Where to Stash Your Cash Legally

Offshore Financial Centers of the World

Seventh Edition

Robert E. Bauman, JD
THE SOVEREIGN SOCIETY, Ltd.
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The Sovereign Society advocates full compliance with applicable tax and financial reporting laws.
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Where to Stash Your Cash Legally
Offshore Financial Centers of the World

Seventh Edition

Robert E. Bauman, JD
 About the Author

Robert E. Bauman, JD

Bob Bauman, legal counsel to The Sovereign Society, served as a

member of the U.S. House of Representatives from 1973 to 1981
representing the First District of Maryland. He is an author and
lecturer on many aspects of wealth protection, offshore residence
and second citizenship.
A member of the District of Columbia Bar, he received his juris
doctor degree from the Law Center of Georgetown University in
1964. He has a B.S. degree in International Relations from the
Georgetown University School of Foreign Service (1959) and was
honored with GU’s Distinguished Alumni Award.
He is the author of The Gentleman from Maryland (Hearst Book
Publishing, NY, 1985); and the following books, all published by
The Sovereign Society: The Complete Guide to Offshore Residency,
Dual Citizenship and Second Passports (10 editions, 2001–2012);
The Offshore Money Manual (2000); editor of Forbidden Knowledge
(2009); Panama Money Secrets (2005); Where to Stash Your Cash
Legally: Offshore Financial Centers of the World (7 editions through
2013), Swiss Money Secrets (2008); How to Lawyer-Proof Your Life
(2009). His writings have appeared in The Wall Street Journal, The
New York Times, National Review, and other publications.
 Author’s Comment

A
sk any reasonably intelligent person in the United States
(or many other countries) what they know about “offshore”
financial activity and usually you will get an answer loaded
with uninformed, even preposterous theories.
Offshore, you will be told, is an evil place populated with secret
numbered bank accounts, sinister con men and fraudsters, money
launderers, drug kingpins, rapacious bankers and corrupt foreign
politicians on tropical islands grasping for briefcases full of cash
bribes.
Thanks to U.S. Internal Revenue Service propaganda, a complicit
and lazy “news” media, far too many potboiler novels, sensational
Hollywood movies and TV shows, the popular notion of “offshore”
has been carefully crafted as an international sinkhole of tax evasion,
fraud, and criminally corrupt, greedy officials.
Too few people realize that offshore financial centers (formerly
known as “tax havens”) serve as vital links in international finance,
banking and investment, as well as providing much needed low
tax competition for the high tax, deficit spending, hugely indebted
welfare states.
For a quarter century, I have been researching and writing about
offshore financial matters. That has included topics such as tax ha-
vens and asset havens, offshore banking, asset protection trusts,
international business corporations, family foundations, limited lia-
bility companies, financial privacy, residence and second citizenship
and about the general state of the offshore financial world.
Even though I had earned a degree in international relations,
a law degree, served in the Maryland State Senate and also spent
eight years as a member of the U.S. House of Representatives, when
I began this work I quickly discovered how little I knew about the
real “offshore” world.
 My early and limited acquaintance with “offshore” matters had
created a similarly erroneous impression that too many people have
to this day.
For 25 years or more, tax-hungry politicians from high-tax wel-
fare states — including the U.S. government, together with their
global leftist political allies — have mounted a series of largely false
attacks on the offshore financial world. They intentionally have
smeared offshore financial centers as venues of tax evasion, drug
money and terrorist cash. At one point these attacks even advanced
the preposterous claim that tax havens caused the 2008–2012 global
housing and banking recession.
Their collective motive is obvious: the politicians want to tax
more so they can spend more, hoping to buy popular support,
thus enabling continued power and the continuation of their failed
policies.
Then too, many American attorneys, accountants, insurance
agents and stock brokers have a vested interest in keeping their
clients close to home, thus they warn against going offshore. They,
like the U.S. Internal Revenue Service, want to keep you and your
money where they can get to it.
Don’t be fooled.
In spite of recent restrictions it is fully legal for Americans to
bank, invest, and purchase real estate, annuities and life insurance
offshore. When this fog of manufactured lies is cleared away, the
truth about “offshore” opportunities and profits is very impressive.
But finding the truth for the first-time offshore adventurer can
be a frustrating, discouraging task and, if you get burnt, a very short
and unpleasant journey. Care is called for because there are many
offshore fraudsters waiting to fleece the unwary.
The offshore world offers Americans few tax savings, certainly
not as many as slick promoters claim. That’s because American
citizens and U.S. resident aliens are taxed on their worldwide in-
come, while most other nations impose “territorial” taxes, mainly on
earnings within their own national borders. For those more sensible
countries, taxes end at the border.
But going offshore for Americans does offer some limited tax
deferral and, most of all, in this lawsuit-happy age, it offers ironclad
asset protection. It also guarantees far more financial privacy (and
yes, secrecy) than can be found in many other countries or most
certainly in the United States, where the so-called PATRIOT Act
has destroyed all financial privacy.
During the 14 years since the first edition of this book appeared,
U.S. politicians and government bureaucrats have become an army
of control freaks when it comes to Americans’ offshore financial
activity. They have imposed an entangling web of border controls,
travel controls, currency controls, foreign investment and banking
controls, all the while repeatedly implying that “going offshore” is
somehow illegal (it is not) and even unpatriotic.
The politicians shamelessly used the New York City and Washing-
ton, D.C., terror attacks on September 11, 2001, as an excuse for even
greater control. The continuing 2008 global financial crisis serves as
yet another pretext not only to impose more financial controls, but to
spend trillions of taxpayers’ dollars to bail out banks and businesses,
foreign and domestic, greatly increasing the ranks of those who are
indebted to the existing system of Big Brother government.
Counter-productive government controls and regulations stifling
the American economy have grown exponentially. The invasion of
every aspect of law-abiding Americans’ privacy, we now know, is
carried out in secret under the PATRIOT Act by the U.S. National
Security Agency (NSA) and numerous federal, state and local police
agencies. The record of the NSA and the FBI in the last decade is
one long list of abused powers and unconstitutional acts, followed
by apologies and promises to sin no more — but only when they
get caught.
 A few years ago the U.S. Justice Department’s Inspector General
Report criticized the FBI abuse of “national security letters” (NSLs)
in obtaining thousands of telephone, business and financial records
without prior judicial approval. Although they cited the PATRIOT
Act as their authority, the DOJ found the FBI illegally issued more
than 20,000 NSLs, most having nothing to do with terrorism.
Thanks to the courageous revelations of former NSA analyst,
Edward Snowden, the world now knows that the NSA, at least since
2005, has been tracking, reading, listening and recording everyone’s
phone calls, emails as well as our financial and other records, a mas-
sive violation of our privacy.
U.S. government civil asset forfeiture seizures are aimed mainly
at innocent people never charged with a crime, as state and federal
police agencies seek easy sources of increased income. Forfeiture
revenue gains soared from $27 million in 1985 to $556 million in
1993. In 2012 the U.S. Department of Justice took in nearly $4.2
billion in forfeitures, a record, and that does not include millions
more in state and local forfeiture income.
So what does all this have to do with offshore financial havens
and your ability to “go offshore”? If you cannot answer that question
easily you may be in trouble already.
Wherever you live, thankfully “offshore” is a place well outside
the immediate jurisdiction of your home country’s government and
its executive and judicial agencies.
When you move some or all of your cash, assets and investments
offshore, you place them on the other side of a political and legal
wall that stands as a formidable obstacle. Offshore serves as far more
than a speed bump to lawsuits, claims, disgruntled business partners
or a spouse, family members and even to your government and its
regulations or unexpected laws.
Asset protection planning means taking steps well in advance of
potential trouble to protect your assets, property, savings, invest-
ments, stocks, businesses, retirement and inheritances. Advance
planning against unexpected threats takes on a new meaning con-
sidering the events in the United States and throughout the world
today. History teaches that things can and do change quickly. Don’t
ever think you are immune from financial and personal harm.
That’s what this book is all about — legal ways for you to protect
your wealth, invest and increase your money, save on taxes make
your home and find financial privacy — and peace of mind — by
“going offshore.”
I will tell you the who, what, why, when and where of the off-
shore world — based on my personal experiences, and I will connect
you with the many experts with whom The Sovereign Society works
across the globe; the same trusted professionals you’ll find listed in
these pages for your own personal use.
Welcome to the offshore world,

Robert E. Bauman, JD
Delray Beach, Florida
November 2013
 Table of Contents

Where to Stash Your Cash Legally

Offshore Financial Centers of the World

About the Author.....................................................................4

Author’s Comment...................................................................5
Chapter One: A Safe Haven Offshore = Peace of Mind...........13
Why Go Offshore?................................................................ 17
Privacy as a Human Right..................................................... 21
Offshore Legal Entities.......................................................... 23
Investment Profits Offshore.................................................. 24
Avoiding Roadblocks to Prosperity........................................ 27
Exodus Offshore Grows........................................................ 30
Diminished Privacy in the Digital Age ................................. 34
Chapter Two: Creative Offshore Financial Strategies..............37
Make Your Home Base in a Tax Haven ................................ 38
Dual Citizenship................................................................... 42
Expatriation: The Ultimate Estate Plan................................. 52
An Offshore Bank Account................................................... 70
The Offshore Asset Protection Trust (APT)........................... 97
Earn $95,200 a Year — U.S. Tax-Free................................. 104
Offshore Variable Annuities................................................ 107
Offshore Investing.............................................................. 118
Interenational Business Corporations (IBC)........................ 123
Using Tax Treaties for Profit .............................................. 128
Chapter Three: What You Need to Know About Offshore Havens
and Financial Centers.......................................................... 147
Different Havens, Different Uses........................................ 150
No-Tax Havens................................................................... 151
 Tax Havens Conitional Surrender....................................... 166
Chapter Four: Leading Offshore Financial Centers (OFCs).171
Switzerland......................................................................... 173
Liechtenstein..................................................................... 195
Panama.............................................................................. 209
Uruguay............................................................................. 225
Hong Kong ........................................................................ 235
Singapore .......................................................................... 249
Chapter Five: The United Kingdom.....................................259
U.K. Bank Privacy.............................................................. 263
Taxes on Former Residents.................................................. 269
U.K. Investment Trusts....................................................... 271
Chapter Six: United Kingdom’s OFCs .................................275
Jersey.................................................................................. 280
Guernsey............................................................................ 288
The Isle of Man................................................................... 291
Chapter Seven: Special OFCs in Europe...............................299
Austria................................................................................ 299
Andorra............................................................................. 308
Luxembourg....................................................................... 318
Monaco.............................................................................. 327
Campione d’Italia............................................................... 334
Cyprus............................................................................... .338
Denmark............................................................................ 346
Malta ................................................................................. 350
Chapter Eight: Asia, Mid-East, Africa .................................365
The Cook Islands................................................................ 365
Mauritius............................................................................ 377
Samoa................................................................................. 382
The Seychelles..................................................................... 385
Dubai................................................................................. 389
Chapter Nine: Atlantic/Caribbean OFCs.............................397
 Anguilla.............................................................................. 403
The Bahamas....................................................................... 406
Barbados............................................................................. 414
Belize.................................................................................. 418
Bermuda............................................................................. 426
British Virgin Islands.......................................................... 434
Cayman Islands.................................................................. 438
Nevis.................................................................................. 447
Saint Vincent & the Grenadines ........................................ 457
Turks & Caicos Islands....................................................... 461
United States Virgin Islands................................................ 478
Chapter Ten: Immigrate to Canada,
Leave U.S. Taxes Behind.......................................................479
About Canadian Taxes........................................................ 483
Tax-Free New Resident Loophole....................................... 484
Canadian Immigration Process........................................... 490
Creating an Offshore Trust.................................................. 497
Chapter Eleven: The United States
as an Offshore Tax Haven ....................................................507
Offshore Corporation Loophole.......................................... 511
What Does Work................................................................ 516
Appendix 1 Recommended Attorneys..................................531
Appendix 2: Legal and Investment Glossary.........................535
 Chapter One

A Safe Haven Offshore =

Peace of Mind

T
he reasons and uses of an offshore haven; the ways and
means of moving your assets and wealth offshore to a tax-
free or low-tax jurisdiction; strategies and the places where
you can invest with maximum profitability, minimum taxes and
greater financial privacy.
Twenty years ago when I first began writing about the offshore
world, the vast technological changes that now have created a new
world economic structure were just taking hold.
I recall the late Bob Kephart, the founder of The Sovereign So-
ciety, returning from Switzerland in the late 1990s and saying with
disgust, “Those Swiss banks don’t even have email yet!”
Today, we have a technologically advanced global system that
offers huge financial opportunities based on instant communica-
tions, interlinked databases, electronic commerce and digital cash
flows. And, in many ways, this system has shifted power from the
monopolistic policies of the high-tax nation state to the beleaguered
individual citizen, greatly increasing personal financial freedom and
the chance for profit — if you know how to navigate.
In turn, this new global freedom has caused a reaction by grasp-
ing governments everywhere, trying desperately to keep control over
their citizens and eager to know what they are doing, especially with
their finances.
16 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

The technology that makes these global systems available for your
use, we now know also are being used by governments for constant
surveillance in an attempt to track your every move, well beyond the
official reports you are required by law to file with the government.
As part of Big Brother’s plans to control its citizens and their
money, political leaders in major nations will use almost any excuse
to attack and curb offshore financial activity. They, along with their
allies in the “news” media, have sought to portray “tax havens” as
secretive places where crime and tax evasion is rampant. Even more
ridiculous, they blamed offshore financial centers for somehow caus-
ing the 2008 global, five-year economic downturn that, in fact, was
caused by their own unwise economic policies exploited by greedy
bankers in New York, the City of London and elsewhere.
To a degree, these big government Big Brothers have succeeded.
The political Left has so tarnished the phrase “tax haven” that these
besieged offshore jurisdictions now prefer to be called “offshore
financial centers,” in fact, a far more accurate description.
Small wonder many people don’t have a clue about what “off-
shore” actually means, while too many others have gained the worst
possible impression of unjustifiably smeared offshore financial cen-
ters (OFCs).
A few clueless people even seem unaware of the major global
financial revolution that has taken place. This book goes beyond
the clues and reveals the secrets. It tells you the truth about offshore
financial activity and OFCs, and how to profit offshore and what
you can do personally to reap the benefits legally.
By now, most people understand the meaning of the huge advanc-
es in digital technology, satellite communications and the vast expan-
sion of the Internet. With social networking, texting, smart phones,
tweeting, iPads and iPhones, today’s economic news travels fast.
Insider information is no longer confined to Wall Street and the
City of London. Waves of news and rumors ripple daily through
A Safe Haven Offshore = Peace of Mind 17

world time zones and stock markets as 24/7 media covers events
live — an example of the irresistible technological advances that have
forced a totally new operational reality on financial and banking
systems — and on governments.
In many respects, all this constitutes a government bureaucrat’s
worst fear — hundreds of millions of instant communication devices
and computers linked worldwide, electronic banking and online
investment accounts, “smart card” money, easily available email
encryption; free communications, much of it still unmediated by
governments.
An astute observer put it this way: “You get untraceable banking
and investment, a black hole where money can hide and be laun-
dered, not just for conglomerates or drug cartels, but for anyone.”
(That may be true, but my advice is, “Don’t try it.” I will expand
on my warning later.)
You can see why government bureaucrats, especially the tax col-
lectors, are constantly in a frantic state. The freedom of this new,
world money system runs counter to all the Big Brother control
freak, socialist policies that have bled taxpayers and crippled pros-
perity for most of the last 100 years. This official fear of losing con-
trol is what, in part, spurs the incessant attacks on offshore financial
centers — and on those of us who use them legally to our advantage.
As the world now understands, the government is doing all it can
to stifle these liberating trends. But I believe they will fail.

Why Go Offshore?
Until relatively recently, most people thought “personal finance”
meant checking and savings accounts, home mortgages and auto
loans. Even now, with available international offshore mutual and
hedge funds — some of them successful even in the face of world
economic turmoil — relatively few investors take advantage of avail-
able global diversification.
18 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

What follows are only some of the many good reasons to “go
offshore.”
1. Investment diversification. Many of the world’s best invest-
ments and money managers and bankers will not do business with
U.S. citizens directly. This anti-American client attitude has stiffened
in reaction to U.S. government policies since the 2008 UBS tax
evasion scandal and the adoption by the U.S. Congress in 2010 of
the Foreign Account Tax Compliance Act (FATCA).
Foreigners, and many foreign banks, have made the choice that
it is easier and less costly to do business with the rest of the world
than it is to comply with the draconian rules of the U.S. govern-
ment, especially those of the U.S. Internal Revenue Service (IRS),
which now claims to have worldwide jurisdiction over every bank
and financial institution that has American clients.
It is a fact that, by going offshore, you can gain direct legal ac-
cess to U.S.-restricted investments unavailable in the United States.
Relatively few foreign securities are traded on U.S. stock and other
markets, representing a tiny percentage of the securities traded on
world markets. The only practical way to buy these offshore shares
is through an account at a foreign bank or with an offshore stock
broker. In these pages you will find the names and contact informa-
tion for reliable banks, brokers, investment managers, insurance and
annuity advisors and attorneys, all professionals who still welcome
American clients.
2. Higher returns. There are opportunities in traditional foreign
financial markets, such as stocks sold only on foreign exchanges
that offer much higher returns than generally are available in U.S.
markets. For one example, through 2012 the Canadian-based Sil-
ver Wheaton (SLW), the largest metals streaming company in the
world, gained 746% in value since 2005 in Canadian dollars, or
952% in U.S. dollars.
3. Currency diversification. Investors wishing to stabilize their
A Safe Haven Offshore = Peace of Mind 19

portfolios can protect their wealth against the fluctuating U.S. dollar
simply by holding currencies the experts recommend, such as the
Norwegian kroner, the Australian dollar and the Singapore dollar,
all good long-term currencies, when stock markets remain soft.
Past currency favorites such as the Swiss franc and the Japanese
yen now pose more risk due to central bank intervention. For those
interested in currency trading, consider the several Sovereign Society
investment research newsletters.
While U.S. investors can purchase foreign currencies through a
few U.S. banks, offshore banks generally offer higher yields, low-
er fees and lower minimums. Foreign currency opportunities are
plentiful, such as earning nearly 13% on the declining U.S. dollar
versus the euro in one recent year. For decades, the U.S. dollar has
been losing value in relation to stronger currencies. In 1970, a U.S.
dollar would purchase 4.5 Swiss francs but in 2013, the U.S. dollar
equals only one Swiss franc. Since 1971, the franc has appreciated
nearly 400% against the U.S. dollar.
4. Safety and security. Starting in the 1980s, the United States
experienced a wave of bank and savings and loans failures at a rate
unmatched since the Great Depression of the 1930s. The under-
writing of U.S. thrifts and S&Ls by the financial industry and the
American taxpayer cost a staggering $153 billion. The disaster was
a major threat to the U.S. financial system, and one of the most
expensive financial sector crises the world had seen.
Beginning in 2008–2009 a government-prompted U.S. hous-
ing crisis in subprime mortgages and unregulated derivative in-
vestments, augmented by Wall Street’s reckless greed, combined to
produce another American banking crisis that recalled the misery of
that same Great Depression. Rescuing many of the major U.S. banks
from themselves required trillions of taxpayer dollars in bailouts.
In contrast, the offshore banks I recommend in these pages were
not, and are not, exposed to risky investments, such as subprime
20 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

mortgages, Third World debt and highly leveraged derivative in-

vestments.
Indeed, we at The Sovereign Society take pride in the fact that
for 15 years we have warned against using certain offshore banks,
including by name UBS and Credit Suisse. We have done our due
diligence and the recommended banks in these pages are well-capi-
talized and conservatively managed — and they welcome American
clients at a time when many offshore banks do not. You can tell
them The Sovereign Society sent you.
5. Asset protection. Lawsuits continue in epidemic proportions
in America and tort reform gets nowhere in the U.S. Congress
where millions of dollars in trial lawyer’s political action committee
contributions hold sway.
In America, if a creditor gets a judgment against you in the state
where you live, that judgment may be easily enforced. In contrast,
if you invest or bank in a suitable offshore jurisdiction, even Swit-
zerland, you can be configured financially to be essentially judg-
ment-proof.
The prudent use of offshore havens for safekeeping some of your
cash and assets provides U.S. persons with a greatly enhanced ability
to protect them from the threat of lawsuits, civil forfeiture, busi-
ness failure, divorce, exchange controls, repressive U.S. legislation,
lengthy probate and political instability. Going offshore, where pri-
vacy laws are strict, largely avoids the vast U.S. asset-tracking net-
work, which permits private or official investigators to easily identify
the unencumbered assets of a potential defendant.
6. Financial privacy. Let’s face the truth: since the adoption of
the so-called PATRIOT Act in 2001, in so far as the government is
concerned, personal and financial privacy is dead in America.
Yet many people naturally want protection from the prying eyes
of business partners, estranged family members and identity thieves
surfing the Internet. Financial privacy can be the best protection
A Safe Haven Offshore = Peace of Mind 21

against frivolous lawsuits that end with big judgments. If you don’t
appear to have enough assets to justify the time and expense of an
attack, a plaintiff’s attorney won’t see you as an easy target.
Simply put, assets placed “offshore” are off the domestic as-
set-tracking “radar screen.” The United States is one of the few
nations lacking a federal law that protects bank or securities ac-
counts from disclosure except under defined circumstances. Many
disclosures that would be illegal in other countries, either under
international agreements such as the European Privacy Directive, or
under national laws guaranteeing financial secrecy, as in Switzerland
or Panama, are commonplace in the United States. That fact makes
“going offshore” even more important.
The six advantages I just described above have especially strong
application when it comes to placing your cash and other assets
offshore.

