Comment by gwd

The "problem" you describe is your US citizenship requires you to pay tax on earnings from outside the US - that's a condition of US citizenship. If you don't want to pay those taxes, then renounce your US citizenship once you have, say, gained UK citizenship, if that works for you.

A famous bloke once said (probably in Hebrew, written up in Aramaic or Greek and badly translated into middle, modern and somewhat strange English): "Pay unto Caesar, that which is due to Caesar and pay unto God that which is due to God" or words to that effect. Substitute IRS for God and you have a suitably cynical aside!

If your firm over here is good enough and you are reasonably settled then why not go all in? I'm not sure what the rules are on reconnecting with the US if you have formally renounced citizenship. However, I'm sure a birth cert from Yeehaw, TX or wherever will go some way. Even so, UK citizens are generally welcomed in the Land of the Free. An ESTA (great scheme IMO) costs about £20 for two years coverage - more than enough to visit the relos.

I know from second hand experience that our bureaucracy is just as convoluted as any other and it will take roughly one to two years (that was about 10 years ago) to get citizenship and probably involves a test that I would fail!

You might like to look into where your company is actually registered. A Ltd is not you - it is a separate legal entity and the UK (etc) is quite a complicated setup within quite a complicated environment. You might explore Jersey and the Isle of Man for places to headquarter. Don't overlook Eire either (EU with UK to the north, with special arrangements)

Anyway, the snag you have is solely US based and not UK (for a change).

> The obvious loss is to government revenue, but the more subtle and still very real loss is the diversion of high-powered talent from what could have been gains in efficiency and productivity to focus instead on corporate reorganizations and tax evasion games.

Looking at all the corpo legal/HR departments really has to make you think - those are people that are paid to aggresively look for legal loopholes, to defeat the spirit of laws and to make sure that the corporation always has the advantage against the society and workforce they exist nearby. There's decades upon decades of man hours being put into chipping away the effectiveness of tax, workplace and other laws and finding loopholes to make them ineffective. We've been at war and we never even noticed.

This is completely unrelated to the post.

What you're complaining about is overreach by the IRS in relation to foreign assets held by US citizens (ie FATCA) and the reporting requirements (eg Form 7938 and FBAR). It's worth noting that real estate is carved out as an exception for reporting purposes somehow, even though it's a common vehicle for money laundering.

That has literally nothing to do the Double Irish Dutch sandwich, which has historically been used by US companies (particularly Big Tech companies) to avoid taxes by moving their IP to a foreign subsidiary and then paying "royalties" to avoid paying US taxes.

>Secondly, if a US citizens owns more than 50% of a foreign company, by default, income from that company counts as personal income, but taxes paid by the company to another government don't count as personal taxes. You can get around this, apparently, but it's even more complicated.

Curious, what are the even more complicated ways?

Yeah it's become an absolute nightmare now if you're an individual or small business involved in anything cross border.

Even if you're not unlucky enough to be a US citizen, if you're tax resident in one country and incorporate in another for completely legitimate reasons, as an individual you're just screwed if you want to be compliant. Rocket science is significantly easier.

You need some KPMG-tier advisor to work it out for you for $crap-ton/hr. Few sole operators have the revenue to afford that.

The guild will get its due! Ironically this is also what the productivity gainsgames produce in the long run. All that excess human capability goes into bureaucracy labyrinths and highway robbery sometimes with the law behind and armed with subscription. The entrepreneur producing the beast that strangles him.

Be careful it might be more complicated than that. I am not 100% sure but I think you might be required to pay taxes on unrealized gains for your company (or whatever assets you are owning).

Would this be avoided if you renounced your US citizenship and became a UK citizen instead?

Would this encourage shell company ownership behavior?

Why is the top comment on this post a mostly unrelated rant about USA individuals being taxed in weird ways? The actual post is about global corporate shenanigans that enable them to evade astronomical amounts of taxes.

Secondly, if a US citizens owns more than 50% of a foreign company, by default, income from that company counts as personal income, but taxes paid by the company to another government don't count as personal taxes. You can get around this, apparently, but it's even more complicated.

This is the GILTI regime, which was intended to target foreign income from intangible assets. But, like most GOP legislation of the last two decades, it was written in a rush without regards to the practical consequences.

Note however that if the foreign income (from the company's perspective, local income) is being taxed at a higher rate than 90% of the applicable U.S. tax rate on that income (currently meaning, 18.9% foreign tax rate or higher) then the income does not get included in its owner's income (aka the high-taxed exception).

Also note that if you are for some reason subject to GILTI, you've basically just prepaid your taxes on actually receiving that income, meaning that you don't pay taxes again when the foreign corporation actually pays the income to you as a dividend.

This was super complicated for a year or two until the IRS released guidance clarifying some points. Now, for any accountant worth their salt, it's pretty straightforward and if they're still complaining about it, find a new accountant.

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