FATCA Regulations Mean Non-Resident Americans Can’t Invest In U.S. Mutual Funds

FATCA Regulations Mean Non-Resident Americans Can’t Invest In U.S. Mutual Funds
FATCA Regulations Mean Non-Resident Americans Can’t Invest In U.S. Mutual FundsForced Into Criminal Patterns Of Behavior

Sept. 29, 2014
Panama City, Panama

Dear Offshore Living Letter Reader,

Since the FATCA regulations took effect July 1 of this year, it’s been getting harder and harder to carry out financial transactions around the world, and I’d say we’re only at the bottom of this hill. As these onerous requirements and restrictions take hold, all kinds of unimaginable and unpredictable complications and consequences continue to come to light. The poor guy (that is, you and me) trying to get anything done that requires moving or investing money overseas is being forced to get good quick at bobbing and weaving.

Over the summer, for example, Fidelity, Schwab, and other brokerage houses announced that they will no longer allow U.S. persons living outside the United States to invest in U.S. mutual funds. You can continue to hold any mutual fund you already own, but no new investments are possible.

This came as a shock to many Americans living overseas. However, in fact, the rules against U.S. persons living outside the States investing in U.S. mutual funds were already on the books. These rules just weren’t enforced. Now, with the advent of FATCA, the issue is being forced.

The trouble is that U.S. mutual funds aren’t registered for sale in other countries. So Fidelity selling one of its mutual funds to a U.S. client in Norway may be (and probably is) running afoul of Norway’s investment regulations. Continue reading “FATCA Regulations Mean Non-Resident Americans Can’t Invest In U.S. Mutual Funds” »

How To Structure The Purchase Of Real Estate Overseas

How To Structure The Purchase Of Real Estate Overseas
How To Structure The Purchase Of Real Estate OverseasTo Structure Or Not To Structure…That Is The Question

Sept. 25, 2014
Panama City, Panama

Dear Offshore Living Letter Reader,

A consulting client came into our office yesterday to ask me some questions about how to structure property investments he’s making in Panama and Colombia. This client has been working with attorneys in both of these countries as well as in the country where he set up his LLC, but he wanted to make sure he’s fitting all the pieces together as advantageously as possible in the context of his big-picture goals.

“In the context of his big-picture goals” is the critical phrase here. No single entity or set of entities fits every situation. What you find, though, is that whatever advisor you work with has his or her individual experiences and advises based on what he or she is familiar with.

Most Panamanian attorneys, for example, will advise you to put any property purchase into a corporation. Because that’s what they do in Panama, both locals and foreigners. Historically, this has been to avoid capital gains tax, which is not imposed on the sale of company shares. You could set up a single-purpose corporation to hold a piece of property, then, when you wanted to sell that piece of property, you were in fact selling the company that owns it…meaning no capital gains tax issue.

Panama changed the relevant tax rule years ago, but people in this country still put real estate they buy into Panama corporations. There are other reasons why using a Panama corporation to hold your Panama real estate can be a good idea, but you should understand them before taking a Panamanian attorney’s blind recommendation. Don’t let custom dictate how you organize your affairs. Question the reasons why you’re being advised to do whatever you’re being advised to do, in Panama or anywhere.

The client who came in to meet with me yesterday had been advised by his Colombian attorney that, if he wants to have the title for the property he’s investing in in that country issued in the name of his offshore LLC, he’ll need to have the LLC documents officially translated and apostilled. That is mostly accurate. I confirmed with my attorney in Colombia that, yes, the LLC documentation must be officially translated but only the certificate of formation…not all 20 pages of the articles of formation. That difference saves money and time on the translation. Continue reading “How To Structure The Purchase Of Real Estate Overseas” »