Privacy as a Human Right

For citizens and foreign residents of the United States, discussion
of the issue of personal and financial privacy must start with the
fact that under the draconian terms of the 2001 PATRIOT Act,
financial privacy in the United States is indeed dead and gone. The
government now has the power to obtain financial information in
secret about anyone — and to confiscate your wealth without notice.
Because of 2013 revelations concerning the secret actions of the Na-
tional Security Agency (NSA) we now know that this questionable
2001 “law” is augmented by massive government police surveillance
of all kinds, much of it of questionable legal authority.
Small wonder that many millions of Americans do business off-
shore to take advantage of still strong privacy laws in places such as
Switzerland, Panama, Singapore, Austria and Luxembourg.
Of course, the usual cry by those who advocate ever-increased
government surveillance of not just our finances, but every aspect
22 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

of our lives, is that old saw: “If you aren’t doing anything wrong,
what do you have to hide?”
It is absolutely wrong to characterize this debate as “clean money
versus dirty cash” or “security versus privacy””
Privacy is an inherent human right, and a requirement for main-
taining the human condition with dignity and respect. The real
choice is personal freedom and liberty versus governmental control
of our lives and fortunes.
Tyranny, whether it arises under the threat of terrorist attack,
alleged solutions to banking problems, or under any form of unre-
lenting domestic official scrutiny, is still tyranny.
Liberty requires security without intrusion — security plus priva-
cy. Widespread surveillance, whether by police or nosy bureaucrats,
in whatever form it takes, is the very definition of a police state.
And that’s why we should champion privacy, both personal and
financial, even when we have nothing to hide.
Having said that, I must acknowledge that the world now exists
in an era when terrorism is real, but this also has become a conve-
nient excuse for power hungry politicians in almost every nation.
Official “anti-terrorism” policies are expressed in a host of national
laws that severely curtail financial and personal privacy, assuming we
are all terrorists. These so-called “anti-terrorist” laws were preceded
by other broad U.S. laws that have failed the original premise of
fighting drugs and combating money laundering and other crimes.
But in America, the combined effect of this onslaught of laws
has all but abolished any personal or financial privacy — at least for
those accused or suspected of crimes of any nature — and these days
that can be anyone, with or without probable cause. Governments
now have much greater powers in deciding who are “suspects” and
the list of crimes alone based on paperwork or failure to report
grows ever longer.
But please understand me: for the average offshore investor or
A Safe Haven Offshore = Peace of Mind 23

person otherwise financially active offshore, there is little to fear

from anti-crime laws that compromise privacy.
So long as you obey the financial reporting laws and tax obliga-
tions imposed on you by your home nation, you will remain in the
clear. Professional advice will help and protect you in this essential
education and in these pages we will tell you how to meet those
obligations and who can assist you in doing so.
I will repeat in these pages an important reminder — the finan-
cial privacy and bank secrecy laws of many other nations are still
very much stronger than those in the United States. In America,
the PATRIOT Act, FATCA and other draconian laws essentially
have abolished the right to privacy. Privacy laws in other countries
can be a definite advantage for you — and an added legal shield for
your financial activities.

Offshore Legal Entities

By now the financially well-informed are comfortable with off-
shore bank accounts which they routinely use as investment vehicles.
But the use of some of the more complicated offshore techniques,
such as the international business corporation (IBC), a foreign-based
asset protection trust (APT), a private family foundation or a limited
liability company (LLC) have seen far less use.
While using these legal entities takes a bit more time and effort,
they can greatly enhance your choice of financial strategies and
give you increased protection and investing effectiveness. In these
pages I explain these proven strategies and show you how to use
them. You may find it difficult to believe, but each of these strat-
egies in their basic form can cost less than $3,500 to implement,
as I’ll explain.
One more thought: perhaps you might consider relocating your
personal residence offshore in a tax haven nation that welcomes
foreigners with tax exemptions and special privileges that make life
24 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

easier and less complicated. I will explain which nations, such as

Panama, Uruguay and Singapore, offer such incentives and how you
can take advantage of them.

Investment Profits Offshore

For the past two decades, the trend continues towards more for-
eign investment. In 1980, less than 1% of U.S. pension fund assets
were invested abroad. In 1993 it was only 5%. By 2009 that figure
had risen to 26%. In addition to pension funds, mutual funds and
stock purchases, banks bought into emerging markets in a very big
way, especially European and Japanese banks.
“When history books are written 200 years from now about the
last two decades of the 20th Century,” former U.S. Treasury secre-
tary, Lawrence Summers, told The New York Times, “I am convinced
that the end of the Cold War will be the second story. The first story
will be about the appearance of emerging markets — about the fact
that developing countries where more than three billion people live
have moved toward the market and seen rapid growth in incomes.”
Of course, that optimistic comment came well before the global
recession of 2008 in which emerging market stock values sank along
with those in other world markets. Even so, after bruising global
downturns in past history, the U.S. economy usually has led the
world back to growth, but developing countries could well be the
engine that powers future recovery.
As of this writing, despite fears that they would be among the
biggest victims of the financial crisis, emerging market giants
like China, India and Brazil are still growing at a reduced rate,
even as Europe, the United States and Japan lag behind in their
recovery.
As historian and professor Niall Ferguson noted: “The globaliza-
tion of finance played a crucial role in raising growth rates in emerg-
ing markets, particularly in Asia, propelling hundreds of millions of
A Safe Haven Offshore = Peace of Mind 25

people out of poverty.”

Cross-border investments have proven profitable, despite tem-
porary setbacks. What used to be tagged “Third World” investment
funds have become the more appealing “emerging market funds.”
The global economy of today is very different from past times.
As depressed as it may have been in recent years, finance and tech-
nology still dominate the world economic scene. In October 2012,
average daily turnover in global foreign exchange markets was es-
timated at US$4.4 trillion, down 7% over the previous year. The
volume of foreign exchange trade has increased by roughly 160
times in the last 30 years.
We all know that the fires of the global credit crisis that first ap-
peared as a wisp of smoke in the U.S. mortgage market turned into
a global firestorm that cut through the housing, bond, and stock
markets. Between 2007 and mid-2011, U.S. households alone suf-
fered a 29.5%, $10.06 trillion absolute drop in the value of housing
assets. In those glory days before the crash, investment capital had
exploded worldwide. In 2006, mutual funds, pension funds, and
other institutional investors controlled more than US$30 trillion,
15 times the comparable 1980 figure.

Boom and Bust

According to the U.S. Census Bureau’s 2013 Statistical Abstract
for Banking, Finance and Insurance, the U.S. mutual fund indus-
try held more than $13 trillion in assets on January 1, 2013. This
exceeds the total net assets on January 1, 2009 of $12.02 trillion,
indicating some degree of recovery.
At one time, autos, steel and grain dominated world markets,
but more recently trade in stocks, bonds and currencies has replaced
them. The global consulting firm McKinsey & Company in 2013
produced some disturbing numbers that tell us what the situation
is today. According to Financial Globalization: Retreat or Reset, a
26 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

recent McKinsey & Company report:

“More than four and a half years after the financial crisis began,
recovery has barely started, despite a rebound in some major equity
indexes. Growth in financial assets has stalled, while cross-border
capital flows remain more than 60% below their 2007 peak.”
In McKinsey & Company’s Mapping Global Capital Markets
2011, they state:
“The 2008 financial crisis and worldwide recession halted a
three-decade expansion of global capital and banking markets. By
2012, growth had resumed, fueled by expansion in developing econ-
omies but also by a $4.4 trillion increase in sovereign debt. The
total value of the world’s financial stock, comprising equity market
capitalization and outstanding bonds and loans, increased from
$175 trillion in 2008 to $212 trillion at the end of 2010 surpassing
the previous 2007 peak.” The latest world’s financial stock value was
sitting at $225 trillion at the start of 2013.
Also from Financial Globalization: Retreat or Reset, a recent McK-
insey & Company report:
“Global financial assets, or the value of equity-market capital-
ization, corporate and government bonds, and loans, have grown
by just 1.9% annually since the crisis, down from average annual
growth of 7.9% from 1990 to 2007. This slowdown is not confined
to deleveraging advanced economies; surprisingly, it also extends to
emerging markets.
Cross-border capital flows have collapsed, falling from $11.8 tril-
lion in 2007 to an estimated $4.6 trillion in 2012. Western Europe
accounts for some 70% of this drop, as the continent’s financial
integration has gone into reverse. Eurozone banks have reduced
cross-border lending and other claims by $3.7 trillion since 2007,
and central banks now account for more than 50% of capital flows
within the region.”
Regardless of boom or bust, what must be remembered is that
A Safe Haven Offshore = Peace of Mind 27

wealth has become stateless, circulating wherever the owner finds

the highest return and the greatest freedom. In other words, cash
without a country.
From 1970 to 2010, spending by investors in industrialized na-
tions on offshore stocks increased more than 200 times over, while
national capital markets merged into one global capital market.
As stock markets close in London, they open in New York and as
American exchanges end the day on the U.S. west coast, markets in
Hong Kong, Singapore and Tokyo come to life.
Unfortunately, this same interconnected global market also helps
to spread economic downturns faster than the speed of the bird flu
virus.
In the global recession of 2008–2009, investors, banks and funds
in many countries lost cash and value because of unwise foreign
investments in so-called “toxic” unregulated subprime mortgages,
stock swaps, derivatives and other esoteric investment vehicles, the
shrunken value of which is a continuing problem.
Add to this world economic indigestion the problem of billions
in sovereign debt of profligate spending by European countries
such as Ireland, Greece, Spain, Italy, Cyprus and Portugal that owe
massive debts to shaky banks in France, Germany, and Luxembourg.

Avoiding Roadblocks to Prosperity

At a time when some politicians on the Left are demanding more
government regulation such as the Foreign Account Tax Compli-
ance Act of 2010 (FATCA), few realize that information about most
offshore investments, profitable or otherwise, long has been denied
to U.S. persons who want to invest offshore.
Cumbersome rules and regulations imposed years ago by the
U.S. government on foreign investment funds and banks lock out
foreign fund managers. Unwilling to waste time and money on
bureaucratic registrations until recently, most offshore funds would
28 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

not even do business with anyone who had a U.S. mailing address.
It is always convenient for America’s Left political class to blame
“deregulation” for every U.S. financial crisis and the excesses of the
free market. Not only does that pass the buck, but it also creates a
justification for still more regulation. The question is: Who regu-
lates the regulators? Until that question is answered satisfactorily,
calls for more regulation are symptoms of the very disease they
claim to cure.
One of the main obstacles has been restrictive U.S. securities
laws. Any “investment contract” for purchase of a security sold in
the United States must be registered with the U.S. Securities &
Exchange Commission (SEC) and often with similar state agencies.
This is an expensive process. The U.S. also requires far more stock
disclosure by sales entities than most foreign countries, burdening
the process further with U.S. accounting practices that differ from
those used abroad.
International fund managers are practical people who keep their
eyes on the bottom line. Many correctly calculate that operating
costs in the U.S. would wipe out any possibility of a profit margin.
In an effort to meet new and more stringent U.S. standards,
several of the Sovereign Society offshore investment and banking as-
sociates voluntarily, and at considerable expense, have qualified and
become registered SEC investment advisers under Section 202(a)
(11) of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-2(a)
(11)) that defines “investment advisers.”
Under SEC rules this means that each person or entity must
file full information on their professional activity and business. It
also allows foreign advisers who register, to contact freely and visit
American clients. Investors can access registration and other com-
pany filings using the SEC electronic system known as EDGAR.
Ironically, many mutual funds and hedge funds with top per-
formance records are run from offices located in the U.S. by U.S.
A Safe Haven Offshore = Peace of Mind 29

residents, but they do not accept investments from Americans. To

avoid SEC red tape and registration costs, investment in these funds
is available only to non-U.S. persons.
But all this is changing as many foreign financial firms and banks
are registering with the U.S. Securities and Exchange Commission
in order to serve American clients. In these pages I will identify such
SEC-registered firms that work with The Sovereign Society.

S.E.C. Goes Worldwide

In the UBS Swiss bank scandal exposed in 2007, the IRS played
a major role in investigating U.S. clients who evaded taxes and this
anti-tax evasion campaign got major media coverage.
Much less notice was given to the fact that the U.S. Department
of Justice charged that the services UBS rendered in Switzerland
amounted to the bank’s staff acting as unregistered investment advis-
ers and broker-dealers in violation of the U.S. Investment Advisers
Act of 1940 and of the U.S. Securities and Exchange Commission
(SEC) rules.
Using this novel extraterritorial approach, the SEC sought to
extend its jurisdiction to include any foreign person anywhere in
the world who dares to advise Americans about investing.
The SEC claims that unless the adviser first qualifies and registers
with them, they are engaged in illegal, even criminal conduct.
In the final 2010 settlement, UBS paid a $718 million fine to
the IRS on the tax evasion charges. It also paid $200 million to the
U.S. based on the SEC charges. UBS was barred permanently from
acting as investment advisers or broker-dealer for American clients
in Switzerland.
As a result of the successful U.S. government attacks and the
fines levied against UBS, a growing number of offshore banks have
established special, separate SEC-qualified investment banking units
for American clients only. Some independent offshore investment
30 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

advisers also have registered with the SEC.

As part of your due diligence, check to see if the offshore bank
you are considering is SEC registered. In the section on Offshore
Banking (starting on page 70) I have listed foreign financial insti-
tutions and independent investment advisers that are now SEC
registered.
Fortunately, there are ways for U.S. citizens to avoid these gov-
ernment obstacles. In these pages, I explain how you can access
such offshore investments, legally and safely, using offshore entities
such as a trust, a limited liability company, international business
corporation, or even a private family foundation, located in a haven
nation.
Or you may use the simple device of establishing a foreign trad-
ing account with an offshore broker. I’ll have more to say about that
in Chapter Two.

Exodus Offshore Grows

The revolutions within individual countries’ economies include
an increasing number of people escaping from leech-like national
tax systems that financially prop up dying welfare states.
In the past, it was not uncommon for some of the wealthiest
French or Americans to flee their homelands in an effort to escape
excessive taxation — or even wealthy Russians and Chinese avoiding
political instability. However, today’s sovereign individual includes
not just millionaires and billionaires, but those of more modest
wealth who have joined this migratory exodus.
People in ever-greater numbers are seeking to start a new life
in countries where hard work is rewarded, not punished by wealth
confiscation — places where business is free to make its own deci-
sions, without regulatory predators hovering over every attempt at
free enterprise.
The numbers of U.S. citizens leaving the land of the free (and
31

heavily taxed) is growing, according to U.S. Treasury figures. In

2011, more than 1,700 people renounced U.S. citizenship — more
than twice the 2009 figure. In the first quarter of 2013, 679 people
renounced U.S. citizenship. U.S. News & World Report estimated
that each year three million U.S. citizens and resident aliens simply
leave America to make new homes in other nations. Admittedly,
this surprising number of people leaving must be compared to the
millions clamoring to get into the U.S. from even more restrictive
nations.
But there’s a huge difference in the economic status of these two
groups. Those seeking admission are, by and large, poverty-stricken
persons desperately trying to better their lot with new lives in what
they see as the Promised Land. They’ll settle for low paying jobs,
welfare, free education for their kids and U.S. government-subsi-
dized housing and health care.
Not all of these people are on low income. Chinese millionaires
and billionaires are flocking to the United States in record numbers.
In 2011, “Investor Visa” was used by more than 2,000 Chinese
citizens who sought entry and, ultimately, citizenship in the United
States. In return for a modest investment of US$500,000 to US$1
million and the creation of a number of jobs, this official U.S. pro-
gram allows foreigners and their families permanent U.S. residence.
Those Americans seeking to escape the growing tyranny aimed
right at them by the United States government are typically middle
class and wealthier people. One estimate is that the loss of three mil-
lion people annually equals a loss of 2% of the national workforce
and $136 billion in income. And it is this hemorrhaging of fleeing
Americans who take with them the lion’s share of the U.S. tax base.
These are among the very top 5% of the people who pay for all of
those programs those new (and often illegal) immigrants covet.
Increasingly, the wealthy correctly perceive that they are under
attack by their own government, so they take the only rational
32 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

option left open to them. They’re taking their wealth and leaving.
Look back on multiple government attacks on wealth during the
last decade. What you will find is U.S. congressional legislation that
has all but abolished domestic financial privacy and reversed the bur-
den of proof forcing the accused to prove his innocence. These laws
allowed billions of dollars of property confiscation by police under
civil forfeiture fiat. Taken together they were all parts of the various
failed wars against drugs, money laundering and anti-terrorism.
But, as they say, “Old habits die hard.”
Despite the occasional financial excursion abroad, human nature
dictates that most folks prefer to make and save money at home.
We tend to be comfortable with the familiar and less-threatening
domestic economy of our home nation.
Case-in-point: Over one-third of the U.S. population or nearly
110 million out of 313 million Americans has a passport. That’s
more than double the number of US passports in 2000 (48 mil-
lion) and around 15 times 1989’s 7 million. Even so  that’s half
of Canada’s rate at 60% and far less than the United Kingdom’s
75%. The percentage of Americans with passports, a number that
was in the teens just a few years ago, has spiked since the Western
Hemisphere Travel Initiative was adopted in 2007. That requires
American, Canadian and Mexican travelers to present documents
showing citizenship when entering the United States.

Taxes Drain Wealth

People who move some or all of their assets offshore simply rec-
ognize the present reality — that government at all levels is engaged
in the systematic destruction of hard-earned wealth.
It’s what I call the “Nazification” of the economy. That’s certainly
true in the United States, the United Kingdom and too many Euro-
pean Union (EU) nations. Sadly, in ever greater numbers, Americans
must look to a select list of foreign lands for the kind of economic
A Safe Haven Offshore = Peace of Mind 33

freedom once guaranteed by the U.S. Constitution — and even

these “tax havens” are under constant attack by major welfare state
tax collectors.
All the warning flags of the approaching storm are flying: the
odious Foreign Account Tax Compliance Act (FATCA), expanded
Report of Foreign Bank and Financial Accounts (FBAR) report-
ing, tax information exchange treaties, offshore banks refusing U.S.
clients, government confiscation of precious metals, police civil
forfeiture of property and cash worth billions, exit taxes, passport
restrictions, and still more depredations daily, as statist politicians
fashion an American prison to confine its most productive citizens.
The tax collectors know that the most talented citizens of the
U.S., U.K., EU and other welfare states are deserting, setting up
financial shop where they and their capital are treated best. What has
been called the “permeability of financial frontiers” now empowers
investors instantly to shift vast sums of money from one nation to
another and from one currency to another. Tyrannical politicians
see these wealth shifts and are imposing multiple curbs on capital
movements and financial freedoms.
Lovers of freedom see in these developments the potential for
the liberation of “the sovereign individual” — the courageous person
who declares independence from “decrepit and debilitating welfare
states,” as The Wall Street Journal described them. (The Sovereign
Individual by James Dale Davidson and Lord William Rees-Mogg
[Simon & Shuster, 1997], is an excellent book that explains the mass
exodus of wealthy individuals from high-tax nations.)
No wonder the U.K. Revenue and Customs, the U.S. Internal
Revenue Service and other tax hounds, are worried. In Europe “un-
declared” (and untaxed) income estimates range as high as 20% of
Europe’s combined gross domestic product (GDP), up from 5%
in the 1970s. In the somewhat freer U.S., the underground “black
market” economy accounts for over 8% of GDP. That means billions
34 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

of dollars slipping through the eager hands of the taxman.

Why the growing black market? Confiscatory taxes, exorbitant
labor costs, over-regulation, bailed-out banks, multiple reporting
requirements with criminal penalties — all failures of big govern-
ment. All things government bureaucrats love.

Diminished Privacy in the Digital Age

In many ways, life in modern America and the United Kingdom
parallels the chilling description of life in the ultimate totalitarian
state foretold in George Orwell’s famous novel, 1984. In part, we
have ourselves to blame. Although we claim to value freedom and
privacy, too many of us willingly surrender personal information
piecemeal to all sorts of sources, until we stand exposed to the world.
Those who conduct their financial affairs with reckless openness
make the work of government snoops easy. As you read this, corpo-
rate and, as the NSA spying revelations have exposed, government
computers hum with detailed electronic facts about you and your
family. Nothing is sacred: health, wealth, tax and marital status,
credit history, employment, phone calls, faxes and email, travel,
eating and reading habits, even individual preferences when cruising
the Internet are recorded in masses of megadata.
In an age of digital cash, interconnected databases, electronic
commerce and instant worldwide communication, no area of fi-
nancial activity offers more pitfalls than personal and commercial
banking. Once considered discreet and honorable, banks and other
financial institutions have been forced to become a U.S. version of
Big Brother’s Thought Police serving as government spies. Sadly,
in today’s world, you need to conduct your financial affairs with
the utmost privacy, caution and discretion. In this book, I give you
concrete legal and practical steps you can take to guard against being
victimized by government spying run amok.
A Safe Haven Offshore = Peace of Mind 35

Action Summary
To protect your privacy and wealth, consider taking the fol-
lowing steps:
• Establish an offshore bank account in a tax-free, privacy-orient-
ed, financial-friendly nation. When done correctly, your cash
will be far more secure from almost all U.S.-based claims. But
first, carefully investigate any foreign bank you consider using.
• As part of your overall estate plan, create your own offshore as-
set protection trust, limited liability company or private family
foundation to hold title to specific assets.
• Precisely document all financial transactions so that you always
have ready proof that your activities are legal.
• Educate yourself about — and comply with — all laws, rules and
regulations concerning reporting of your financial activities to
government agencies.
• Before you act, consult an experienced professional attorney
and/or accountant and understand the U.S. and foreign tax
implications of your plans.
• Get a firm and reliable estimate of the cost of your plans, both
at the start, upon implementation and for the first few years of
operation.

