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Comment by um_ya | Hacker News Reader

You don't need to be a millionaire to use these tax loopholes. I calculated that it would take $2600 a year to maintain an offshore structure. That includes an offshore LLC and trust in Belize (the best jurisdiction). The Belize trust owns membership position in your Belize LLC, and your Belize LLC has control over the trust. Then you just appoint yourself as manager of the LLC. Once that's done, you can simply open bank accounts or brokerage accounts in the LLC name.

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You can set up the structure, but you won't be able to defend it in court without bankrupting yourself when the IRS comes knocking. And that's exactly where the problem lies.

Exactly. It does not matter how clever your structure is if the IRS thinks it is fishy you are going to be in for a world of pain.

Which makes it particularly painful if you're innocent

Of course. I am an Australian living in Australia with no direct US business and the IRS is a pain for me to deal with. I don’t know how US citizens and businesses manage it.

The US IRS? What do they demand of you?

Yes the US IRS with things like W8-BEN-E form when you sell to a US company.

They also make it more of a pain to deal with financial institutions since the institution needs to ensure you are not a US citizen.

What tax advantage does this provide? I'm curious to learn more. Are we talking about tax avoidance, or tax evasion?

This sounds like only the first leg of the scheme. How do you actually get money you earned into these bank accounts? I guess you could have your offshore company charge some bullshit consulting or IP licensing fees and deduct that amount but then that just sounds like plain old tax fraud.

usually its treated as a holding company, it can then buy your current assets at low cost. it could also be a management company that(optionally) manages that holding companies holdings and collects fees. you then use the income to invest in other countries so the income never comes back through your home country. you can work for your company for free, so any services you do for its clients, can pay directly to it.

its not overly complicated as long as you know and understand the rules in each stop along the way and its perfectly legal.

not sure i would call belize the safest place, but any stretch. a common place yes, safest, far from it.

Your ideas are intriguing to me, and I wish to subscribe to your newsletter.

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