tax laws focus on a corporation’s headquarters.  This was known as the “force of attraction” rule.  There was a problem with this rule.  It caused chaos.  The U.S. was losing tax revenue.

So, the U.S. and only the U.S. replaced the “force of attraction” rule with today’s U.S. international tax laws.  The Pfizer move to London benefits by two opposing tax theories.

In other words, the UK looks at the location of the headquarters.  While the U.S. has unique income sourcing rules and ignores the location of the headquarters.  By combining the laws of both countries, you create a low tax haven.  Pfizer Pharmaceutical’s international tax plan focuses on these laws. 

Now, let us get into some UK tax law.  The UK uses the term “Corporation Tax”   It is a tax on the net income of “limited companies” and other organizations including clubs, societies, associations and other unincorporated bodies.  This guide gives you a basic overview of Corporation Tax. 

A “limited company” is a company where the owners are liable for the debts of the company.  In the US, it would be a corporation or a limited liability company. 

Taxable profits include:
1. profits from taxable income such as trading profits and investment profits (except dividend income which is taxed differently) and 

2. capital gains – known as ‘chargeable gains’ for Corporation Tax purposes 

If your company or organization is headquartered in the UK, you will have to pay Corporation Tax on all your taxable profits – wherever in the world those profits come from.  The tax rate is no more than 21 percent.  In the U.S., a corporation pays taxes at 43% (including state income taxes).

So, the worst you do is to cut your income taxes in half.  

If your company is not headquartered in the UK but operates in the UK – for example through an office or branch (known to HMRC as a ‘permanent establishment’) – you will only have to pay Corporation Tax on profits arising from your UK activities. 

For example, a foreign corporation has its headquarters on Nevada (a tax-free state).  It has a branch in the UK for European e-commerce.  The UK will not tax the income from European customers or from American customers.  The European countries do not tax you because your branch is in the UK.   The U.S. will not tax the income generate by the UK branch. 

The UK will tax the profits earned from UK customers at 21%. 

If you are an American, you will find this concept odd.  However, only the U.S. has the concept of taxing worldwide income. 

Here is some basic information on U.K. corporation taxes. 

For Corporation Tax, the tax year is called the ‘financial year’ or ‘fiscal year’ and runs from 1 April to 31 March.  This is different from the tax year for individual taxpayers, which runs from 6 April to 5 April. 

The Chancellor sets out the rates of Corporation Tax and various allowances, reliefs and credits in the Budget each year (usually in March or April) and in the Pre-Budget Report the previous November/December.  Normally any changes are announced one or more financial years in advance of the year to which they will apply.

U.K. Corporation Tax rates

There are currently two rates of Corporation Tax, depending on the company or organization’s taxable profits:

  1. The lower rate (known as the small profits rate) is 20%
  2. The upper rate (known as the full rate or main rate) is 21%