Case in Point
The U.S. National Security Agency (NSA) operates America’s
largest-ever spy center. The NSA, the intelligence agency of the
U.S. Department of Defense, years ago secretly tried to impose on
Americans the questionable ECHELON spy program. Until the
brave revelations of a concerned NSA analyst, Edward Snowden,
Americans were unaware that the NSA was spying on everyone,
collecting billions of phone calls, emails and credit transactions.
36 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

To augment their spying the “Utah Data Center,” an ultra-secret

project in the desert, is the latest government move to destroy all
privacy. The heavily fortified, $2 billion secret center is part of a
program codenamed Stellar Wind. The center intercepts, deciphers,
analyzes and stores all the world’s communications collected from
satellites and underground and undersea cables from international,
foreign and domestic networks. It stores all forms of communica-
tions, including contents of private e-mails, cell phone calls and
Google searches, even personal data such as parking receipts, travel
itineraries and so-called digital “pocket litter.” This NSA project is
the latest version of what the late columnist William Safire called
“a super snoop’s dream.”
 Chapter Two

Creative Offshore Financial

Strategies

I
n this chapter, you will learn specific personal and financial
strategies for offshore living, foreign residence, second citizen-
ship, investing, bank accounts and conducting your business
for maximum tax savings and the greatest profit. I’ll also explain
U.S. government reporting requirements for offshore personal and
financial activity.
Later in these pages, in chapters 4 through 11, I will describe the
best jurisdictions and countries that qualify as tax, asset and banking
havens; the ones best for achieving your personal wealth and estate
management goals. (Note: I use the phrase “jurisdictions and coun-
tries” because some places are independent nations, while others are
independent regions offshore territories of the United Kingdom.)
While reading later sections, keep in mind the strategies I de-
scribe in this chapter because I explain the individual types of off-
shore tax and asset havens where these strategies are best suited.
Later you may want to match your strategies to specific jurisdictions
I describe.
Before I get to geography and specific places, first we will consid-
er several personal, financial and business strategies you can employ
offshore now, even before you finally choose your own best tax or
asset haven.
38 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

These varied strategies can be used individually or in combina-

tion, as your situation requires. But each one is fully legal and each
has been used by many thousands of people worldwide — often with
highly satisfactory results.
In later chapters when I discuss individual jurisdictions that
qualify as offshore financial centers (formerly known as “tax havens”)
and/or asset and banking havens, I’ll suggest which havens are best
suited for these strategies.
One or all of these may be just the financial strategies you need.

Part 1. Personal Strategies

Strategy 1: Make Your Home Base in a Tax Haven
For those who choose to leave their home nation and live in a
foreign country, places that qualify as tax havens can provide better
living financially and greater profits because of lower taxes or no
taxes at all.
While eventually you may consider obtaining citizenship in the
foreign land of your choice, the first step is to qualify to become
a resident officially approved by the government. (Keep in mind
that once you become a citizen of a country, you are no longer an
exempt “foreigner” and you may become subject to that country’s
taxes and other laws.)
Interestingly enough, for those who live in foreign countries for
long periods, scientists have found a link between creativity and
living abroad. The Economist magazine reported on a study by ac-
ademics at the Kellogg School of Management that showed better
problem-solving skills in 60% of students who were either living
abroad or had spent some time doing so, whereas only 42% of those
who had not lived abroad demonstrated such skills.
A second test found that those who had lived abroad were more
Creative Offshore Financial Strategies 39

creative negotiators, probably learned as a coping strategy for foreign

survival. And even when researchers discounted the possibility that
creative people were more likely to choose to live abroad, the link
between creativity and foreign life held true, “…indicating that it is
something from the experience of living in foreign parts that helps
foster creativity.”
The authors of the report supplied no great detail as to why
living abroad should stimulate the creative juices, but their con-
clusion contains the most likely rationale: it may be that those
critical months or years of turning cultural bewilderment into
personal concrete understanding may instill the ability to “think
outside the box.”

Lower Taxes
Even though U.S. persons (citizens and U.S. permanent resident
aliens) are taxed on their worldwide income, there are many attrac-
tive places in which to live where taxes are reduced on business activ-
ities, or where business may be totally tax-exempt when conducted
offshore. These hospitable places exempt foreigners who live there
from taxes because they only levy taxes on income earned within
their borders, under what is known as a “territorial” tax system.
Personal income tax rates in many major welfare states now equal
50% of income or even higher. This crushing burden of combined
social security taxes, capital gains taxes, net worth taxes, wealth taxes
and inheritance taxes, has prompted many to seek low or zero tax
havens where they can make a new home tax-free.
Many countries provide tax incentives to qualified foreigners
who become new residents. Residence qualifications include good
health, a clean record with no past criminal acts, a guaranteed suf-
ficient income and enough assets so that you won’t need a job in
the local market.
However, it isn’t easy to find a haven offering both low taxes and
40 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

an acceptable high quality of life that also includes a wide range of

amenities, excellent medical facilities, easy residence requirements
and a warm climate, all within easy reach of major American or
European cities.
But a few countries come fairly close to the ideal.
For instance, the Mediterranean island nation of Malta is one of the
most attractive locations for foreigners looking for a warm climate, as
well as low taxes. Under a 2013 Global Residence Program permanent
foreign residents enjoy a privileged tax status, with only a 15% tax
charged on income remitted from outside of Malta, subject to a mini-
mum tax liability of about £5,000 (US$6,400) per year to a maximum
of US$15,000. To obtain permanent residence, one must show proof of
an annual income of about £25,000 (US$37,500) or capital of about
US$360,000. Although a residence permit entitles you to live in Malta,
you don’t actually have to spend any minimum length of time there.
This is particularly useful if you are away for long periods.
The Republic of Panama offers one of the most attractive loca-
tions for tax advantaged residence in the Americas. It has a special
pensionado program for foreign retirees providing tax-free living
with substantial discounts on the price of many goods and services.
In 2012, Panama instituted a fast-track “Immediate Permanent
Resident” visa for foreign nationals from 22 listed countries “that
maintain friendly, professional, economic, and investment relation-
ships with the Republic of Panama.” Under its territorial tax system,
all residents pay no tax on income earned outside Panama. Under
several other immigration programs tailored to attract them, for-
eigners may acquire residence as a financially independent person/
retiree or as an investor.
The Central American country of Belize also offers a special
program for foreign retirees much like that in Panama, with zero
taxes on offshore income and other incentives.
For people of great wealth, Austria, Switzerland and Singapore
Creative Offshore Financial Strategies 41

are among the nations with special immigration and tax arrange-
ments for foreigners who wish to live or retire there. It’s fair to say
that there are countries in many parts of the world where individual
arrangements can be made for tax-advantaged residence, but be
careful of possible fraud in such cases.
If you are looking for a place to do business offshore or to make
a new home, the haven that will meet your needs can be found. It’s
out there waiting for you and I’ll help you find it.
A word about personal security: Every country has safety and
security issues, ranging from petty crime and scams to active ter-
rorist groups and revolutionary movements. Each country’s police
and security forces operate differently — something a new resident
sometimes must learn the “hard way.”
For up-to-date security information on countries worldwide,
check the websites listed below.

US Department of State: Consular Information Sheets:

http://travel.state.gov/travel/cis_pa_tw/cis/cis_4965.html

Overseas Security Advisory Council:

https://www.osac.gov/Pages/Home.aspx

Australian Department of Foreign Affairs:

http://www.smarttraveller.gov.au/zw-cgi/view/Advice/

International Crime Threat Assessment:

http://www.fas.org/irp/threat/pub45270index.html

INTERPOL Country Profiles: http://www.interpol.int/

World Intelligence and Security Agencies:

http://www.fas.org/irp/world/
42 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

NationMaster: http://www.nationmaster.com/index.php/ (mas-

sive global search database including crime and terrorism)

Strategy 2: Dual Citizenship

Let’s say you have decided to establish a new residence in an
offshore tax haven.
As a resident, you may want to consider acquiring citizenship
there and, with it, a second passport. Dual citizenship simply means
that a person is officially recognized as a citizen of more than one
nation. Under U.S. law, this status is fully legal, and it is legal under
the laws of many other nations, although not all.
The United States government had official recognition of dual
citizenship forced upon it in 1967 by a U.S. Supreme Court ruling,
Afroyim v. Rusk, 387 U.S. 253, when a U.S. citizen successfully
argued that he had no intent to end his American citizenship when
he acquired the citizenship of another country. The Court ruled that
Mr. Afroyim’s right to keep his U.S. citizenship was guaranteed by
the Citizenship Clause of the 14th Amendment to the Constitution.
Prior to that ruling it was the U.S. government’s legal position
that whenever a U.S. citizen acquired citizenship of another country,
U.S. citizenship was automatically lost. Other acts held to end U.S.
citizenship included voting in a foreign country’s election or serving
in an official position or in the military of a foreign government.
The Afroyim decision opened the way for a wider acceptance
of multiple citizenships in U.S. law. A series of treaties in place be-
tween the U.S. and other nations which had limited dual citizenship
following naturalization were abandoned after the U.S. government
concluded the Afroyim ruling had rendered them unenforceable.
Since 1967, the official policy of the U.S. government is to
presume a U.S. citizen does not wish to surrender their citizen-
ship based on actions. Proof of specific intent is required before
expatriation is officially recognized. The burden of proof is on the
Creative Offshore Financial Strategies 43

government to show intentional abandonment of U.S. citizenship.

This presumption is set forth in a 1990 U.S. Department of State
publication.
See http://travel.state.gov/law/citizenship/citizenship_778.html,
and also http://travel.state.gov/travel/cis_pa_tw/cis/cis_1753.html.
Even though, as a matter of policy, the U.S. government now
recognizes dual nationality, it still does not encourage it because of
what the bureaucrats view as problems and conflicts that may result.
Indeed, the U.S. Department of State website still fails to make clear
that dual nationality is legal for Americans.
Although the U.S. government has been forced to accept dual
citizenship, it still asserts legal control based on U.S. citizenship in
numerous ways. For example: 1) The law requires a dual citizen with
a U.S. passport to use that U.S. passport to leave or enter the U.S.
2) U.S. citizens are prohibited from travel to Cuba without prior
U.S. State Department permission.
Perhaps the most onerous example of these U.S. controls is in the
area of tax payments and tax reporting obligations. U.S. citizens are
burdened with U.S. taxes no matter where in the world they live or
where their income sources are located. Countries such as Panama
with a more reasonable territorial system of taxation are taxed only
on income earned within their country of citizenship, without re-
gard to where they live or the income source.

Good Reasons
A second passport, quite literally, could save your life. History
is littered with repressive instances when a government has blocked
its citizens from traveling internationally. If it becomes necessary
for you to leave and you have only your home country passport,
you’re stuck. That’s because your passport is the property of your
government and officials can seize or suspend a passport at any time.
At the very least, having a second nationality and passport is a
44 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

hedge against unexpected political and economic events at home.

The dual status gives you the option of residing in another country
away from your home place, which may produce tax advantages as
well. But remember these tax advantages are of limited benefit to
U.S. citizens who are taxed on worldwide income, without regard
to where they physically reside.
You may be able to acquire a second citizenship and passport
based on your ancestry, by marriage or because of your religious
affiliation. If you don’t qualify on these grounds, your principle
option for obtaining citizenship is through establishing residence
in your chosen country for a required period of time (usually five
years) or by obtaining citizenship by investment.
Citizenship by investment, also called “economic citizenship,”
describes the granting of citizenship by a sovereign country in ex-
change for a financial contribution to that country or for an invest-
ment in a business, real estate, or government-designated, job-pro-
ducing project.
In recent years, the number of economic citizenship programs
has dwindled down to only three. The several programs that did exist
were criticized for allegedly offering to help international organized
crime and terrorists. Such sensational charges were largely false, but
they led to the termination of citizenship by investment in Ireland,
Belize, the Cape Verde Islands and Grenada.
In 2013, after several years of economic difficulty, the govern-
ment of Antigua and Barbuda created the National Economic and
Social Transformation Plan including the introduction of a citizen-
ship-by-investment program. See https://www.henleyglobal.com/
countries/antigua-barbuda/
St. Christopher & Nevis and the Commonwealth of Dominica,
both small island nations in the eastern Caribbean (in what used
to be the British West Indies), are now the two major countries
that promote legal citizenship by full-scale investment programs. In
Creative Offshore Financial Strategies 45

2012, Ireland introduced a new economic citizenship program based

on investing in that economically depressed country. In Austria, it is
also possible, under certain limited conditions, to obtain citizenship
without prior residence based on a substantial investment (US$2
million or more), but this is done on an individual basis and is
rarely granted. Each of these programs requires that applicants pass
a rigorous screening process.

St. Kitts & Nevis

The economic citizenship program of St. Kitts & Nevis enjoys
an excellent reputation and it offers visa-free travel to the British
Commonwealth and many other countries.
Under their current citizenship-by-investment rules, to qual-
ify for St. Kitts & Nevis citizenship, an investment of at least
US$350,000 in designated real estate, plus additional government
and due diligence fees are required. Alternatively, a cash contribu-
tion can be made to the Sugar Industry Diversification Foundation
in the amount of US$200,000 (for a single applicant).
Using the charitable contribution is an easier route for most
applicants because it provides a set cost and avoids further expenses
associated with owning real estate in a foreign country. Plus, you
don’t have to live in St. Kitts & Nevis to secure your second citi-
zenship, so buying real estate could just be an additional burden if
you’re not interested in spending time there.

Sugar Industry Diversification Foundation Option

Required contributions:
• Single applicant: US$200,000
• Applicant with up to three dependents (spouse, two children
below the age of 18): US$250,000
• Applicant with up to five dependents: US$300,000
46 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

• Applicant with six or more dependents: US$400,000

• Each dependent child 18–25 years old and enrolled full-time as
university undergraduate: US$35,000
• Each dependent parent 62 years or older living with and sup-
ported by head of household: US$35,000
• Registration, application, due diligence, and processing fees:
• Application fee: US$250 per applicant plus 17% VAT;
• Consulting fee: US$1,200 per application.

Investment in Designated Real Estate Option

Required investment:
• Minimum US$350,000, plus approximately 7% in taxes, du-
ties, and fees.
• Alien land owner’s tax, 10%–12% of purchase price, may apply.
• Title insurance cost varies depending on the cost of the property.
• Registration, application, due diligence, and processing fees:
• Application fees:
• US$250 per applicant plus 17% VAT
• Security fee, US$3,500 per applicant
• Processing fee, US$250 per applicant
• Court fees, no additional charge
• Consulting fee, US$1,200 per application

Registration fees (after grant of approval):

• Head of household: US$35,000
• Spouse and each child under the age of 18 years: US$15,000
Creative Offshore Financial Strategies 47

• Each dependent child 18-25 years enrolled full-time as univer-

sity undergraduate: US$35,000
• Each dependent parent 62 years or older living with and sup-
ported by head of household: US$35,000

Depending on what an attorney or other professional may

charge, usual legal fees can cost US$20,000 for a single applicant
or applicant and spouse; US$25,000 for applicant, spouse, and up
to two children; US$5,000 for each additional dependent child.
Also, 50% of the legal fee is refunded if the primary applicant is
not approved. There is also a US$500 escrow fee. Due diligence fees
vary from US$4,000 to US$8,000.
The real estate option requires the purchase of a condominium
or villa from an approved list of developers with a minimum invest-
ment of US$350,000. Transaction costs add 10% to the purchase
price (i.e., at least US$35,000, and likely US$50,000 or more) as
real estate prices are at a relatively high level in St. Kitts & Nevis
and you don’t get much for your money, especially In the local
condo market.
Processing time for charitable contribution applications takes up
to three months and dual citizenship is permitted, with no residen-
cy requirement. Using the real estate option lengthens the average
processing time from four to 12 months or longer. The real estate
cannot be re-sold until at least five years after purchase.

Commonwealth of Dominica
For now, and in the foreseeable future, there are two options to
acquire citizenship here:

Direct Family Cash Option (family of 4, investor, spouse, 2 chil-

dren under 18 years):
• Required contribution: US$100,000
48 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

• Children between 18 and 21 years: US$25,000 per child (up

to 2 children)
• Additional children under the age of 18 years, US$15,000 per
child

Direct Cash Single Option

• Required contribution: US$75,000
• For both options, the cash contribution is due only after the
application has been provisionally approved by the government.
Other government fees include:
• Application fee US$1,000 per application (non-refundable);
• Processing fee US$200 per applicant (non-refundable);
• Naturalization fee US$550 per applicant; and
• Stamp fee US$15 per applicant.

Depending on what an attorney or other professional may

charge, usual legal fees can cost US$20,000 for a single applicant
or applicant and spouse; US$25,000 for applicant, spouse, and up
to two children; US$5,000 for each additional dependent child.
Again, 50% of the legal fee is refunded if the primary applicant is
not approved. There is also a $500 escrow fee. Due diligence fees
vary from US$4,000 to US$8,000.
The government guarantees the return of all investment funds if
an application is rejected for any reason or withdrawn, but US$2,200
in processing fees is non-refundable. Since granting citizenship is
at the sole discretion of the government, there is no guarantee that
applications will be approved. The government also has introduced
more onerous due diligence requirements.
Creative Offshore Financial Strategies 49

Republic of Austria
Investors of at least US$2 million in approved projects in Austria
may be considered for immediate citizenship under an Austrian law
seeking to attract extraordinary contributions to the nation.
This rarely granted Austrian passport offers the only possibility to
obtain a “First World” (as compared to a “Third World”) passport
through investment, and one that offers the additional right to live,
work and travel in 27 of the 28 countries of the European Union,
because Austria is an EU member state. With Austrian residence,
visa-free travel is possible throughout all Schengen Accord countries.
Although Austria does not have an economic citizenship pro-
gram per se, statutory law does allow the granting of citizenship
to a foreign person if he or she is judged to contribute in some
extraordinary way, including economic means, to the interests of
Austria. However, this is not an easy way to acquire citizenship and
the process may require a year or more to complete.
Applicants are approved on a case-by-case basis and must be
willing to invest at least US$2 million in an approved project in
Austria. Investment proposals are submitted to the Office of Eco-
nomic Development. Those that provide export stimulation or local
employment receive preference.
Representation by a knowledgeable (and well-connected) Aus-
trian lawyer is essential, and is likely to cost considerably more
than US$50,000. Fees of €250,000 (US$333,000) or more apply,
depending on the case and the number of persons in an application,
as each case is handled on an individual basis.
Persons of independent means with a proven minimum annual
income of US$25,000 with an established home in Austria and full
health insurance coverage are eligible to apply for official Austrian
residence. After five years and, in some cases, less, residents may
apply for citizenship.
In 2013 the Austrian government adopted a new law allowing
50 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

applicants to acquire citizenship in six years compared to the

previous 10 years. This new system is based on a person’s degree
of integration in Austrian society rather than their duration of
stay. The six-year path requires the applicant to be employed with
a monthly income of €1,000 (US$1,400) or more for at least
three years including, the last six months before application and
to have some German language ability. Applicants must pass a
citizenship test.
There are also citizenship opportunities for academics, such as
university professors. Both Henley & Partners and Mark Nestmann
(see below) can provide details on these Austrian possibilities. In
special circumstances, a person who can demonstrate that their pro-
posed residence in Austria will make a unique scientific or techno-
logical contribution that benefits the public interest will be admitted
with a tax-free status. This special status is reviewed annually by the
Ministry of Finance.
Since citizenship by investment remains politically controver-
sial within each of these three countries, these programs could be
changed, suspended or terminated at any time. In the event these
programs are changed or abolished, those persons who already have
acquired passports should be able to retain them but that is not
guaranteed.

Republic of Ireland
In 2012, with its national economy in very bad shape, the Irish
government started a new Immigrant Investor Program to attract
both money and wealthy individuals from outside the EU. The pro-
gram offers special immediate residence visas to foreign individuals
willing to invest in Ireland.
This investment can eventually lead to full citizenship, and Irish
citizenship opens the door to full personal and commercial access
to all 28 countries in the European Union.
Creative Offshore Financial Strategies 51

Under the new program, potential investor immigrants have

these choices (all numbers are required minimums):
• Make a one-time payment of €500,000 ($666,000) to a public
project benefiting the arts, sports, health or education.
• Make a €2 million (US$ 2.7million) investment in a low-inter-
est immigrant investor bond. The investment is to be held for
a minimum of five years. The bond cannot be traded, it must
be held to maturity.
• Invest €1 million (US$1.3 million) in venture capital funding
in an Irish business for a minimum of three years.
• Make a €1 million mixed investment in 50% property and 50%
government securities. Special consideration may be given to
those purchasing property owned by the National Asset Man-
agement Agency (NAMA). In such cases, a single €1million
investment in property may be sufficient.

