An Easy Way to Legally Avoid Taxes

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As we often point out here at Q Wealth, there is really no need to engage in tax evasion – the illegal way to pay no taxes. Governments are getting desperate. The penalties for getting caught are just not worth it.

I was sitting in a cafe the other day, in a little tax haven country (Malta to be precise… check our article on residence in Malta: Malta, Little Known Tax Haven Within the EU), having just this conversation with another expat. Why on earth, we agreed, would anyone choose to remain in a high tax country and pay taxes against their will, when they could so easily move offshore or live internationally? The quality of life is better offshore, provided of course you do your research. There are countries that are great for business, countries that are great for kids, etc etc.

And you can still legally earn money in your home country, from your existing business, without paying any tax. How? By working from overseas. I found this example on Vernon Jacobs’ excellent Jacobs Report tax site.

QUESTION: Assume that a US citizen renounces citizenship and is now a sole citizen of the Federation of St. Kitts & Nevis. That person has an IBC in Belize through which he advises companies in the USA for a fee. However, that person does not physically need to be in the USA to perform the services and has no bank account in the USA. The Belize IBC doesn’t pay Belize taxes on the advisory income. If the Belize IBC pays a salary to the citizen of St. Kitts, the St. Kitts citizen doesn’t pay taxes in St. Kitts on the salary. Does the US government have any claim on this revenue stream?

ANSWER: No. An expatriate (one who has renounced US citizenship)  is not subject to U.S. tax unless the income is deemed to be U.S. source income. Income from services is subject to tax in the country where the services are performed.

Therefore, provided the services are performed from offshore, the income is completely tax free.

The same principle applies in the UK, only UK citizens don’t need to renounce citizenship – they simply need to leave the UK and establish residence elsewhere. A UK Limited Company may have a full time employee, director etc working outside the UK. Provided that one is careful not to perform the job in the UK, then no tax is payable on the salary – which, of course, remains tax deductible in the UK company’s books.

With the ease of remote working by phone, over the internet, videoconferencing, Skype etc today – it is so easy to avoid taxes. Tax avoidance is completely legal and is good business practice.

Using Q Wealth’s information, you too can learn the details of using offshore companies to protect your assets and grow offshore wealth. If you are not yet a subscriber to Q Bytes, our free weekly newsletter, please sign up now by clicking here.

6 thoughts on “An Easy Way to Legally Avoid Taxes”

  1. This is blatantly wrong and will land anyone who takes your advice in prison. There is an expatriation tax in the United States and it applies to everyone with a certain level of income or net worth, regardless of whether you renounce your citizenship. It lasts for ten years and applies when with income as low as ~$130k a year or a net worth of over $2mm.

    http://en.wikipedia.org/wiki/Expatriation_Tax

    Reply
  2. JG: I beg to differ. First, if you look at the link you posted, it specifically says that this tax refers to US citizens who renounce their citizenship. So this tax is not 'regardless of whether you renounce your citizenship.'

    Beyond that, I don't know exactly what you are saying is 'blatantly wrong.'

    We know there is an exit or expatriation tax in certain cases, though with good planning and legal advice its effects can be minimized or even avoided completely. This obviously depends on individual circumstances and is not the subject of this article.

    The example given specifically refers to a person who has ALREADY RENOUNCED US citizenship (and therefore, one can assume, already paid the exit tax if liable to it… nobody said this could be done for free, did they?!).

    The example shows how a FORMER US citizen with no US source income can live completely legally tax free.

    Even if one can't avoid the exit tax, a lot of people would think it's well worth taking that one time tax hit in order to completely legally avoid all taxes on all future income. Or not?

    Reply
  3. Whydoes one have to move to another country? Can't you just set up a corporation there? If it resides in another country and the services provided from another country are not taxable then the website, bank account of the company should also be there and yiu can live in the us using an ATM card tax free? Would that work out? I mean you can even claim your forge in Corp in your taxes, it is just a separate individual from you. Am I correct?

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  4. The article is correct. If the United States does not repeal the unConstitutional FATCA (no foreign treaty authority for the IGAs, no mention of IGAs in the bill, 30% – 50% plus asset seizure plus enormous fines even when no wrong doing is demonstrated = cruel and unusual punishment, no due process, violation of 4th amendment privacy rights) you will see the surging trend of expatriation keep growing exponentially into a tidal wave. Americans are tired of being treated like cattle while government officials flout the law and the Constitution with impunity. With no borders and no rule of law there is no America worth saving. Mr. McCain and Mr. Levin you should be deeply ashamed of yourselves for trying to pass this illegal garbage off as law.

    Reply
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