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A New Concept In Offshore - The Foreign Earned Income Exclusion Coupled With Offshore eCommerce .
If we are self-employed there are additional tax exclusions. For self-employed individuals it is net income that is applied towards the exclusion limit and not gross income. One can get housing deductions, use more than one offshore residency and claim both as exemptions, self-employment benefits, and so forth. This can also include: rent, utilities, insurance, lease fees, rent for furniture and accessories, repairs, parking fees, employee payroll, and whatever operational expenses you deem appropriate to include. Reducing Taxes To Zero There is another way to make more than $80,000 net and still reduce our taxes to zero. By using offshore eCommerce coupled with a Panamanian International Business Corporation (IBC,) we can make any amount of money into the IBC and still keep our tax basis at zero. If we purchase our house in the name of the IBC, we can rent the house to ourselves, thereby increasing our tax exclusion by the amount of the rent, which is paid back into our own IBC bank account. Note that this modality is best used when you earn more than $80,000 net and cannot move the additional income into your IBC. The IBC acts as a buffer in this case by reducing the taxes on the amount of income that exceeds the $80,000. In cases where the majority of income enters the IBC rather than being paid to you individually, this modality is hardly necessary. You can live in the house rent free if your entire personal income is less than $80,000. In the former case, where we earn too much personal income, (more than $80,000,) we can find myriad ways to use the IBC to 'extract' money from our earnings, thereby lowering that portion of our income exposed to taxes. In addition to the modality of the IBC buying a house and renting it to us, we can do the same with a car, a boat, an office building, an airplane, a property management company, or anything our own company deems appropriate to purchase in its behalf. The concept of incorporating an IBC and Offshore Web Site with eCommerce capabilities into an existing business is discussed in the article Offshore eCommerce Can Make You Rich - an article which explains how to couple Offshore Web Hosting and Offshore eCommerce with a typical 'brick & mortar' business. An expense account paid by the company to the individual can include, travel expense, dining, and a host of other expenses. The fact is, our IBC can purchase anything it deems appropriate, as long as it is purchased in the name of our IBC it is not taxable income. There are also provisions which exempt offshore workers from Social Security Tax. There are also provisions which exempt offshore workers from the social security taxes of the foreign host nation. These provisions are called totalization agreements. They dictate that US citizens who are temporarily working offshore are subject only to the US social security tax and are exempt from the host countries tax. The US has signed agreements regarding this exemption with twelve countries; they are: Canada, Belgium, France, Germany, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. We can get around paying local social security in many other countries by presenting proof that our employment is temporary and that we are covered by US social security. To qualify for any of these social security exemptions, US or foreign, we must obtain a certificate prior to the foreign assignment from the US Social Security Administration, Office of International Policy, P.O. Box 17741, Baltimore, Maryland 21235 Reducing The Taxes Owed To Foreign Nations Most countries of the world tax on the basis of residency (or domicile.) While the rules vary from nation to nation, most of today’s nations consider anyone who has established a place of abode inside their country for more than six months to be a resident. Here are our options: If we are working for someone other than ourselves and if those for whom we work have a policy of paying their employees inside the host country and of reporting the amount of that payment to the host government we can try the following options. We can ask our employer if we can hire on as independent contractors, having them make payment to our ‘company,’ located in a third nation, rather than to pay us personally. Our ‘company’ of course will be our own, with its corporate headquarters domiciled in a tax haven such as Panama. Once payment is made to our corporation, our corporation can then in turn pay us an amount sufficient to live on in our foreign host nation, with the remainder of the funds remaining in our corporate account, just as it is with every other corporation in the world. We personally see little sense in using an exemption from US taxes if we are of a mind to simply turn around and place ourselves in a position to be unfairly taxed by a foreign government. Regarding unfair taxation we should give our definition of fair: fair taxation is a sum paid in taxes to a government that does not exceed in value the benefits returned in goods and services by that government to the taxpayer. If as an expat we contribute to a foreign host country by bringing jobs and expertise, we add to that countries wealth and evolution. Most countries will be exceedingly happy with a productive expats presence and why shouldn’t they be? Few nations pursue taxation with the vigilance and brutality of the United States. In most nations, tax avoidance is a national sport. If our employer declines to hire us on a contractual basis, if for instance we are working for the Australian government as statisticians; then we probably will have to pay Australian taxes. To be exempt from a host country’s tax, we must qualify as a ‘detached worker.” A detached worker is one whose assignment in the host country is expected to last less than five years. Not Self Employed? Not A Business Owner? Offshore Web Hosting Is Your Opportunity To Become One Being self-employed always presents more creative options for us. This writer recognizes that it is not always possible to be a self-employed business owner. However, with the introduction of Offshore Web Hosting and Offshore eCommerce it is now possible for us to quickly and easily start a second income stream offshore, beyond the reach and scrutiny of monetary predators. This modality is explained in full in the article eCommerce Can Make You Rich - an article that includes various ways to find a product to sell offshore. Offshore Web Hosting is the first method of preventing taxation before it happens, rather than hiding at after it's levied, and for that reason, as well as its low start-up costs, everyone should give it several tries until they hit on the winning combination. I personally know of hundreds of success stories that have proved to me beyond any doubt what a perfect way it is to break free and live free. It is the most inexpensive way to open a business in modern history, in addition to the fact that we are talking about a global business with 100% profit on the earned income due to the zero tax base of Panama. Coupling your Offshore Business with
an existing business, or a brick and mortar business, gives us the best
of both worlds. It allows a great deal flexibility, pure privacy and an
amazing ability to operate tax free. It is an excellent example of synergism.
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