There is a separate Start-up Entrepreneur Program for foreigners

with entrepreneurial abilities who wish to start a business in an in-
novation area of the economy with funding of at least €75,000 (US$
100,000). They will be given a two-year residence for the purposes
of developing the business.
Information is available at the Ministry of Justice webpage:
http://www.inis.gov.ie/en/INIS/Pages/New%20Programmes%20
for%20Investors%20and%20Entrepreneurs
Emails can be directed to: [email protected]/
For more information about these economic citizenship pro-
grams, contact:
Mark Nestmann, a senior member of The Sovereign Society
Council of Experts, is a qualified professional who assists those
interested in acquiring foreign residence and citizenship and is a
recommended agent of the government.
52 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

The Nestmann Group, Ltd.

2303 N. 44th St. #14-1025
Phoenix, AZ 85008 USA
Tel/Fax (USA): +1 (602) 604-1524
Email: [email protected]
Website: http://www.nestmann.com/

Henley & Partners AG

Wipplingerstr. 32/20A
1010 Vienna, Austria
Tel.: +43 1 532 0 777 77
Website: www.henleyglobal.com/austria
Contact: Ms. Maya Herzog
Email: [email protected]

Strategy 3:

Expatriation: The Ultimate Estate Plan

Heavily taxed Americans are renouncing their citizenship at re-
cord levels.
Data from the U.S. government shows there were 932 renuncia-
tions of U.S. citizenship in 2012, on top of 1,781 in 2011, largely,
I suspect, to avoid proposed tax increases. Many high net worth
individuals have decided that having a U.S. passport just isn’t worth
the cost anymore. And the trend is clearly gathering pace. In the
second quarter of 2013 alone, 1,131 individuals renounced their
U.S. citizenship, according to State Department data.
These are comparatively small numbers of course — with a 2013
population of about 313 million Americans, these expatriates are a
drop in the ocean. Yet the trend is clearly there.
Why is this happening?
Several lawyers told The Wall Street Journal that many expatriates
Creative Offshore Financial Strategies 53

are wealthy Americans who are leaving because of President Obama’s

policies and the general direction of the nation’s political leaders.
“There is growing concern, particularly among the wealthy, about
the future financial direction of the country,” said Paul L. Caron,
Professor of Law at the University of Cincinnati College of Law.

The Saverin Case

If the last 30 years of accumulated assaults on the constitution-
al rights of U.S. citizens have not convinced you to make plans
to escape America, perhaps the reactionary political demagoguery
surrounding Eduardo Saverin will do the trick.
Saverin, the billionaire Facebook co-founder, ended his U.S.
citizenship in 2011 as a legal means of avoiding U.S. taxes.
U.S. laws, unlike most other nations, impose taxes on “U.S.
persons” (citizens and resident aliens), no matter where in the world
they live and without regard to their income sources. Terminating
citizenship is the only way to avoid U.S. taxes.
The vast majority of other national tax systems are territorial,
imposing taxes only on income earned within their borders. A Ca-
nadian or British citizen, for example, can move offshore and legally
leave most domestic taxes behind. A Panamanian is taxed only on
income earned within his country, none offshore.
In May 2012, the leading publicity hound in the U.S. Senate,
Charles E. Schumer (D-NY), and his PR apparatchiks regarded the
Saverin news as a great chance to make headlines and they pounced.
The “ultra-liberal” Schumer unveiled the Ex-PATRIOT Act
(Expatriation Prevention by Abolishing Tax-Related Incentives for
Offshore Tenancy Act). This legislative disaster would have imposed
prospective 35% tax on U.S. earnings on anyone who ended U.S.
citizenship during the last 10 years.
To add juice to the story, Saverin’s 4% stake in the publicly traded
Facebook was estimated to be worth US$3 billion to US$4 billion.
54 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

This made him the perfect target for politicians — an ungrateful

tax-dodging billionaire skipping out on America and its suffering
taxpayers.
Indeed, by ending U.S. citizen status, Saverin probably saved
hundreds of millions in eventual estate and gift taxes. If he remained
a citizen, he would not have owed U.S. capital gains tax on his
income until he sold his shares. Wealthy American shareholders
often borrow against their shares and live tax-free off the unrealized
appreciation for years.
Anyone in Saverin’s position would be insane not to act legally
to save all the taxes possible, and that’s just what he did. As it is, he
will probably pay US$150 million because of the Exit Tax the U.S.
imposes on expatriates.
Saverin, 32 years old, who was born in Brazil, came to the
U.S. as a teenager and became an American citizen, reportedly to
avoid being kidnapped from his wealthy parents. Exercising his
legal right as an American, he filed to surrender his U.S. citizen-
ship in January 2011 and it became official last in September. As
I said, he also was among the 1,780 Americans who ended U.S.
citizenship in 2011.
He is now a resident of Singapore, where, unlike the U.S., the
government welcomes wealthy foreigners with low taxes and eventu-
al citizenship. Saverin will benefit from major tax savings by becom-
ing a permanent resident of Singapore, which imposes no capital
gains taxes.
Perhaps the most atrocious part of Senator Schumer’s proposal is
was the attempt to bar re-entry into the U.S. forever. This ban would
have been retroactive and applied to anyone who ended citizenship
during the 10-year period before 2012. Fortunately, once he got
the publicity he wanted, Schumer’s proposal died a well-deserved
legislative death.
Creative Offshore Financial Strategies 55

The Ultimate Plan

Indeed, expatriation has been called “the ultimate estate plan.”
Expatriation is nothing less than a step-by-step process that,
when completed, provides the legal right to stop paying U.S. in-
come taxes for the U.S. person (citizen or resident alien) willing to
terminate that status.
In sum, it requires professional consultations, careful planning,
movement of assets offshore and most certainly, prior acquisition
of a second citizenship. When that’s done — and done exactly
right — you can leave behind America as your home country and
establish a new domicile, preferably in a low- or no-tax jurisdiction.
And for U.S. citizens, this unusual plan requires, as a final step to-
ward tax freedom, the formal relinquishment of citizenship.
Obviously expatriation is a drastic plan.
And in truth, there are many other perfectly suitable offshore
strategies recommended in this book that can result in some tax
savings and that don’t require anything as dramatic as expatriation.
These include purchase of international life insurance policies, an-
nuities, and making offshore investments through retirement plans,
among others.
But for U.S. citizens and long-term U.S. resident aliens (“green
card holders”) seeking a permanent and legal way to end their obli-
gation to pay U.S. taxes, expatriation is the only option.

Blueprint for Ultimate Tax Avoidance

Since the dawn of humankind, individuals have been migrating
away from their native lands to seek better opportunities elsewhere.
But since the development of the modern nation-state and the high
taxation imposed by some nations on all the worldwide income of
their citizen-residents, led by the United States, this process called
“expatriation” has taken on significance because of the tax freedom
it allows.
56 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

One of the first tax experts to appreciate the potential tax savings
of expatriation was Marshall Langer JD, a leading international tax
attorney who practiced law in London and Miami.
Langer is the respected author of several major international tax
treatises, but also the daring creator of a now out-of-print book, The
Tax Exile Report (1992). This title gained international notoriety
when the late U.S. Senator Daniel Patrick Moynihan (D-NY), red-
faced and angry, waved a copy of the book at a televised U.S. Senate
hearing, denouncing it as “… a legal income tax avoidance plan.”
(Note that the senator said “legal” — and indeed, it is that.)

Compelling Numbers
In explaining why expatriation is so attractive to wealthy Amer-
icans (and others), a few years ago a Forbes magazine article gave
the compelling arithmetic: “A very rich Bahamian citizen pays zero
estate taxes; rich Americans — anyone with an estate worth US$3
million or more — could pay 55%. A fairly stiff 37% marginal rate
kicks in for Americans leaving as little as US$600,000 to their chil-
dren.” Even though U.S. estate taxes have been reduced since then,
an even more impressive part of the Langer plan is the ability to
escape higher U.S. income, capital gains and other taxes.
When it comes to expatriation, however, Americans face a
unique burden. Unlike almost every other nation, with one or two
exceptions, U.S. citizens and long-term residents cannot escape
home country taxes by moving their residence to another nation.
The only way to leave U.S. taxes behind is to end U.S. citizenship
or resident alien status.

New Refugees
Becoming a “tax exile” by choosing to expatriate is not without
problems. In America, expatriation to avoid taxes has been a hot
political issue for 25 years.
Creative Offshore Financial Strategies 57

The original source of the expatriation controversy was a sen-

sational article in the November 24, 1994 issue of Forbes maga-
zine, entitled “The New Refugees.” Filled with juicy details (famous
names, luxury addresses, huge tax dollar savings), the story described
how clever ex-Americans who became citizens of various foreign
nations, legally paid little or no U.S. federal and state income, estate
and capital gains taxes.
Ever since, expatriation has periodically been a “hot button” issue
kicked around by the American news media and “soak-the-rich”
politicians. Indeed, President Barack Obama repeatedly attacked
offshore financial activity by U.S. individuals and companies during
both his presidential campaigns.
It’s understandable why politicians keep this political football in
active play. To the average, uninformed U.S. taxpayer, expatriation
seems like just another rich man’s tax loophole. Before Forbes raised
the issue, few people had even heard of the concept of formal sur-
render or loss of U.S. citizenship.
Taken together with the controversy over U.S. companies having
offshore affiliates or re-incorporating offshore to avoid U.S. corpo-
rate taxes (both still legal at this writing), politicians have found in
expatriation a convenient straw man that they can beat unmercifully.
Former President Bill Clinton’s Treasury Secretary at the time,
Lawrence Summers, later President Obama’s top White House eco-
nomic advisor, went so far as to call tax expatriates “traitors” to
America. He was forced to apologize for his hyperbole.

Right to End U.S. Citizenship

As a national political issue, expatriation is hardly new.
In the bitter aftermath of the U.S. Civil War (1861–1865), the
U.S. Congress hotly debated the post-war status of the people in
the southern states that had formed the Confederacy. Ultimately,
Congress decided “rebels” who swore allegiance could again become
58 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

U.S. citizens. The Expatriation Act of 1868 formally recognized

that all Americans do have a right to give up their citizenship, if
they so choose.
A century later, in the Foreign Investors Tax Act of 1966, Con-
gress again decided to make an issue of expatriation. In that Act,
lawmakers tried to impose onerous taxes on exiting wealthy Amer-
icans who relinquished their U.S. citizenship “with the principal
purpose of avoiding” U.S. taxes, a highly subjective intention that
was virtually impossible to prove. This made for a good political
issue, but the IRS couldn’t prove such “intent” and didn’t even try.
The lengths to which American politicians will go to penalize
supposed tax expatriates is demonstrated by a never-enforced pro-
vision of U.S. law, sponsored by then-U.S. Representative (and
later U.S. Senator) Jack Reid (D-RI) and enacted in 1996. The
Reid Amendment permits the U.S. Attorney General to bar from
returning to the United States anyone who renounces their U.S.
citizenship to avoid taxes. Thus, Congress lumped together individ-
uals exercising their legal right to avoid taxes by expatriating with
barred narcotics traffickers, terrorists and persons suffering from
communicable diseases.
In a moment, I will explain the 2008 U.S. Exit Tax imposed on
expatriates, but consider the 2012 legislation proposed by Charles
E. Schumer (D-NY), known as the Ex-PATRIOT Act (Expatriation
Prevention by Abolishing Tax-Related Incentives for Offshore Ten-
ancy Act). This legislative disaster would impose a retroactive 35%
tax on U.S. earnings on anyone who ended U.S. citizenship during
the previous 10 years. The most atrocious part of Schumer’s proposal
was his attempt to bar re-entry into the U.S. forever for anyone who
ended citizenship during the 10-year period before 2012.
The only other regimes that adopted similar punitive laws were
Nazi Germany, the Communist Soviet Union under Stalin and
South Africa during apartheid.
Creative Offshore Financial Strategies 59

Amidst the political furor, thoughtful experts question what

they view as much broader and dangerous U.S. anti-expatriation
precedents. They point out that these laws involve not only retal-
iatory government acts against resistance to high taxes, but pose
possible human rights violations guaranteed by other American
laws and even by the Human Rights Charter of the United Nations.
It is worth repeating that the U.S. Supreme Court has repeatedly
affirmed the right of U.S. citizens to end their citizenship, as well
as the right to enjoy dual citizenship.
In reality, this political frenzy probably reflects politics as usual
and collective envy more than any sense of patriotism by Americans
or congressional politicians. Expatriation is not as serious a problem
as some pretend since less than two thousand Americans, rich or
poor, formally surrender their citizenship each year. Most expatriates
give up their U.S. citizenship because they are returning to their
native land or marrying a non-U.S. citizen, and not to avoid taxes.

Save Millions of Dollars, Legally

Amidst this controversy, until the 2008 Exit Tax there were very
substantial tax savings for wealthy U.S. citizens who were prepared
to end their citizenship. While only a handful of very rich Americans
legally expatriated, the list included some prominent names.
In 1962, the late billionaire mutual fund founder Sir John Tem-
pleton (knighted by Queen Elizabeth in 1992), made a controversial
decision. He decided to terminate his U.S. citizenship after moving
his home to The Bahamas, where there were no estate, income or
investment taxes. He became both a British citizen and a Bahamian
citizen and lived tax-free in The Bahamas until his death in 2008.
This move saved him more than US$100 million when he sold the
well-known international investment fund that still bears his name,
and many millions more in estate taxes when he died. Interestingly,
Templeton’s investment record improved markedly after he stopped
60 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

worrying about the U.S. tax consequences of his investment deci-

sions. As a result of tax-free compounding, Templeton was worth
several billion dollars and when he died he was one of the world’s
wealthiest men. However, Sir John did not necessarily recommend
that other investors follow his lead and switch allegiance to a tax
haven such as The Bahamas. (It’s almost impossible for an Ameri-
can to become a Bahamian citizen today.) But, Templeton strongly
recommended that smart investors should take full advantage of
tax-deferred vehicles such as life insurance, annuities, self-directed
pension plans and offshore business.
Other wealthy ex-Americans who took their formal leave from
the U.S. included billionaire Campbell Soup heir John (“Ippy”)
Dorrance, III (Ireland); Michael Dingman, chairman of Abex and
a Ford Motor director (The Bahamas); J. Mark Mobius, one of the
leading emerging market investment fund managers (Germany);
Kenneth Dart, heir to the billion dollar Dart container fortune
(Belize); the late Ted Arison, head of Carnival Cruise Lines (Israel);
and Fred Kreible, millionaire head of Locktite Corporation (Turks
& Caicos Islands).

The Law Today — U.S. Exit Tax

While all those former U.S. citizens were able to escape American
taxes, they did so in past years — but they probably could not do
it again today.
That’s because on June 17, 2008, President George W. Bush
signed new anti-expatriation legislation, Public Law No. 110-245,
unanimously passed by Congress under the misleading title of “The
Heroes Earnings Assistance and Relief Tax Act of 2008,” also called
the “Heroes Act.” (I’ll just call it “the Act”.)
The Act dramatically changed the former income tax rules ap-
plicable to both U.S. citizens who expatriate and long-term U.S.
residents (e.g., “green card holders”) who decide to end their U.S.
Creative Offshore Financial Strategies 61

residence status. The Act refers to both groups collectively as “cov-

ered individuals.” Much of this law has little to do with expatriation
since it provided increased benefits for U.S. armed forces veterans.
But because the rules of Congress require that all new spending
programs be accompanied by a source of revenue to pay for them,
the anti-expat tax crowd in Congress jumped at the chance to wrap
their long-time anti-expatriate tax nostrums in the American flag.
The new expat tax was supposed to finance the hundreds of mil-
lions needed to pay for veteran’s benefits, but few believed that to be
true. A study by the Congressional Budget Office guessed that the
law might net the government up to US$286 million over five years.
This expat “exit tax” — because that indeed is what it amounts
to — had been the devout wish of liberal, left-wing Democrats for
a decade or more. In 2008, Democrat Rep. Charles Rangel of New
York, then chairman of the powerful, tax-writing House Ways and
Means Committee, slipped this horrendous tax restriction into a
popular military pension/pay bill (without hearings or public no-
tice). President George W. Bush, the great “tax cutter,” signed it into
law without so much as a whimper.
Rangel was later forced to resign as Ways and Means chairman
when he was exposed as having failed for years to pay taxes on several
sources of income, failed to report offshore real estate holdings and
having traded special legislative favors in return for contributions.

Totalitarian Taxes on “Covered Individuals”

In advocating an exit tax Rep. Rangel and his political allies
on the Left imposed expat exit restrictions very similar to those of
Hitler’s Nazis, apartheid South Africa and the Communist Soviet
Union. Each of these totalitarian regimes in their despotic days
fleeced persecuted departing citizens (Jews, gypsies, political dissi-
dents) with similar confiscatory exit taxes.
In fact, the 2008 Act probably violates protections in the U.S.
62 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Constitution that guarantee the right to voluntarily end U.S. cit-

izenship and the right to live and travel abroad freely, although I
seriously doubt that any wealthy expatriate would ever waste money
on a court challenge once they have escaped.
Under this law, a person described as a “covered individual” falls
within the clutches of the Act if, on the date of expatriation or ter-
mination of U.S. residence, (i) the individual’s average annual net
U.S. income tax liability for the five-year period preceding that date
is US$155,000 or more (adjusted annually for inflation); (ii) the
individual’s net worth as of that date is US$2 million or more after
an exclusion of US$663,000; or (iii) the individual fails to certify
under penalties of perjury that he or she has complied with all U.S.
federal tax obligations for the preceding five years.
Of course, if you’re lucky and don’t fit within the above defini-
tions, this new law may offer a very real opportunity to escape U.S.
taxes as you become more prosperous in the future. (More about
that, and what might be a very good no-tax deal if you qualify, later
in this text.)

Exceptions
There is an exception in the Act for those who have dual citizen-
ship and became U.S. citizens by accident of birth, either because
they happened to be born in the U.S., or born to a U.S. parent and
subsequently lived in the U.S. for only a limited time.
Covered individuals under items (i), (ii) or (iii) above, have two
limited exceptions that avoid taxes under the Act. They won’t be
taxed if they certify compliance with all U.S. federal tax obliga-
tions and either: (i) were a citizen of the United States and another
country at birth if, (a) they are still a citizen and tax resident of
that other country and, (b) they resided in the U.S. for no more
than 10 of the 15 taxable years prior to expatriation or giving up
long-term residence; or (ii) they renounce U.S. citizenship before
Creative Offshore Financial Strategies 63

the age of 18-and-a-half if they were not residing in the U.S. for
more than 10 years before the renunciation or the termination of
long-term residence.
In scanning random examples of the official U.S. State Depart-
ment expatriate lists mentioned earlier, it seems that a large portion
of those listed are probably green card holders of modest means who
are returning to their country of birth. In other words, most persons
who chose formally to end their American status are not very rich
tax evaders, but rather folks whose assets and tax bills are well below
the amounts the new Act states.
Of course, the official list of expatriates doesn’t include those who
simply move to another country and gradually sever their ties with
the U.S. Technically, these people are still subject to U.S. taxes, but
if they give up their claim to U.S. Social Security or federal pension
benefits, it is difficult for the IRS to find them. This law may well
increase that number.

Confiscation by Taxation
There was a time in the United States when tax rates on the
top earning individuals approached 90% or more. The Reagan tax
revolution brought those rates down to more reasonable, upper
30% levels.
But under the Exit Tax, covered individuals are taxed enormously
under new Code Section 877A (called a “mark-to-market tax”). This
vindictive tax taxes all assets as if the person’s worldwide assets had
been sold for their fair market value on the day before expatriation
or residence termination. For 2013, the first US$663,000 in unre-
alized gains from a covered expatriate isn’t subject to the exit tax, a
figure that is adjusted annually for inflation.
This phantom gain will presumably be taxed as ordinary income
(at rates as high as 35%) or capital gains (at either a 15%, 25%, or
28% rate), as provided under current law. In addition, any assets
64 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

held by any trust or portion of a trust that the covered individual

was treated as owning for U.S. income tax purposes (i.e., a grantor
trust) are also subject to the mark-to-market tax.
No doubt many people caught by this tax would have to sell their
assets to pay the tax, leaving them with little or nothing.

Still More Taxes

Equally as bad, the stay-at-home relatives of rich expatriate
Americans who remain behind as U.S. citizens could find them-
selves owing tax if they receive large gifts of money or property from
their expat relatives.
The Act also imposes an additional tax of a potentially far-reach-
ing scope: gifts and bequests to U.S. persons from “covered indi-
viduals” (beyond the annual 2013 gift tax exclusion of US$14,000
per person) are subject to a U.S. “transfer tax” imposed on the
U.S. transferee at the highest federal transfer tax rates then in effect
(currently 47.5%).
Talk about highway robbery! Not only is wealth taxed away by
the Exit Tax from a generous expatriate who gives a gift, the recipi-
ent of the gift is punished with a 45% tax on that gift.

Non-Grantor Trust Distributions

But as they say on those late night TV commercials, “But wait,
there’s more!” Mucho más!
The Act requires that trustees of certain “non-grantor” trusts
(i.e., trusts of which covered individuals or others are not treated as
the owners for income tax purposes) must withhold 30% of each
distribution to a covered individual if that distribution would have
been included in the gross income of the individual if he or she were
still a U.S. taxpayer.
Defying international law, the Act says no double taxation avoid-
ance treaty of any country with the United States may be invoked
Creative Offshore Financial Strategies 65

to reduce this withholding requirement. Moreover, if the trustee

distributes appreciated property to a covered individual, the trust
will be treated as if it sold the property to the individual at its fair
market value. This treatment of distributions applies to all future
distributions with no time limitation.

Retirement Plans Cut in Half

Not content with all this tax persecution, the greedy congressio-
nal politicians went after expatriates’ pensions as well.
The Act forces an expatriate to pay up to a 51% tax on distribu-
tions from retirement plans. The same goes for most other forms
of deferred payments. If there’s a small silver lining, it’s that the tax
isn’t due until you actually receive payments from the plan. Plans
covered by this provision include qualified pensions, profit sharing
and stock bonus plans, annuity plans, federal pensions, simplified
employee pension plans and retirement accounts.

Very Select Group

It is fairly clear that for anyone who falls within the definition of
a “covered individual” under the 2008 expat tax law, the chance of
legal avoidance of American taxes by ending citizenship is going to
be a very costly endeavor. Indeed, under this confiscatory law, the
richer you are, the more you stand to lose by leaving the U.S. behind.
But for those who are not “covered” by this punitive law, but who
do have good prospects of amassing future wealth, this new law may
well offer you a no-tax bonanza — if you are willing to reorder your
life, acquire second citizenship, move to an offshore tax haven and
turn in your U.S. passport. And in this era of economic globaliza-
tion and instant international communications, many enterprising
entrepreneurs are able to do business anywhere they desire.
Let’s say you paid less than US$145,000 in taxes for the last five
years, your net worth is less than US$2 million and you have no prob-
66 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

lem certifying that you complied with all U.S. federal tax obligations
for the preceding five years. This law says you can leave home free!
No doubt there are many ways to rearrange your finances and
title your property to avoid values being assigned to your balance
sheet, keeping that net worth under US$2 million. Indeed financial
obligations might reduce your net worth. And once you have left
the U.S. and have become a new citizen of a tax haven such as Pan-
ama, Uruguay, Singapore, Belize or Hong Kong, there is nothing
to prevent assets being transferred to you.
In that case, it appears that the Exit Tax law allows you to end
your citizenship and with that, also end your U.S. tax obligations.
And the 2008 law also ended the former 10-year claim of IRS tax
jurisdiction over an expats income and assets. In fact, as a foreigner,
you too can enjoy the tax breaks American tax law affords to non-
U.S. investors in America.
Something to think about in your estate planning!

Green Card Holders Get Stuck

The 2008 Act not only affects U.S. citizens who expatriate, but
also can financially penalize “green card” holders who return to their
home country.
If a foreigner living in the U.S. has a green card and has lived in
the U.S. for eight out of the most recent 15 years, they are considered
a long-term permanent resident, or “permanent resident alien” (so
count your years here — you may have to leave soon to avoid the tax).
Most of these individuals never intended to make the U.S. their
permanent home. Now, if and when they leave, if they have reached
the asset/income tax threshold set in the 2008 Act, they too will
be taxed as a “covered person.” These people are not American tax
dodgers but rather well-to-do Canadians, Britons, Indians, and
other foreign residents perhaps concluding long-term business and
professional assignments in the U.S.
Creative Offshore Financial Strategies 67

When these foreign bankers, software engineers, chemists, teach-

ers and others leave the U.S. to retire or transfer to a new post
abroad, the Act will tax them on the unrealized capital gains of
their total global assets. That includes supposedly tax-deferred U.S.
retirement accounts, as well as assets like a cottage in Quebec, a
share of a relative’s business in Bangalore, or a great-grandmother’s
pearls kept in a London safe.
Here’s one example: consider someone who paid US$10,000
for a vacation home in France in 1980, came to the U.S. in 1990
when it was worth US$100,000, and left the U.S. in 2008 when
the French home was worth US$1 million. That person would be
subject to a capital gains tax of US$135,000 on that one asset.
Only “permanent residents” (“green card holders”) will be stung.
As a result, wealthy persons considering moving to the United States
may increasingly select long-term visas rather than formal residence
status, potentially depriving the country of wealthy immigrants.
Some developed countries have so-called “exit taxes” but critics say
that the Act tarnishes the image of the U.S. as a friendly place for
foreign talent and capital, at a time when America needs both.

Devastating for Foreign Workers

The U.S. National Association of Manufacturers (NAM) de-
scribed the proposal to tax expatriates as “potentially devastating” for
American manufacturing’s many long-term foreign workers. NAM
argued that the rules should target U.S. citizens who expatriate to
avoid taxes, not workers who return to their home countries for
personal reasons and must, by U.S. law, eventually surrender their
green cards. Previously, long-term residents who surrendered their
green cards could avoid taxes on their unrealized gains by spending
fewer than 30 days of any year in the United States for 10 years.
Even then, only U.S., not worldwide, gains were subject to tax.
There is evidence that American companies have respond by
68 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

sponsoring fewer green cards or filling openings with workers on

less attractive long-term visas, drawing a smaller and potentially less
talented pool of workers to the U.S.
Green card holders now living abroad may consider immediately
giving them up under a provision of the Act that allows retroactive
dating for nonresidents. But green card holders now living in the
United States have no way out, lawyers say.

Unwelcome Foreigners
One other point: there is still one more vindictive punishment
for any “covered individual” who dares to end U.S. citizenship.
Once they are no longer U.S. citizens, they will be “foreigners”
in the eyes of American immigration law. Generally, foreigners can
apply for any of the many entry visas the U.S. issues. For example,
foreign tourists entering the U.S. for visits usually are granted a 90-
day visa that is renewable once for a total of 180 days. If a foreigner
stays in the U.S. more than 180 days in one year, they run the risk
of becoming a “U.S. person” liable for U.S. taxes.
However under the exit tax law, the IRS says: “...expatriated
individuals will be subject to U.S. tax on their worldwide income
for any of the 10 years following expatriation in which they are
present in the U.S. for more than 30 days, or 60 days in the case of
individuals working in the U.S. for an unrelated employer.”
The tax-dodging U.S. Rep. Charlie Rangel and other politicians
on the Far Left finally got their wish and enacted an exit tax on
expatriates — much to the detriment of America, its economy and
the nation’s standing in the eyes of the world.
But don’t let all this information about exit taxes scare you. If you
don’t come under the Act for net worth or other reasons, it means
you can end your American tax liability by ending your citizenship
and thus permanently detach yourself from the clutches of the IRS.
That possibility is something to seriously consider. If you need
Creative Offshore Financial Strategies 69

recommendations for professional tax advice, contact The Sovereign

Society toll-free at 1-888-856-1412 or through the website at http://
sovereign-investor.com/contact-us/.

How it’s Done

Long before anyone formally surrenders their U.S. citizenship,
they should have reordered their financial affairs in such a way as
to remove most, if not all, of their assets from possible government
control and taxation.
Here are the recommended steps to take:
• Arrange affairs so that most or all income is derived from
non-U.S. sources;
• Title property ownership so that any assets that remain
in the United States are exempt from U.S. estate and gift
taxes to the maximum extent;
• Move abroad and make a new home in a no-tax foreign
country so that you are no longer a “resident” for U.S.
income tax purposes;
• Obtain a new alternative citizenship and passport;
• Formally surrender U.S. citizenship and change your legal
“domicile” to avoid U.S. estate taxes.
One of the most important decisions is the choice of your new
second citizenship.
Millions of Americans already hold a second citizenship; millions
more qualify almost instantly for dual citizenship by reason of birth,
ancestry, or marriage. At this point you may wish to review the
information described above in “Strategy 2 — Dual Citizenship” at
the beginning of this chapter to see if any of these faster avenues
are open to you.
70 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Part 2: Financial Strategies

Strategy 1: An Offshore Bank Account
Until a few years ago, only the wealthiest investors could benefit
from having an offshore bank account. In the days of snail mail and
trans-Atlantic ocean travel, only the richest of the rich could afford
the fees and legal advice associated with going offshore. Now, after
dramatic changes in international travel, banking and communi-
cations, even a modest offshore account can be your quick, inex-
pensive entry into the world of foreign investment opportunities.
Put aside the erroneous popular notion that foreign bank ac-
counts are designed for shady international drug kingpins and un-
scrupulous wheeler-dealers avoiding taxes. For some people, offshore
accounts will always evoke images of cloak and dagger spies from
the U.S. Central Intelligence Agency or the U.K.’s MI5, of shadowy
clandestine operations and crooked officials in Third World nations.
Although these sinister images are entertaining, they hardly relate
to your present practical purposes. What we want to do is build
offshore financial structures that will increase your wealth legally
and solidly protect your assets. Forget the intrigue and embrace the
fact that an offshore bank account is a highly effective economic
way to achieve your legitimate financial goals. There is nothing un-
derhanded or sinister about protecting the wealth you have worked
so hard to earn.
A foreign bank account can be employed as an integral tool in
an aggressive, three-pronged offshore wealth strategy. One goal is
to increase your asset value by cutting taxes and maximizing profits.
The next goal is to build a strong defensive asset protection struc-
ture, and the third is using your account for profitable offshore
investments.
As I demonstrate in these pages, the possible variations on these
important themes are nearly endless.
Creative Offshore Financial Strategies 71

Offshore banking is big business worldwide. Estimates are that

from US$3 trillion to US$5 trillion is stashed in nearly 40 off-
shore banking havens that impose no or low taxes, have less onerous
regulations, guarantee privacy and welcome non-resident clients.
Nearly a quarter of the entire world’s private wealth is stashed in
Switzerland alone!
High tax, deficit spending welfare system countries, led by the
U.S., howl that tax havens are engaged in “unfair tax competition”
but they never try to imitate tax havens by lowering their own high
taxes or reducing spending.

Benefits of Offshore Banking

Let me be clear about one important fact up front.
An offshore bank account is not a tool to be used to illegally
avoid taxes. As an American citizen or “green card” holder, the U.S.
Internal Revenue Code taxes you on all your worldwide income.
No matter where or how you earn your money, you may owe some
U.S. taxes and you must annually file with the IRS at least an IRS
Form 1040 for income and related taxes.
An offshore bank account provides a “safe haven” for your mon-
ey. Many thousands of sovereign individuals already are using their
offshore bank accounts for exactly that purpose.
The International Monetary Fund (IMF) recently confirmed
that “stability reasons” — and not bank secrecy — helped foreign
havens like Switzerland attract 27% (a total of US$2.3 trillion) of
the world’s offshore wealth.
These smart people, just like savvy Argentineans and Russians,
are using this simple, yet effective, tool to protect their wealth
against a meddling government and their declining currencies. You
should consider doing the same.
Your offshore bank account is not just a place for safekeeping
cash. One of the great advantages of an offshore bank account is
72 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

it enhances your ability to trade freely and invest in foreign-issued

stocks, bonds, mutual funds and national currencies that are not
available in your home country.

Hedge Against Dollar Decline

Another major benefit of an offshore bank account is protection
against the declining dollar.
Since the creation of the Federal Reserve in 1913, the value of
U.S. currency has collapsed. What was worth US$1 back then is
worth less than 4.8 cents today. That is to say, the American dollar
has lost more than 95% of its value. This trend continues almost
daily. Clearly, having an offshore account is becoming a matter of
some urgency while you still have assets to convert to more stable
currencies. An offshore account has the power to help build your
wealth through currency diversification.
From 1976 to 2009, the U.S. dollar lost an average of 73%
of its purchasing power against most major currencies. That
means US$100,000 would only be worth US$27,000 today.
Yet, if you had held your “cash” portfolio in Swiss francs or Jap-
anese yen during that time, your portfolio would be worth from
US$157,000 to US$187,000 today.
Opening an offshore bank account makes it easy for you to ac-
cess the power of currency appreciation. Unlike most U.S. banks,
offshore banks offer “multi-currency functionality.” That is, they
give you the ability to invest and transact business in your choice
of strong currencies, such as the Swiss franc — currencies that ap-
preciate while the U.S. dollar sinks. That bank account also gives
you a place to safely store gold, silver or other valuable investment
items or documents offshore.

Investment Platform
An offshore account is an excellent platform from which to di-
Creative Offshore Financial Strategies 73

versify investments. It gives instant access to the world’s best in-

vestment opportunities, including currencies and precious metals,
without concern about your home nation’s legal restrictions that
would otherwise apply if the bank account was located within your
home country.
Offshore foreign stock, bond and mutual fund trading are not
inhibited by restrictive laws such as the U.S. Securities and Exchange
Act or the rules of its administrative agency, the U.S. Securities and
Exchange Commission (SEC). An offshore bank allows the ready
purchase of attractive insurance and annuity products not available
in the U.S. and other nations. Tax savings may result from deferred
investment earnings, capital gains, or appreciation, rather than re-
ceiving ordinary income that is not only taxed by the U.S. as current
income, but at a higher tax rate.
An offshore bank account can provide opportunities to profit
from currency fluctuations, the easy ability to purchase foreign real
estate, and earnings from comparatively higher bank interest rates
available only in foreign countries. You can also trade precious met-
als and other tangible personal assets through most foreign accounts.

Asset Protection
Another important benefit is the relatively strong asset protec-
tion foreign bank accounts provide. The existence of your offshore
account is not readily known to a possible claimant considering a
lawsuit or someone seeking to collect a judgment against your assets.
The existence of the account must be revealed on your U.S. income
tax return (IRS Form 1040), but that’s not supposed to be part of
the public record.
At times in a judicial proceeding you may have a legal obligation
to reveal an offshore account in a full statement of your assets and
liabilities. But there are times when it makes good financial sense
to discourage a potential litigant and promote compromise by let-
74 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

ting an opponent know just how difficult it will be to reach your

offshore assets.
Because of defendant-friendly local laws in asset protection haven
nations, foreign judgment holders often have a very difficult time
enforcing a judgment obtained in their own country in another
country. To reach your assets, a successful creditor must start all
over using the foreign judicial process to press a claim against your
offshore assets. To do that, they must bear the expense of hiring
foreign lawyers and paying for travel and witness transportation.
Besides promoting compromise, the delay in such a strung-out
process allows ample time for a defendant to fight the action, or sim-
ply move cash or assets to an account in another country. Because
of such offshore local laws, courts in these countries rarely issue
orders prohibiting such transfers (called “portability”), especially
in civil cases.
Many of these nations have one or two-year statutes of lim-
itations accruing from the date an initial claim arises against the
account holder. Since a U.S. lawsuit takes years to get through the
courts, this means an American court judgment could be void under
the foreign nation’s one-year cutoff date. In fact, the U.S. judicial
process often takes so long that time runs out in nations with five-
year statutes of limitations.

Offshore Accounts More Accessible

A decade or more ago, only the wealthiest investors could benefit
from any kind of offshore bank account. Now, after dramatic chang-
es in international banking and communications, even a modest
offshore account can be a quick, inexpensive entry into the world
of foreign investment opportunities.
To open an offshore private investment account today, you do
not always need a minimum deposit of US$1 million or more, but
that is the average required amount. Some banks with which The
Creative Offshore Financial Strategies 75

Sovereign Society has a relationship will open an account for lesser

amounts, but with lower minimums you don’t get the individual
service that comes with a deposit of US$1 million or more.

Five Steps to Choosing Your Offshore Bank

With all these potential benefits and lower barriers to entry, how
do you go about choosing the right country and the right financial
institution for your offshore bank account?
Step #1: Carefully examine and research established financial
institutions in your country of choice. This allows you to gauge
banking standards and it gives you a frame of reference with which
to judge individual banks and their services.
Step #2: Check Google News and local newspapers and publi-
cations for any negative mentions about a specific bank you have in
mind. Google can also provide the website of the country’s official
bank supervisory agency, which usually lists facts about each bank,
its license, its current standing and any prior complaints or official
actions.
Step #3: Beware of “banks” that only have an Internet presence.
Most countries have outlawed “brass plate” banks that are little more
than a name on a building or lawyer’s office door. Absence of bank
officials’ names, a physical address, and phone numbers are almost
always indications of fraud.
Step #4: Be wary of banks you find on the Internet that offer
interest rates that are unreasonably high. If the offered deal appears
too good to be true, it usually is.
Step #5: Find out which offshore private banks abide by, or ex-
ceed, the minimum standards set by the international Basel Accords,
the banking supervision regulations issued by the Basel Committee
on Banking Supervision (BCBS). These limit risk and require min-
imum capital, shareholder equity, disclosed reserves, and holdings
in debt and equity instruments.
76 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Here are seven preferred banking countries, in each of which we

can recommend American-friendly banks:
Switzerland: historic banking center but high minimums to
open accounts.
Denmark: innovative financial products and solid performance.
Austria: financial privacy and access to Eastern European in-
vestments.
Singapore: strong, Swiss-like privacy laws and a gateway to Asia.
Uruguay: American accounts welcome with strong privacy.
Hong Kong: Banking window to investment opportunities in
China.
Liechtenstein: much like Switzerland, large minimums required
here.

U.S. SEC Goes Offshore

One other important and relatively new consideration is an off-
shore bank’s status when it comes to U.S. Securities and Exchange
Commission (SEC) compliance and registration.
In the UBS Swiss tax evasion bank scandal (2008–2010), the
U.S. Internal Revenue Service played the major role in investigat-
ing and prosecuting U.S. account holders who evaded taxes. This
notorious aspect got most of the news media coverage.
Much less notice was given to the fact that the U.S. Department
of Justice also charged that the services UBS rendered to U.S. clients
amounted to the bank’s staff acting as “unregistered investment
advisers” and “broker-dealers” in violation of the U.S. Investment
Advisers Act of 1940 and of the U.S. Securities and Exchange Com-
mission (SEC) rules.
Using this novel extraterritorial approach, the SEC sought to
extend its jurisdiction to include any foreign person anywhere
in the world who dares to advise Americans about investments.
The SEC claims that unless the adviser first qualifies and registers
Creative Offshore Financial Strategies 77

with that agency, then they are engaging in illegal, even criminal
conduct in spite of the obvious fact that such activities are outside
the United States.
In the final settlement, UBS paid US$718 million to the IRS on
the tax evasion charges. It also paid an additional US$200 million
to the U.S. based on the SEC charges. UBS was also barred per-
manently from acting as investment advisers or broker-dealers for
American clients in Switzerland.
As a result of the successful U.S. government attacks and the
fines levied against UBS, a growing number of offshore banks have
established special, separate SEC-qualified investment banking units
for American clients only. Some independent offshore investment
advisers have also registered with the SEC.
That SEC registration means the offshore manager understands
relevant SEC rules and regulations. It also allows him to work with
an American client in a fully U.S. compliant way. That includes the
U.S. investor receiving on a regular basis all investment transaction
documents, as well as U.S. tax statements needed for IRS filings, all
provided directly on a timely basis from the custodian bank where
the client’s investment funds are held.
As part of your due diligence, check to see if the offshore bank
you are considering is SEC registered.

Major Change in Offshore Investment Management

It is no exaggeration to observe that when it comes to banking
or other offshore financial activity today, Americans have been di-
minished as both current and potential clients in the eyes of many
foreign financial institutions. This is made so mainly because of
the Foreign Account Tax Compliance Act (FATCA), a legislative
monstrosity enacted in 2010 by a Democrat-controlled Congress
and signed into law by President Obama.
Perhaps the worst of all FATCA consequences is the decision
78 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

of untold numbers of foreign banks, financial institutions, profes-

sionals, insurance companies and investors to avoid doing business
with Americans. Understandably they don’t want to deal with
the trouble, cost and the very real legal threat of even accidental
non-compliance with the imperial edicts of FATCA and its en-
forcers at the IRS.
FATCA also has made it difficult, if not impossible, for U.S.
citizens living abroad to maintain existing bank accounts or open
new accounts, both in the U.S. and in their countries of residence.
It also impedes American companies and their employees, active in
badly needed foreign business and trade.
I know from experience with our European, Asian and Latin
American banking contacts that there is a continuing general alarm
and deep seated resentment at the imperial Obama administration
for claiming that U.S. tax law now covers the world and that they
must conform or else.
But that is the negative side of the current offshore situation.
The old and often true saying is that “out of every bad situation
some good results.”
That is exactly what has happened in the rise of the independent
asset manager (IAM) as a useful and profitable link in offshore
banking.
In this new, streamlined system, your IAM acts as the interme-
diary with the offshore custodial bank that holds your investment
funds and, within parameters you dictate and control, manages your
investments for maximum profit.

Alternate Means Available

Even those offshore banks and financial institutions that are
still willing to work with American clients for self-protection, have
imposed a number of limitations.
Some have declined to deal directly with U.S. persons as individ-
Creative Offshore Financial Strategies 79

uals, but will accept accounts opened in the name of corporations,

limited liability companies or trusts controlled by U.S. persons.
Others have agreed to continue only as custodians of private
investment or retirement account funds, but have transferred man-
agement of the investments to independent investment managers.
Throughout these trying years, the Sovereign Society has been
fortunate, drawing on our experience and professional contacts
since our founding in 1997. We have been able to create a net-
work of offshore banks and investment associates willing to ac-
cept (and continue with) our members as their banking clients,
especially those with private investment accounts, notwithstand-
ing FATCA.
Under FATCA pressures, several of our banking associates have
changed the process by which Americans’ private investment ac-
counts are to be managed.
For example, Valartis Bank Vienna decided they no longer would
deal directly with American private investment clients, but the bank
will hold investment funds as custodian if they are transferred to the
management of designated independent asset managers.
Our long-term partners at Jyske Global Asset Management
(JGAM) in Denmark decided to follow this path after serving Amer-
icans for more than 20 years and discontinued providing investment
advisory services.
Unlike other institutions that simply have abandoned their U.S.
clients, JGAM has sold its business to SEC-registered and privately
owned ENR Asset Management in Montreal, Canada.
Eric N. Roseman is the head of that firm and long-time Sover-
eign Society members will remember Eric as our former Investment
Editor and editor of Commodity Trend Alert. ENR Asset Manage-
ment is merging the best of what JGAM has to offer with its own
sizeable investment expertise.
ENR Asset Management will continue to use Jyske Bank in
80 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Denmark to hold the assets as custodian and account keeper and

provide Internet access.
In addition, ENR will have a dedicated support desk at Jyske
Bank in Denmark. ENR is lowering the account minimum by 50%
to US$100,000, just about the lowest asset-management minimum
available now. ENR is also lowering the management annual man-
agement fee by 25% to just 1.5%. Thomas Fischer, the former head
of the investment committee for JGAM, will be the lead investment
consultant for ENR, bringing to bear his years and wealth of foreign
currency experience.

Independent Asset Managers

The role of offshore independent asset managers is not new, but
acting as the adviser and intermediary for American clients with
custodial banks is an expanded role that benefits those clients in
many ways.
The Sovereign Society consistently has recommended that part
of an individual’s wealth and portfolio should be held offshore.
An offshore bank account definitely offers stronger asset protec-
tion than a domestic American account. The same rule applies to
offshore account holders who live in any country.
But the other major plus of an offshore account is the direct
path it offers for better and more profitable and more diverse
investments.
Self-management by a foreigner to produce profits from an off-
shore account obviously requires intimate knowledge about pro-
cedures, fees and rules in another country. An offshore investment
account also requires constant supervision and instant information,
almost forcing you to become a day trader.
This is where an IAM can make all the difference to your invest-
ment success.
In Switzerland alone there are about 8,000 licensed IAMs that
Creative Offshore Financial Strategies 81

manage an estimated US$5.3 trillion. Other leading IAMs can be

found in most major financial centers such as the City of London,
Copenhagen, Gibraltar, Singapore, Hong Kong, Montreal, Mon-
tevideo and the Cayman Islands.
There are good reasons why some independent asset managers
attract such large investment sums; they are good at what they do
and provide a vital service.
Those with experience know that it is to an investor’s advantage
to work through your own personal IAM, rather than trying to deal
directly with an impersonal foreign bank and its possibly overbur-
dened staff.
Based on our experience, here are six reasons that recommend
an IAM for successful operation of an offshore investment account:
• Most IAMs run small operations that are flexible, tailoring in-
vestments to the individual client. They don’t insist on the usual
bank customer investment categories of aggressive, non-aggres-
sive or conservative, but they do offer service to fit your specific
goals. They limit the total number of clients to that which their
staff can assist readily without undue delay.
• A good IAM builds a personal relationship, understanding at
the beginning exactly what a client is seeking and accommo-
dating those goals on a continuous basis with periodic updating
sessions.
• Working with an IAM greatly simplifies your investment life.
Your manager handles opening your account at one of the lead-
ing banks with which they work. A limited power of attorney
enables the manager to work with the bank on your behalf as
you direct. And the IAMs we recommend work with offshore
banks that welcome Americans as desired clients.
• With an IAM you don’t need to devote time to monitoring
your portfolio on a daily basis. A good manager stays in regular
82 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

contact with his client to build on their relationship, but that

does not require constant contact.
• An offshore investment manager will free you from the drag
of the U.S. dollar by choosing foreign investments that do not
mirror domestic U.S. investments. The IAM will take advantage
of the world of investments, many not immediately available to
U.S. investors; that includes foreign stocks and bonds, national
currencies, commodities and precious metals.
• Having an offshore bank account will enable you to invest in all
of the above (and more) using one single account. An IAM and
his associated foreign bank acts as your stock broker and foreign
currency, commodity and precious metals trader. The IAM can
also convert a domestic 401K or other retirement account to a
foreign custodian for greater asset protection.

Once you establish your bank account all orders go from you
to the IAM, as your designated manager, and through him directly
to the bank. The IAM communicates via digital electronic means
with the custodian bank holding your funds for quick execution
of your orders. A typical IAM fee charge is 1.5% for management.
You can be certain the IAM shares your mutual goal of profitable
investments.

Recommended Advisers
SEC Registered

Robert Vrijhof, President

WHVP: Weber, Hartmann, Vrijhof & Partners
Schaffhauserstrasse 418
CH-8050 Zürich, Switzerland
Contact: Daniel Gartmann or Julia Fernandez
Creative Offshore Financial Strategies 83

Tel.: 011 41-44-315 77 77

E-mail: [email protected]
Web: http://www.whvp.ch
Custodial banks: WHVP is associated with a variety of Swiss and
other foreign banks.

Eric N. Roseman
President & Chief Investment Officer
ENR Asset Management, Inc.
1 Westmount Square, Suite 1400
Westmount Quebec, H3Z 2P9 Canada
Tel.: 1-514-989-8027
Toll free: 1-877-989-8027
Web: www.enrassetmanagement.com
Email: [email protected]
Custodial banks: Valartis Vienna, Jyske Bank Private Banking, Von-
tobel Private Banking Zurich, Royal Bank of Canada (RBC)

Thomas Fischer
Lead investment consultant ENR for Jyske Bank
Email: [email protected]

Daniel Zurbrügg, CFA, Managing Partner

Swiss Infinity Global Investments GmbH
Postfach 1919, CH- 8021 Zurich, Switzerland
Tel.: +41 44 200 2311 Fax.+41 44 200 2319
Website: www.swissinfinity.ch
Email: [email protected]
Minimum Balance: US$250,000 or equivalent

Dominique J. Spillmann
CEO and Partner, Swisspartners Advisors Ltd.
84 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Web: www.swisspartners.com
Contact Form
Custodial banks: Bank Julius Bär, Credit Suisse, LGT
Liechtensteinische Landesbank, Pictet & Cie, Sarasin,
UBS, Zürcher Kantonalbank

For members of the Sovereign Society we can provide contact

information for opening offshore bank accounts in Panama, Belize,
Uruguay, the Cook Islands, Singapore, Hong Kong, New Zealand
and Australia.

Choosing and Opening Your Offshore Bank Account

Before you choose a bank, you must pick the right haven nation
where your banking needs will best be met. On the following pages,
you will find information designed to help you make that decision.
Different strategies offer unique benefits and I will show you what
may work best to meet your specific needs
But first, ask yourself your true purposes for wanting an offshore
bank account.
Do you want expanded investment opportunities? Increased
privacy? Do you need asset protection from potential claims and
creditors? All these worthy objectives can be accomplished offshore.
Once you know your objectives, your next step is to learn all
about offshore banks that will fulfill your specific needs. For each
bank you must determine the services it can provide. Check its
reputation, financial condition and all associated costs and fees.
In many countries, banking fees are rather expensive, far more
than Americans are used to paying. Often, the net benefits of an
offshore account are diminished by high fees. Be practical and run
a mathematical model and find out what your net profit (or loss)
might be, based on bank fees alone.
This is especially important for private investment accounts
Creative Offshore Financial Strategies 85

where not only set fees are charged but in some cases, percentage
fees are levied. Few countries tax non-resident bank accounts per se,
but some, like Switzerland, do collect withholding taxes on interest
earnings. In the Swiss case, as with some other countries, these taxes
may be credited against your U.S. tax liability under the existing
double taxation treaties, but you must apply to the IRS for this
credit. See http://www.irs.gov/pub/irs-pdf/p514.pdf

Maximum Privacy
If you want maximum privacy and strong protection from intru-
sive government officials, litigation and lawyers, avoid any offshore
bank with established branches or subsidiaries located within your
home country, especially if you live in the United States, its terri-
tories, possessions, or dependencies. American courts have been
known to threaten the shutdown or confiscation of accounts in U.S.
branches or subsidiaries when their offshore parent bank fails to
comply with a U.S. court order, as in the UBS tax evasion scandal.
Never use your offshore account as a checking account for
payment of home country bills. Bank fees for international check
payments are costly and, what’s worse, this creates recorded links
that undermine the advantages of financial privacy. Offshore retail
accounts are available in some offshore banks with which we work,
even if you do not live or have a business there, but usually such ac-
counts are allowed only for in-country foreigners who are residents.
On the other hand, if you’re unconcerned about creditors or
personal claims and you want ease and speed in setting up and
managing an offshore account, head for the U.S. branch office of
a foreign bank. You might also pick a major American bank such
as Citibank that has many offices and subsidiaries overseas. This
latter course allows you to use offshore bank outlets when you are
abroad but realize that this option offers no asset protection and no
real privacy.
86 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

A more convenient and more private course of action is to obtain

a Barclays, Visa, MasterCard, or other international credit card from
your offshore bank. While offshore cards are more expensive than
their U.S. equivalents, the offshore bank can deduct your monthly
charges from your account balance. This means you earn money
offshore, incur bills offshore, make deposits into and pay with your
offshore account, all outside your home country. As with offshore
checks, never use that offshore credit card in your home country. Do
that and your financial privacy is reduced and the cost is prohibitive.
We now know that the U.S. National Security Agency (NSA), is
spying on all of our phone calls, emails and other information, and
FATCA requires offshore banks to report on Americans’ accounts
starting in 2014. The advice above, if followed, offers some added
privacy, but, in fact, financial privacy is non-existent if you are a
target of the government.
Under no circumstances should you attempt to hide reportable
income that is taxable in your home nation in your offshore bank
account. Nor should you use an offshore bank credit card as an un-
reported piggy bank to conceal income or personal expenses. That
sort of illegal activity is tax evasion and it can land you in jail. As part
of their continuing anti-offshore campaign, the IRS has a vigorous
aversion to tax cheats who use offshore credit cards to hide income.

Source for Offshore Bank Information

U.S. laws force banks and financial institutions licensed to do
business in the U.S. to disclose information about transactions in
other branches even if their home office is in another country. Many
nations have similar laws.
A bank’s failure to disclose information can mean the bank and
its officers may be held in contempt of court, fined and/or its man-
agers imprisoned. Indeed, U.S. courts have imposed sanctions on
the American branches of a foreign bank, even when refusal is based
Creative Offshore Financial Strategies 87

upon a foreign court order or law that forbids production of the

requested data.
As I write this, more than a dozen offshore banks in Switzerland,
Liechtenstein, Israel and other countries are under investigation by
the U.S. Department of Justice for allegedly assisting Americans to
hide unreported funds or evade taxes.

Bank Information Source

The former Thomson/Polk World Bank Directory and the Bank-
ers Almanac have now been replaced by the online services of Bank-
ersAccuity at http://www.bankersaccuity.com/. This is a paid service
and it lists all banks worldwide at http://www.bankersaccuity.com/
correspondent-banking/.
You can also consult a reliable local foreign in-country profes-
sional with whom you have an established relationship. They are a
valuable resource for banking advice and contacts. Once you have
decided which offshore financial institution is best for you, the next
step is to open the account.

Opening Your Account

Except for the geography involved, opening an offshore bank ac-
count differs little from starting a domestic, home country account.
As would your local domestic banker, offshore bankers want to see
you in person when your relationship begins.
Just as you need to do due diligence on your offshore bank, the
due diligence that banks are required to conduct on potential cli-
ents has increased greatly under “know your customer” rules now
in effect worldwide.
When you apply to open an offshore bank account you will be
asked to provide some or all of the following:
• A notarized copy of your passport. You may also be asked to pro-
vide a notarized copy of your birth certificate or driver’s license.
88 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

For the U.S. State Department procedure on how to obtain a

notarized passport, see http://www.travel.state.gov/passport/npic/
npic_872.html
• A recent utility bill or equivalent document which confirms the
details of your permanent home address. Make sure the bill you
present is no older than three months.
• A bank reference letter on your domestic bank’s letterhead, or
on a form provided by the offshore bank. Your domestic bank
manager must sign this letter or form stating you are a reliable
customer. Most offshore private banks prefer that this reference
come from a bank with which you have had at least a two-year
relationship.
• A professional letter of reference from a doctor, lawyer, or ac-
countant in your country of residence.
• A letter describing the specific source of funds you will deposit
initially and your subsequent projected banking patterns. The
bank will use this “profile” information to measure your account
activity to determine if there is suspicious or unusual behavior
that the bank must investigate.
The required minimum deposit, which varies with each insti-
tution or type of account. The minimum starting point for most
offshore private investment bank accounts is US$1 million for full
investment services. ENR Asset Management in Montreal, Cana-
da, one of our recommended independent asset managers, accepts
accounts for as low as US$100,000. See http://www.enrasset.com/
Retail accounts, where available offshore usually require
US$5,000 as an initial deposit.
In some jurisdictions, such as the Republic of Panama, it is tradition-
al that a local professional introduce a foreigner seeking a bank account.
A member of our Council of Experts, Derek Sambrook of Trust Services
Panama provides this service. (Contact information on page 99.)
Creative Offshore Financial Strategies 89

Almost all offshore banks now require that U.S. clients complete an
IRS Form W-9 (Request for Taxpayer Identification Number and Cer-
tification) before they will agree to open your account. The form allows
the bank to share information with the IRS and, in some cases, acts as
a waiver of the foreign country’s bank secrecy laws. This form is used
by a U.S. person (including a resident alien) to give their correct U.S.
Taxpayer Identification Number (TIN) and to certify the TIN is correct.

10 Questions to Ask Any Offshore Bank

What types of accounts are available to international investors?
Are there any restrictions on foreigners’ investments, specifically
on U.S. account holders?
What taxes, if any, will be withheld from my investment income?
What investments are considered part of the bank’s balance sheet
and available to the bank’s creditors (including depositors) in the
event of bank insolvency?
What are the fees for securities transactions and custody?
What other fees may apply to the account?
Is my account insured by law or otherwise against loss in the
event of the bank’s insolvency?
How do I transact business and with whom, and are telephone,
fax, or e-mail orders accepted?
Is Internet banking available and secure? If so, is this service
available in English?
Does the bank send U.S. clients a year-end statement showing
any taxable interest paid?

As I said earlier, employing an independent asset manager is the

best course to follow in opening or managing an offshore investment
account. If you handle your account yourself, one-on-one banking
90 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

contact should be reciprocal. When you establish your account,

immediately get to know your contact at the bank personally. That
person should speak your language, understand your business and
be totally reliable. Always have a “back-up” contact at the bank who
knows who you are, in case your usual representative is unavailable.
While selecting an offshore bank may sound exotic or even dif-
ficult, it is actually not that different from picking a local domestic
bank. It’s important to examine closely the bank’s reputation and
financial condition, and to ask the right questions. What kind of
fees does it require? What services does the bank provide? What do
the services cost?
But with offshore banking there is one critical extra step. You
must ensure the bank welcomes foreigners, especially those with
U.S. passports. And you want to be sure they understand FATCA
and IRS tax reporting requirements.
Offshore banking can be expensive so it is important to be sure
you fully understand a bank’s fee structure. Be sure to crunch the
numbers to find out what your net profit (or loss) might be. And
once you choose a potential offshore bank, get these questions an-
swered before you transfer the first penny.
Be sure you invest the time up front to check the bank’s finan-
cial standing and perform your due diligence. This is not always an
easy task. If you aren’t sure where to start, first check out the bank’s
website to find their annual report or request a copy from the bank.
However, all the due diligence can’t replace a personal visit. I
recommend at least one face-to-face meeting at the bank when you
open the account (often this is required by the bank) and a return
visit at least every two years.

Out in the Open

Here’s a tip that may help you avoid unwanted scrutiny while ac-
complishing your offshore financial goals in relative privacy and peace.
Creative Offshore Financial Strategies 91

Let’s be honest: many offshore jurisdictions known for no-tax,

privacy and anti-creditor banking laws are also prime suspects for
certain dubious financial activities. When your name appears on
a bank account in places such as The Bahamas or the Cayman Is-
lands, it immediately raises red flags for suspicious U.S. government
agents. (But then, so does the name of any tax haven.)
If privacy is your paramount goal, you do not need to use your
own name when opening an offshore account. Instead, create a
trust, family foundation, limited liability company or corporation
under your direct or indirect control and open the account in
its name. Many offshore banks now require American clients to
have their accounts in the name of a legal entity. Even though this
usually is not a matter of public record, all offshore banks require
full disclosure of all beneficial owners of legal entities that open
accounts and this information may be shared with your home
government.
Another way to obtain banking privacy is to “get lost in a
crowd.” You can establish your offshore account in a major bank-
ing nation where privacy is better protected than in the U.S. A
good choice might be the United Kingdom or Switzerland where
there are respected private investment banks. But accept the fact
that IRS agents are suspicious of accounts held in any offshore
financial institution.
You might choose a country where you have family ties, or one
with an active international financial role, such as Hong Kong,
Singapore, Ireland or Austria. In London, Vienna or Dublin, your
bank dealings will not be deemed especially noteworthy, since
thousands of Americans hold accounts in these places. If you create
your own “privacy haven” out in the open, instead of going to a
small bank in some exotic, far-flung locale, your money, and your
privacy, usually will be somewhat more secure.
92 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

No Absolute Bank Secrecy

Let me make clear that banking secrecy does exist in many rep-
utable haven jurisdictions.
Offshore financial centers (“tax havens”) such as Switzerland,
Panama, Belize, Singapore, the Cook Islands and Monaco officially
impose banking privacy by law, waiving this protection only in
criminal situations and usually only under court order.
Unlike the U.S., where bank employees have been turned into
surrogate government spies, many offshore nations impose fines and
prison sentences on bank employees for the unauthorized violation
of the privacy of account holders. At this writing a former employee
of Bank Julius Baer is serving time in a Swiss prison for just such
a violation and an ex-employee of Liechtenstein Landesbank is on
the Interpol international most wanted list.
But let’s put one notion to rest right now — there is no such thing
as a totally “secret” bank account anywhere in the world. And yes,
there still are “numbered accounts” but not in the sense that the
phrase used to designate an account with no name on it.
Even in nations with the strongest bank privacy laws, such as
Switzerland or Austria, a bank account holder’s true name is on
record somewhere in an institution’s files. Even if the account is
in a corporate name, or the name of a trust or other legal entity,
there’s always a paper (or computer) trail to be traced, especially
if government agents want to know about alleged criminals and
their finances.

Tax Information Exchange Agreements

Almost all offshore banking jurisdictions now have numerous tax
information exchange treaties (TIEAs) with the United States and
other nations. These agreements allow the jurisdiction to share tax
information with the U.S. or other governments upon a showing
of probable cause that a tax violation may have occurred in the case
Creative Offshore Financial Strategies 93

of an account holder who is a citizen or resident of the requesting

country.
Beginning in 2009, a major change in offshore banking privacy
policies occurred under a coordinated threat of “blacklisting” from
major nations. Abandoning decades of strict bank secrecy guaran-
teed by law, almost all tax havens have accepted foreign tax evasion
or tax fraud as a valid basis for responding to foreign tax agency
inquiries concerning their citizens with accounts in an offshore
financial center.
The new standard for information exchange is that set by the Or-
ganization for Economic Cooperation and Development (OECD),
based on Article 26 of the “OECD Model Tax Convention.”
Under this OECD procedure, foreign tax authorities wishing
to take advantage of tax information exchange agreements need to
supply evidence of tax evasion (names, facts, alleged tax crimes) to
the requested government. Supposedly, “fishing expeditions” are not
allowed. In the absence of sufficient probable cause, the request may
be denied by the foreign government, but each government varies
in its policies on what constitutes probable cause.
This TIEA policy is now well established internationally.
See http://www.treasury.gov/resource-center/tax-policy/treaties/
Pages/treaties.aspx. The OECD announced that by the end of 2012,
governments had signed more than a thousand bilateral TIEAs to
exchange tax information.

The Imperial U.S. “External” Revenue Service

The Roman Empire’s history of conquest for those countries
and peoples who were conquered brought centralized control, the
suppression of local laws, the imposition of a unified system of rules
and general enslavement.
The question is whether the United States Internal Revenue Ser-
vice has adopted the Imperial Romans as their model and as the
94 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

inspiration for the Foreign Account Tax Compliance Act (FATCA).

FATCA is a U.S. law that attempts to order all offshore banks and
other foreign financial institutions to report directly to the IRS
information about financial accounts held by U.S. taxpayers, or by
trusts, corporations or other legal entities which have substantial
U.S. ownership.
Failure to follow FATCA reporting rules will impose a 30% tax
on all U.S.-based transactions with foreign banks that don’t comply.
It is no secret that offshore banks are furious at being deputized as
IRS agents. But if they refuse to comply, the banks face a choice of
paying that punitive 30% withholding tax or withdrawing com-
pletely from lucrative U.S. financial markets.
This unprecedented American law, adopted in 2010 with little
public notice, follows the Imperial Roman model. It assumes that
the jurisdiction of the U.S. government now extends to every bank
and financial institution in the entire world. It also assumes that
U.S. tax and reporting laws supersede the laws of every other nation,
whether those countries like it or not.
FATCA is billed as an effort by a tax-hungry Obama admin-
istration to combat tax evasion by U.S. persons holding cash or
investments in offshore financial accounts.
As I have already noted, unlike most other countries, the U.S.
government does not have a reasonable territorial tax system that
ends at its borders. Americans are taxed on all their worldwide in-
come without regard to where the individual lives or the sources of
the income.
For many years, U.S. taxpayers with financial assets outside the
United States have been required by law to report those assets to the
IRS and to pay any taxes due — and most do so.
As successive big spending, budget deficit governments of both
political parties have come and gone in Washington, D.C., poli-
ticians frantically have searched for more revenue. As part of this
Creative Offshore Financial Strategies 95

tax and spend policy, they assume that every American engaged in
offshore banking or investing probably is engaged in tax evasion.
What FATCA means for you and me, is that starting in 2014 foreign
financial institutions — including banks, investment brokerages and
insurance companies — are going to be awash in new reporting reg-
ulations — if they agree to continue to welcome American clients
once FATCA comes into force.
In the face of massive protests from thousands of offshore banks,
as well as official protests from governments in Canada, Panama,
Switzerland, The Bahamas and many other countries, the IRS an-
nounced that the original January 1, 2013 FATCA effective date
had been moved to July 1, 2014.
Obama administration officials tried to claim the delay as a sign
of the FATCA’s success. Treasury officials said they have signed
nine agreements with other countries to implement FTACA and
were negotiating with about 80 countries. These so-called “In-
ter-Governmental Agreements” (IGAs) promise U.S. reciprocity in
return for foreign compliance, meaning U.S. banks will be forced
to turn over the names of their foreign clients to their home coun-
try. Members of the U.S. Congress have questioned the legality
of these IGAs, pointing out that treaties must be approved by the
U.S. Senate.
Under this IRS delayed schedule, offshore private banks, which
face the most onerous FATCA requirements, will not be forced
to provide details on U.S. clients with accounts with more than
US$50,000 until the middle of 2014. Lower value accounts at pri-
vate banks won’t need to be reported until 2015. Required personal
reporting by persons with offshore assets for American taxpayers
began in April 2012 with the first filing of IRS Form 8938 (State-
ment of Specified Foreign Financial Assets).
Adhering to these complex IRS reporting regulations will cost
offshore financial institutions hundreds of millions of dollars for
96 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

greatly expanded compliance staffs, software programs, investiga-

tions of their U.S. clients and trying to understand and meet the IRS
rules. Bank clients will pay the bill for this IRS mess in ever-higher
bank fees.

Expat Americans Suffer

FATCA presents a special problem for millions of Americans
who live and work offshore, each of whom suddenly is confronted
with an obligation to file all sorts of new reports which carry penal-
ties and possible criminal indictments. Many have had established
foreign bank accounts closed and been refused new ones as offshore
banks have opted to stay out of this FATCA mess.
So if you ran a business, would you cater to clients that cost you
more to serve and bring with them more risks? Or would you say,
“Thanks, but no thanks” and focus your business elsewhere? It seems
pretty simple. And that is the exact decision thousands of foreign
institutions are making, or already have made.
What the tax hungry U.S. politicians have ignored is that FAT-
CA could cripple foreign investment in the U.S. at a time when the
faltering economy needs all the foreign cash it can get.
But few are betting that the IRS, unless forced to, will aban-
don its Imperial Roman attitude — even as the American Empire
it serves declines.
Fortunately for members of The Sovereign Society, during our
unique, 15-year existence The Society has established arrangements
for bank accounts with numerous reputable and well capitalized
offshore banks. Any bank mentioned in these pages is one that wel-
comes American clients and will give a special welcome to Sovereign
Society members.
Creative Offshore Financial Strategies 97

Strategy 2:

The Offshore Asset Protection Trust (APT)

To paraphrase that great old American TV show, Gun Smoke,
“Get your assets out of Dodge.”
Frivolous litigation, expensive legal defense costs, outrageous jury
awards and government privacy invasions all combine to create an
urgent need to protect your family and business wealth and your
privacy as well.
What’s the solution?
The offshore asset protection trust (APT) — a legal device that
shields your wealth from lawsuits, creditors, an irate ex-spouse and
even the government of your home country. One of the very best
methods for asset protection is to create an APT located in an off-
shore haven jurisdiction.
Many offshore financial centers specialize in trust creation,
including Bermuda, the Isle of Man, the Channel Islands of Jersey
and Guernsey, Singapore, Hong Kong and the Cook Islands.
But I recommend the Republic of Panama. Only a few hours
by air from the United States, Panama has a century-long history
as a financial haven and a reputation for working closely with
Americans.
The Republic of Panama, unlike the United States, has a sensi-
ble “territorial” tax system. It only taxes income produced within
the borders of Panama. Thus, non-Panama trust or other income
is exempt from local Panama taxes, but not U.S. taxes.
The first trust law in Panama was adopted in 1925 based on the
British common law trust. In 1984 and again in 1995, the trust
law was updated to include modern provisions especially designed
to allow flexible operation and convenience for foreigners seeking
offshore trusts.
98 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Low Costs
Traditionally, the cost of creating a highly complex asset protec-
tion trust in a foreign nation has exceeded US$15,000, plus several
thousand dollars in annual maintenance fees. Unless the total assets
to be shielded justify such costs, a foreign APT may not be practical
for you.
A few years ago, BusinessWeek estimated that “as a rule of thumb
you should have a net worth of around US$500,000” or more in
order to justify a foreign asset protection trust. The magazine cited
expert’s fees for establishing and administering such trusts running
as high as US$50,000, with some demanding a percentage of the
total value of assets to be transferred.
While high costs once may have been the old rule, APT costs
have changed for the better. These days, offshore trusts are not just
for the very rich.
Panama is a good example of these lower costs. In the State of
Delaware, for trust creation and management some trust compa-
nies charge “basis points” on the net asset value of the trust assets.
So, if you have a trust worth US$500,000 and the trust company
charges 2%, the fee would be US$10,000. Others charge flat fees of
US$3,500 to US$5,000 a year, regardless of the size of the trust estate.
In Panama, however, if your assets are valued at US$400,000 or
less, the initial cost to create an APT is US$2,500 if you employ
Trust Services Ltd., and this includes the first-year annual mainte-
nance fee of US$1,070. The trustee fee pays for keeping your trust
compliant and covers the costs of administering the trust according
to its stated goals.
Some people overlook annual maintenance fees, but a trust could
be active for 20 to 30 years, or longer, so annual fees add up. For
instance, a simple offshore APT holding title to less than US$1
million in assets set up by Trust Services Ltd. in Panama (contact
details below), charges US$1,000 a year. Compared to a domestic
Creative Offshore Financial Strategies 99

U.S. trust structure which would charge US$5,000, over a 25-year

period that saves US$100,000!

Trust Services SA
Derek Sambrook, Managing Director
Adam Carmody, Trust Officer
Suite 522, Balboa Plaza, Avenida Balboa
Panama, Republic of Panama
Tel.: +507 263-5252 / 269-2438
Email: [email protected]
Website: www.trustservices.net

What is a Trust?
Most of us know the word “trust” but do you know what a trust is?
A trust is a formal legal arrangement voluntarily created and
funded by a person (the grantor) that directs another person (the
trustee) to take legal title and control of the grantor’s donated prop-
erty, to be used and managed for the benefit of one or more other
persons the grantor designates (the beneficiaries).
The beneficiary receives income or distributions of assets from
the trust and has an enforceable equitable title to the benefits, but
does not control trust assets or manage trust operation. An offshore
asset protection trust may also include another party to trust opera-
tion, the protector, a person vested with certain powers to monitor
the performance of the trustee.
The creation of a trust arrangement is a planned, intentional act.
A trust can serve a specific purpose or be part of a general estate
plan. The trust grantor signs a written declaration describing his or
her intentions, stating specific details of proposed trust operation,
income distribution and the extent and limits of trustee powers.
A well-drafted trust document will reflect the grantor’s precise
intentions. Drafting a trust declaration as part of an overall estate
100 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

plan requires expert advice based on a thorough examination of all

existing arrangements that affect the grantor’s estate.
To create a proper estate plan, the status of all other legal doc-
uments or devices, such as a will, or jointly owned assets, must be
reviewed and coordinated with the trust. Conflicts must be resolved
consistent with all applicable trust and tax laws. However, a targeted
trust may be drafted only to accomplish limited or even single goals,
such as asset protection.
Most offshore asset protection trusts are drafted as “discretion-
ary” trusts, a form that allows greater planning flexibility. This means
the trustee is given the power to decide how much will be distribut-
ed to beneficiaries and, in some cases, who qualifies as a beneficiary.
The trust declaration may vest a trustee with the right to make
payments for purposes, at times and in amounts, the trustee de-
cides. A trustee often is given the authority to recognize benefi-
ciaries within named classes of persons (“my children and their
heirs”), or the trust may contain a right known as a “power of
appointment” allowing the trustee to choose beneficiaries from a
class of eligible persons.

What a Trust Can Do

A trust may be created for any purpose that is not illegal or void
as against public policy.
A trust can hold title to and invest in real estate, cash, stocks,
bonds, negotiable instruments and personal property. Trusts can
provide care for minor children or the elderly; or pay medical, edu-
cational or other expenses. A trust can provide financial support in
an emergency, for retirement, during marriage or divorce, or even
carry out premarital agreements.
To the uninformed, the trust process may seem complex and
difficult, but, in fact, a trust is one of the most flexible yet efficient
legal mechanisms recognized by law. Compared to the alternatives,
Creative Offshore Financial Strategies 101

it can provide superior asset protection and can assure that your
bounty will be distributed exactly as you see fit.

The APT
In recent decades, asset protection using the trust format has
gained wide popularity among people of wealth who are “in the
know.”
The foreign asset protection trust (APT) is any trust that helps
individuals protect assets from attack by creditors. It is established
in an offshore jurisdiction by a grantor resident in one nation under
the laws of another nation where the trust operations are based and
where trust laws offer greater protection.
Because the trust is governed by the laws of the nation where it
is registered and administered, this “foreignness” serves as a shield
for the grantor’s business and personal assets, deflecting would-be
creditors, litigation and potential financial liabilities, perhaps even
an ex-spouse bent on revenge.
Here are a few reasons why an offshore APT can be so effective:
Judicial Obstacles: In many cases, the courts of asset haven na-
tions often will not automatically recognize the validity of U.S. (or
other nations’) domestic court orders. A foreign judgment creditor
seeking collection must re-litigate the original claim in the foreign
court after hiring local lawyers. He may have to post a bond and
pay legal expenses for all parties if he loses. The legal complexity and
cost of such an international collection effort is likely to stop all but
the most determined adversaries or, at the very least, to promote
compromise.
Minimal Needs: An offshore APT need not be complex. Cre-
ation can be little more than the signing of formal documents and
opening a trust account managed by your local trustee in a bank in
the foreign country of your choice. Respected offshore multi-nation-
al and local banks routinely provide experienced trust officers and
102 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

staff to handle trust matters. Most international banks have U.S.

dollar-denominated accounts, often offering better interest rates
than U.S. financial institutions.
Greater Protection: Under the laws of haven nations, assets
placed in an offshore asset protection trust have far more protection
than permitted under domestic U.S. trust law. The law in these
countries is drafted specifically to provide an asset protection “safe
harbor” that is unavailable in the U.S. and many other nations.
With an offshore APT, foreign-held trust assets are not subject to
the jurisdiction of your local or home country judicial system.
Fast Acting: Time under the statute of limitations for initiating a
foreign creditor’s suit varies. In many jurisdictions, the statute begins
to run from the date the APT was established. Some haven nations,
such as the Cook Islands, have a limit of one year for the initiation
of claims. As a practical matter, it may take a creditor longer than
that just to discover the existence of a foreign APT to which most
assets have long since been transferred.
Better Investments: An offshore APT is an excellent platform for
diversifying investments and benefitting from the global tax savings.
An APT permits taking advantage of the world’s best investment
opportunities, without being blocked by your home nation’s legal
restrictions on foreign investments. As previously discussed, offshore
foreign stock, bond and mutual fund trading are not covered by laws
such as the U.S. Securities and Exchange Act or its administrative
arm, the SEC. An offshore APT can also purchase attractive insur-
ance and annuity products not available in the U.S. and some other
nations. Tax savings may result from deferred investment earnings
or capital gains, rather than ordinary income that will not only be
taxed immediately but at a higher rate.
Confidentiality: The APT can provide far greater privacy and
confidentiality, minimization of home country inheritance taxes and
the avoidance of the probate process in case of death. It provides
Creative Offshore Financial Strategies 103

increased flexibility in conducting affairs in case of personal disabil-

ity, allows easy transfer of asset titles and avoids domestic currency
controls in your home nation. An APT is also a good substitute
for, or supplement to, costly professional liability insurance or even
a prenuptial agreement, offering strong protection for your heirs’
inheritance.
Estate Planning: An offshore APT can serve the same tradi-
tional estate planning goals achieved by U.S. domestic strategies.
These include using bypass trust provisions to minimize estate tax-
es for a husband and wife, trusts that allow maximum use of gift
tax exemptions through planned giving and trusts that provide for
maintenance and tax-free income for a surviving spouse.

Asset Transfer
As a practical matter, regardless of the time of APT creation, any as-
sets physically remaining within your home country and its courts’ juris-
diction generally are not protected from domestic judgment creditors.
Simply placing title to domestic property in the name of a foreign
trust is paper-thin protection at best unless the property is actually
moved offshore. When tangible assets actually are transferred to the
foreign jurisdiction, as when funds, stock shares, precious metals
or other tangible property are moved to an offshore trust account
or the trustee’s safe deposit box, a home country creditor will have
great difficulty in reaching them, provided he even discovers the
existence of the trust.
As a mandatory precaution, the APT and its trustee should al-
ways employ an offshore bank that is not a branch or affiliate of any
bank within your home country. This helps insulate the offshore
bank officials (and APT accounts) from foreign official or private
pressure. It gives greater legitimate protection from home country
pressures or just informational snooping — whether government
or otherwise.
104 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

But consider this: even with this enhanced offshore financial

privacy, in a given situation there can be great tactical advantage in
letting a harassing party know your assets are securely placed well
beyond their reach. The cost and difficulty of pursuit may well dis-
courage any action on their part or result in a compromise.

Strategy 3:

Earn US$97,600 a Year — U.S. Tax-Free

If you decide personally to follow your cash, assets and invest-
ments and go offshore yourself, there’s a very useful provision of
U.S. tax law about which you should know.
As I have noted, Americans and citizens of other nations move off-
shore for many reasons, to find a new or second home, to seek lower
taxes, greater asset protection and more financial and personal privacy.
But there is another group of international migrants, many of
them educated and professional Americans who “go offshore” to
find not only a better job, but to enjoy a major tax break that U.S.
law grants to those who qualify — it’s called the “foreign earned
income exclusion.”
If you are considering moving yourself or your family to a foreign
country, or if you have an offer of employment abroad, here is a
definite plus that may help you decide.
A few years ago The New York Times reported on a Louisiana
professor with a PhD in economics who, despite being tenured
at his prestigious Virginia university, left to teach at the American
University in Dubai in the United Arab Emirates. Helping to tip
the scales in favor of Dubai included great schools for his children,
inexpensive house help and two top-of-the-line luxury import autos
he purchased without having to pay U.S. income tax.
The tax break to which the professor referred is known as the
“foreign earned income exclusion.”
Creative Offshore Financial Strategies 105

Why is this important? Because no thanks to the U.S. Internal

Revenue Code, along with a Supreme Court decision from the 1920s,
U.S. citizens must pay tax on their worldwide income, no matter
where they live and work. Most other countries allow their citizens
who live abroad to avoid domestic taxes, but not the United States.
This foreign earned income exclusion is a legal tax break that
allows a U.S. citizen who lives and works outside the U.S. to exclude
up to U$97,600 each year tax-free (the 2013 amount adjusted annu-
ally for inflation) of foreign earned income from U.S. income taxes.
If both a husband and wife work offshore, it’s possible that they
could earn US$195,200 tax free annually offshore, plus lower taxed
housing allowances an offshore employer pays for you.
This is not a tax deduction, credit, or deferral. It’s an outright
exclusion of your offshore earnings from gross income, so you pay
no U.S. income tax on that amount.

Qualifications
To qualify for these benefits you must: 1) establish a “tax home”
in a foreign country; 2) pass either the “foreign residence test,” or
the “physical presence test”; 3) actually have earned income; 4) live
in the U.S. for no more than one month during the year; 5) file a
U.S. income tax return for each year you live abroad claiming the
exclusion.
Usually your “tax home” is where your principal place of business
is located, not where you live. The term “tax home” is broader when
determining eligibility for the foreign earned income exclusion.
Confusion over this point stings many Americans overseas. If you
work overseas and still maintain a U.S. residence, your tax home
remains in the U.S.
To qualify for the foreign earned income exclusion you must
establish both your principal place of business and your actual res-
idence outside the United States.
106 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

A complicated test that determines if you get this exclusion in-

volves counting the maximum number of days you’re in or out of the
U.S.A. But the foreign residence test is easier for most taxpayers to
pass. You must establish yourself as a bona fide resident of a foreign
country for an uninterrupted period that includes an entire taxable
year; and you must intend to stay there indefinitely. If you don’t pass
this test, you’re considered a transient and won’t qualify.
U.S. tax law defines your residence as a state of mind. It’s where
you intend to be domiciled indefinitely. To determine your state
of mind, the IRS looks at the degree of your attachment to the
country in question. A number of factors, none of them decisive
are examined.
Your “tax home” is the location of your regular or principal place
of business, not where you live. But the definition of “tax home” is
broader when determining eligibility for the foreign earned income
exclusion.
Confusion over this point snags many Americans overseas who
think they are earning tax-free income. If you work overseas and
maintain a U.S. residence, your tax home is not outside the U.S.
In other words, to qualify for the foreign earned income exclusion,
you must establish both your principal place of business and your
residence outside the United States.
The bottom line is that you must establish yourself clearly as a
member of a foreign community. This unusual tax break is only for
those who actually live and earn offshore.
But think about this: suppose you have a legitimate business
that can be based in an offshore tax haven such as Panama, where
a territorial tax system only collects taxes on earnings from within
Panama, but not from outside the country. And suppose the bulk
of the income comes from worldwide sources, say, for consulting or
professional advice. You could cut your U.S. ties, move to Panama
and charter a Panama corporation (SA) for your business. You could
Creative Offshore Financial Strategies 107

then pay yourself (and perhaps your spouse or significant other) a

salary for services rendered, plus housing and other expenses.
Needless to say, such an arrangement would have to be carefully
planned with the advice of an expert U.S. tax attorney so that all
requirements of the foreign earned income exclusion tests are met
and you are certain to qualify.
Definitely something to factor into your planning if offshore
beckons you.
For U.S. tax advice:

Josh N. Bennett JD
440 North Andrews Avenue
Fort Lauderdale, FL 33301
Tel.: (786)202-5674
Email: [email protected]
Website: http://www.joshbennett.com/

Strategy 4:

Offshore Variable Annuities

Even though the U.S., the United Kingdom and the European
Union continue to tighten the tax and financial reporting screws
on wealth, there still remain private and profitable, yet strictly legal
ways to protect and invest assets.
One of best of these is the offshore variable annuity because it
allows you to avoid paying taxes until you actually withdraw funds.
According to The Wall Street Journal, “Offshore annuities are be-
coming an investment vehicle of choice for those who have oodles
of money they want to shelter from taxes.”
This is also one of the easiest, least expensive methods to invest in
offshore stocks and other funds. Another advantage is that annuity
investments can be transferred from one fund manager to another
108 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

with no immediate tax consequences. Plus, you achieve significant

asset protection.
Annuities work very well for your children or grandchildren,
because the earnings accumulated within the policy are tax-deferred
until funds are paid out or withdrawn many years later when they
are ready for retirement.
What really makes an offshore deferred variable annuity supe-
rior to its domestic U.S. brother is that it gives you access to a
wide variety of international investment options, including foreign
currencies, foreign investment funds and an entire host of offshore
stocks and bonds.
Offshore variable annuity investments typically start around
US$500,000, commonly exceeding US$1 million or more. In
contrast, the average domestic U.S. annuity buyer’s initial in-
vestment is only US$25,000 or less. The primary objectives in
purchasing annuities and life insurance offshore are asset pro-
tection, greater wealth accumulation and access to international
investment opportunities.
Because they are located offshore, away from restrictive U.S.
laws, foreign insurance companies can be flexible in negotiating fees.
But keep in mind that, unless eliminated by a tax treaty, a one-time
1% federal U.S. excise tax is levied on all life insurance and annuity
contracts issued to U.S. persons by foreign insurers.

Good Income Play for Savvy Investors

A Swiss annuity, denominated in one of the world’s most re-
liable currencies, the Swiss franc, is a good income play for savvy
investors. That is because, as the dollar depreciates, your annuity
income appreciates.
Example: Mr. Smith, age 64, invests 100,000 Swiss francs
(CHF) in a Swiss annuity. Every year, for the rest of his life, this
annuity will repay him a guaranteed 4,623 Swiss francs. His August
Creative Offshore Financial Strategies 109

1, 2013 payment of 4,623 Swiss francs would then have converted

into US$4,911.64.
The Swiss franc appreciated 27% in two years against the fal-
tering U.S. dollar, making Mr. Smith’s investment more profitable
for him.
The Swiss franc generally has reflected the state of Swiss banking,
strong, valuable and unaffected by inflation and monetary fads. Since
1971, the franc has appreciated nearly 400% against the U.S. dollar.
Whatever the specific arithmetic, if you invest the usual mini-
mum required, CHF100,000 (US$107,146) in a Swiss fixed an-
nuity, with immediate payments over a 10-year term, inevitably if
and when the dollar declines in value, you enjoy greater spendable
income when you later convert Swiss francs back into the dollar at
a much better exchange rate.

Annuity Mechanics
In this arrangement, the insurer is the legal owner of the annuity
bank account and also the investor.
The annuity purchaser has the right to choose initially and later
change the overall investment strategy, but under U.S. law you
cannot select the specific underlying investments or manage them
yourself. The asset manager has the power to choose any investment
he deems appropriate within the general instructions you have giv-
en, conservative, moderate or speculative.
He can pick from the entire global investment universe, without
SEC restrictions or other rules that would otherwise apply to U.S.
citizens. This allows him to place the deposit you made into your
fixed annuity in all traded mutual funds, hedge funds, and stocks,
bonds, structured products and the like.
Under this arrangement the insurer is the owner of the investments.
You own an annuity policy with a value linked to the underlying port-
folio of investments, but you don’t own the individual investments.
110 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Swiss and other foreign insurers have established special arrange-

ments with the successful private banks and asset managers in Swit-
zerland and throughout the European Union, giving you assurance
that there is an investment strategy available to suit your needs.
You can be certain the insurer wants to make profitable invest-
ments as much as you do.
In the event of your death, the account funds will be paid to the
beneficiaries according to your instructions.

Swiss Leader
History shows that Switzerland is the place for offshore annuities
and life insurance.
While Swiss banking often gets the world’s spotlight (for reasons
both bad and good), Switzerland’s other financial institutions and in-
surance companies offer a broad range of services that, in some cases,
approach the flexibility of a bank account. Indeed, many Swiss resi-
dents use their insurance company as their only financial institution.
As for integrity, in the entire history of Swiss insurers, no life
insurance company ever has failed to meet its obligations or been
forced to close its doors.
And Swiss insurance policies — including annuities — have im-
portant advantages:
Insurance and annuity accounts aren’t subject to the Swiss 35%
withholding tax on earned bank interest and are exempt from all
other Swiss taxes, including those on income, capital gains, and
inheritance taxes.
Swiss annuities generally offer higher interest rates than Swiss
bank accounts.
Swiss law gives annuities special asset protection including ex-
emption from enforcement of foreign court judgments including
bankruptcy.
However, all these special benefits are not limited to the Swiss
Creative Offshore Financial Strategies 111

people alone. You too can enjoy unequalled asset protection and
guaranteed income at relatively low cost.

Deferred Taxes
An offshore variable annuity is a contract between you and a
foreign insurance company that provides tax deferred savings. It can
serve as a savings or retirement vehicle using investment structures
similar to mutual funds, sometimes called “sub-accounts.”
Here’s how it works: you buy a variable annuity contract (pol-
icy) for an agreed-upon sum, often referred to as a “single premi-
um.” These monies are invested by the insurance company in one
or more investments that you approve, such as an offshore hedge
fund.
The annuity contract requires periodic payments by the insur-
ance company to you representing the increased value of invest-
ments on which the annuity is based. The money compounds, tax
deferred, until you withdraw part or all of it, at which time it is
taxed as regular income.
This tax-deferred accumulation can continue until the contract
maturity date, usually when you are 85 or older, a time when total
income is lower. An annuity is not “life insurance,” so you need not
take a medical examination to determine “insurability.”
In most cases when the annuity matures, it either must be sur-
rendered or converted to a life annuity that pays out a specified sum,
at least annually, for the rest of your life, or for some other agreed
upon period of time. Because most investors buy variable annuities
for their tax-deferred savings features, withdrawing funds as needed,
most variable annuities never convert to a life annuity.

Strong Asset Protection

Variable insurance annuities offer significant asset protection,
especially in Switzerland, shielding the cash invested and the annu-
112 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

ity income from creditors and other claimants. Swiss law exempts
annuities from foreign court judgments including bankruptcy.
Practical asset protection exists because: 1) the policies are issued
by an offshore insurance company with no affiliates in the United
States, and 2) the policy’s underlying assets are held entirely outside
your home jurisdiction. Any domestic investments are made in the
name of the insurance company, not in your name.
The degree of asset protection afforded by Swiss insurance and
annuities is unparalleled anywhere else in the world.
Swiss law holds that simply owning Swiss life insurance or an
annuity absent other evidence of business activity within the coun-
try, is not a sufficient basis for a Swiss court to honor a foreign legal
judgment against you or your assets.
Swiss law offers significant asset protection for life insurance
products including annuities. Neither is subject to collection reme-
dies directed against the owner of the policy and the policies are not
deemed to be a part of the bankruptcy estate of the policy owner.
If a U.S. or other foreign court authorizes the attachment or levy
against a Swiss policy, whether in bankruptcy or otherwise, a Swiss
court will not issue an order directing the assignment of the policy
to the creditor or the bankruptcy trustee.
Because Swiss insurance companies are not subject to the jurisdic-
tion of a U.S. court, without an order from a Swiss court the annuities
are untouchable by creditors. Swiss courts repeatedly and strictly
have upheld these protective rules. The law also offers special added
protection for annuities naming spouses and children as beneficiaries.
Recognized by the Swiss Federal Office for Private Insurance
Matters, these protections apply to all life insurance policies, in-
cluding annuities and those linked to mutual funds and derivatives.

Company Protection
Statutory asset protection exists in other jurisdictions for annuity
Creative Offshore Financial Strategies 113

contracts as well. In the Isle of Man, a jurisdiction that is home to

192 insurance companies, claims by creditors can only be made
through the local courts.
When a variable annuity is issued, the investment assets must be
placed in this account and used only to satisfy the variable annuity
obligation. If the company has financial problems, these segregated
assets cannot be reached by insurance company creditors or credi-
tors of other policyholders. Unfortunately, in 2013 FATCA caused
Manx insurance companies to stop writing insurance for American
clients.
The Cayman Islands, the home of many leading offshore insur-
ance companies, have a similar “segregated accounts” law.
In Switzerland, according to Swiss attorney Urs Schenkero, “A
life insurance policy...is protected from the policy owner’s creditors
if the policy owner has irrevocably designated a third party as bene-
ficiary or if the policy owner has irrevocably or revocably designated
his spouse and/or his descendant’s beneficiaries.”
The Swiss Insurance Act prevents a properly structured insurance
contract from being included in a Swiss bankruptcy procedure. The
law also protects the contract from foreign seizure orders or orders
including them as part of foreign estate proceedings. Under Swiss
law, if you are unable to pay your debts or file bankruptcy, all rights
under the contract are assigned to the beneficiaries. Other offshore
jurisdictions with a well-developed insurance sector provide statu-
tory protection against creditor claims for insurance policies.

Offshore Variable Annuities and U.S. Taxes

Section 72 of the U.S. Internal Revenue Code treats both for-
eign and domestic variable annuities the same. But the IRS rules
must be followed by an insurance company in drafting a policy in
order for accumulations to qualify for tax deferral. Before you buy,
always obtain a copy of a reliable written legal opinion issued by the
114 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

insurance company that confirms the proper U.S. tax treatment of

the company’s annuities. Check the opinion and policy with your
U.S. tax advisors if in doubt.
To the extent that the funds you withdraw from a variable an-
nuity represent deferred income, they are taxed at ordinary U.S.
income tax rates. A loan against a variable annuity from the issuing
insurance company to the annuity buyer, or a third party loan se-
cured by a pledge of the annuity, is a taxable distribution. Certain
unsecured loans, however, may be tax-free. Also, borrowing against
an annuity when it is first purchased is not taxable since no deferred
income has accumulated.
Thus, you can acquire a US$2 million annuity contract and bor-
row up to US$1 million of the purchase price, pledging the annuity
to secure the loan, with no adverse tax consequences.
Keep in mind this difference: tax deferral is available to variable
annuities of U.S. investors but not to those who purchase foreign
fixed annuities. A “fixed” annuity is an annuity contract guaran-
teeing a fixed income for a specified period of years or for life. A
“variable” annuity income varies depending on the performance of
the underlying investments.

Offshore Insurance is Reportable

U.S. reporting requirements relating to offshore insurance are
similar to those the IRS imposed on offshore banks, such as fil-
ing the IRS Form W-9, as I discussed earlier under the offshore
banking section.
The rules announced by the U.S. Treasury agency, the Finan-
cial Crimes Enforcement Network (FinCEN), greatly expanded
the scope of investments that U.S. taxpayers must report annually.
U.S. persons long have been required to submit the Foreign Bank
Account Report (FBAR), U.S. Treasury Form TDF 90.22-1, by
June 30th each year.
Creative Offshore Financial Strategies 115

Current FBAR rules an expanded definition of the term “other

financial accounts” and includes reporting “an account that is an
insurance or annuity policy with a cash value.” This squarely targets
U.S. investors holding non-U.S. life insurance or annuity contracts.
The obligation to file the FBAR in the case of life insurance or
annuities rests with you as the policyholder, not with the beneficiary.
If you are interested in learning more about Swiss annuities, con-
tact Marc-André Sola, a member of The Sovereign Society Council
of Experts. Marc and his associates at NMG International in Zurich
are experts in tailoring policies to each person’s individual needs.

Marc-André Sola, Managing Partner

Dr. Josef A. Haid, Managing Partner
NMG International Financial Services Ltd.
Hottingerstrasse 21, 8032 Zürich, Switzerland
Tel.: +41 44 266 21 41
Web: www.nmg-ifs.com
Email: [email protected]

Strategy 5:

Offshore Life Insurance

Despite all the talk of “tax reform” in the United States, when
a death occurs without prior proper planning, the combination
of income tax and estate tax can consume 50% or more of a U.S.
person’s estate.
Such ruinous consequences can be avoided with several planning
techniques, but only life insurance provides these four key benefits:
1) tax-free buildup of cash value, including dividends, interest and
capital gains; 2) tax-free borrowing against cash value; 3) tax-free
receipt of the death benefit; and 4) freedom from estate and gener-
ation skipping taxes.
116 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

These benefits are available in any life insurance policy de-

signed to comply with U.S. tax laws. However, for larger estates, a
U.S.-tax-compliant life insurance policy issued by a carrier outside
the U.S. offers these additional benefits:
Increased asset protection. No protection for life insurance pro-
ceeds exists under federal laws. While many states have enacted laws
that provide limited protection for life insurance policies, coverage
varies from significant to non-existent. In contrast, many offshore
jurisdictions provide statutory asset protection for the death benefit
and investments held by an insurance policy. And, as a practical
matter, it is much more expensive for a creditor to bring a claim
before a foreign court than a domestic court.
Access to global investments. Offshore insurance policies
provide tax advantaged access to international asset managers
and to offshore funds that are generally not accessible to U.S.
investors.
Increased privacy. Domestic assets, including life insurance pol-
icies, can easily be discovered by private investigators with access to
any of the hundreds of “asset tracking” services now in existence in
the U.S. In contrast, assets held offshore are off the domestic “radar
screen” and cannot easily be identified in a routine asset search. The
confidentiality statutes of some offshore jurisdictions are an addi-
tional barrier against frivolous claims and investigations.
Not reportable as a “foreign bank account.” A life insurance
policy purchased from a non-U.S. carrier is not considered a “for-
eign bank, securities or other financial account.” This means that
there is no requirement to report the existence of the income derived
from an offshore insurance policy to any U.S. government authority.
However, depending on what country you purchase an offshore in-
surance policy from, it may be necessary to make a one-time excise
tax payment to the IRS amounting to 1% of the policy premium.
Currency diversification. Life insurance policies are free to
Creative Offshore Financial Strategies 117

make investments in non-U.S. dollar assets that may gain in the

event of future declines in the value of the U.S. dollar.
Needless to say, the IRS is not pleased with a planning technique
that simultaneously eliminates federal estate taxes, creates a situation
where no U.S. person is subject to tax upon transfer of the assets
to the beneficiaries and permits the policyholder to invest in highly
lucrative offshore mutual funds without paying tax.
To this end, the IRS announced rules that would limit the tax
benefits for investors in hedge funds that are setting up insurance
companies in offshore jurisdictions, but that are not in fact op-
erating as life insurance carriers. The IRS is also concerned with
foreign insurance carriers that are investing in hedge funds and has
promised to more aggressively enforce existing provisions in the U.S.
Tax Code that prohibit life insurance investors from managing their
own securities portfolio and that require adequate diversification
within the policy.
However, these IRS policy changes have been “in the making” for
several years. A properly planned and executed offshore insurance pol-
icy should not be affected. But it is essential that you obtain expert tax
advice when considering the purchase of an offshore insurance policy.
Life insurance remains one of the few remaining opportunities
for offshore estate tax planning combined with asset protection and
tax deferral. And, without major changes in U.S. federal laws, these
advantages will remain for the foreseeable future.

Marc-André Sola, Managing Partner

Dr. Josef A. Haid, Managing Partner
NMG International Financial Services Ltd.
Hottingerstrasse 21, 8032 Zürich, Switzerland
Tel.: +41 44 266 21 41
Web: www.nmg-ifs.com
Email: [email protected]
118 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

Strategy 6:

Offshore Investing
When it comes to profitable investing, too many Americans
believe the U.S. sits at the economic and political center of the
world, with other countries orbiting around us. And these misguid-
ed U.S. investors put the greatest share of their cash into domestic
markets — a phenomenon known as “home-country bias” — but
that’s a big mistake.
More than a decade of impressively high foreign market returns
should have convinced more American investors to trade offshore.
Over-dependence on U.S. stocks is a weakness in any portfolio.
Those who only invest in U.S. stocks are losing out on much larger
profits abroad.
For smart investors everywhere, the message is clear: For sol-
id profits, you must put some wealth to work in markets beyond
America’s borders. Since 2001, U.S. stocks have had seven winning
years. In 2003, the S&P 500 gained almost 30%. That’s huge by
any yardstick.
Yet, even with that huge win, U.S. stocks never cracked the top
10 list of the world’s best-performing stock markets — and given the
U.S. financial situation these days, don’t expect America to move to
the top of the list any time soon.
Until recently, putting money to work in overseas stock markets
was largely the province of institutional investors and the super-rich,
whose deep pockets attracted the interest of private bankers and
exclusive U.S. brokerage firms that catered solely to the well-heeled.
That is no longer the case.
To date, there are approximately 2,000 emerging-market invest-
ment funds managing over US$300 billion in equities. In 2012, ET-
FGI, an independent U.K. research and consultancy firm, said that
global assets invested in Exchange Traded Funds (ETFs) and Ex-
Creative Offshore Financial Strategies 119

change Traded Products (ETPs) hit an all-time high of over US$1.7

trillion. Over the past 10 years the compounded annual growth rate
of these products globally has been 26.5%.
Assets invested globally in ETFs and ETPs were at US$2.04
trillion, down from their all-time high of US$2.13 trillion in June
2013. At the time there were 4,849 ETFs and ETPs, with 9,878
listings, assets of US$2.04 trillion, from 209 providers listed on 56
exchanges.
Add to those figures the billions in multiple currencies denom-
inated in other financial instruments and the total is impressive.
International and “emerging nation” mutual funds offer a simple
way for American investors to profit from the growth of foreign
companies. Such funds eliminate the inconvenience associated with
direct ownership of foreign shares.
American investors can also profit from American Depository
Receipts (ADRs). These are listed securities traded on U.S. stock ex-
changes. ADRs represent shares of a foreign stock and are issued by
U.S. banks that take possession of the securities. The banks convert
dividend payments into dollars and deduct any foreign withholding
taxes. ADRs give investors a greater guarantee of safety, as partici-
pating foreign companies have to meet certain U.S. Securities and
Exchange Commission (SEC) accounting and disclosure standards.
Over the past 20 years, capital markets outside the U.S. have
grown rapidly in size and importance. In 1970, non-U.S. stocks
accounted for 32% of the world’s US$935 billion total market capi-
talization. By 2012, foreign stocks represented over 65% of the total
value of world stock market capitalization of over US$15 trillion.
Until the recent recession, leading U.S. stocks performed well
over the years; but international stock markets historically have out-
performed Wall Street as a whole. The rapid growth of capital mar-
kets around the world has also created abundant opportunities for
fixed income investors. Worldwide bond market capitalization now
120 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

exceeds worldwide equity capitalization. Non-U.S. bonds account

for more than half of the world’s bond market value. Non-American
investors have realized the enormous profit potential of cross-border
investment.

Avoiding Roadblocks to Prosperity

International economic integration continues despite U.S. laws
designed to hinder such activity by Americans.
One of the main obstacles remains restrictive U.S. securities
legislation. Any “investment contract” for a security sold in the
United States must be registered with the SEC and similar agencies
in each of the states. This is a prohibitively expensive process. The
U.S. also requires far more disclosure than most foreign countries
and burdens the process with different accounting practices.
International fund managers are practical people who keep an
eye on the bottom line. Many correctly calculate that operating
costs in the U.S. would wipe out any profit margin they could
achieve. Ironically, several mutual funds and hedge funds with top
performance records are run from the U.S. by U.S. residents, but
do not accept investments from Americans. To avoid SEC red tape
and registration costs, investment in these funds is available only to
foreigners. To avoid these restrictions, as I explained earlier, some
offshore investment managers have registered with the SEC.
Although you’re a U.S. citizen, you may be able to qualify under
the law as an “accredited investor.” As such, you will have a freer
hand to buy non-SEC registered foreign stocks and mutual funds
directly. An accredited investor is defined by SEC rules as an indi-
vidual who has a net worth of US$1 million or more, or an annual
income of at least US$250,000. In other words, you must have a
lot of money.
You can also buy foreign securities through a trust, family
foundation or corporation you have created offshore. Properly
Creative Offshore Financial Strategies 121

structured foreign legal entities — and I do mean properly struc-

tured — are not considered “U.S. residents, persons or citizens.”
These entities, therefore, have the unrestricted right to buy non-
SEC registered securities.

Become Your Own Offshore Stock Trader

Traditionally, Americans used domestic brokers to invest in for-
eign markets, if the brokers offered these services. This required
broker contact with a U.S.-based “market maker” or an affiliate firm
located in the country where you wanted to buy shares. This was a
slow, cumbersome route that didn’t always guarantee timely access.
These types of opportunities, and many thousands more like
them, are available right now on any number of stock exchanges
around the world. And the best way to access them is through a
foreign brokerage account or one of the relatively few brokerage
firms here in the U.S. that provides direct access to overseas markets.
These firms offer American investors the opportunity to trade
shares directly on foreign stock exchanges — in places like Hong
Kong, Germany, Japan, Australia and the United Kingdom. Some
firms even offer access to smaller, emerging markets, such as Russia,
South Africa and Turkey.
Forget about the big-name Wall Street brokerage firms. Merrill
Lynch, Morgan Stanley and the like will not trade in overseas mar-
kets for individual investors, unless clients put at least US$50,000
to US$100,000 in their trading accounts.
Instead, consider the firms below. These are U.S.-based brokerage
houses that not only cater to individual investors, but offer you the
ability to trade directly on foreign stock exchanges:
• EverTrade, the St. Louis brokerage unit of Jacksonville, Flori-
da-based EverBank (www.evertrade.com)
• E*TRADE, the discount online brokerage firm (www.etrade.com)
122 Where to Stash Your Cash Legally: Offshore Financial Centers of the World

• Fidelity, the online brokerage, mutual funds and retirement-ser-

vices giant (www.fidelity.com)
• Interactive Brokers, an online brokerage firm (www.interac-
tivebrokers.com)
• Charles Schwab, the original discount trading firm. (www.
schwab.com)

Each of these firms offer varying degrees of access to overseas

markets, and each has its pros and cons. For example, with an
E*TRADE domestic brokerage account you can invest in inter-
national markets with ADRs, ETFs and mutual funds. You can
upgrade to an E*TRADE Global Trading Account that allows you
to trade foreign stocks directly online in six global markets in five
local currencies, or in 77 international markets in 35 countries in
U.S. dollars.
For investors, though, the fact that a variety of foreign markets
are directly available through a stateside brokerage account dramat-
ically changes the game. It opens up the world for you.
But there is another more direct route. One of the easiest ways
to buy and sell offshore securities is to establish your own foreign
broker account. Start by investigating brokers in a country where
you would like to make investments, a broker that you can use as
your base for multi-country investments.
Go to the homepage on the Internet of the foreign stock ex-
change of your choice. At the exchange find the web link labeled
“local brokers/market makers.” This will