International Business Chris Rusch, MBA, JD

Law Office of Chris Rusch, APC www.RuschLaw.com

Tax Introduction

Other Benefits of Relocating Offshore

How to Select Your Country of Operation

Country of Incorporation Guide

Banking Guide

Introduction #2

• Intended Audience

– U.S. citizens living and working abroad

– International business owned by U.S. citizen(s)

– Focused on foreign corporations for international

business and not asset protection

•It does not matter which country •Does not need to be the country in which you are working.

•Currently $91,500

•Take it out with the FEIE or use the corporation to defer tax

Business Structure

Tax

Basics

Retain

the rest of the

income in the

offshore

corporation.

Form a

Corporation in

any tax free

country

Draw a Salary

equal to the

foreign earned

income

exclusion

Foreign Earned

Income Exclusion

The most important

tool in the ExPat’s tax toolbox is

the Foreign Earned Income

Exclusion (FEIE).

For the 330 day

test, it does not

matter where you

are…just not in

the US. Also, you

may use any 12

month period.

If a husband and

wife are operating

a business, each

can draw a salary

of $91,500

A resident is

someone who

moves to another

country and

intends to make it

their home.

If you are a resident

of another country,

or you are out of the

U.S. for 330 of 365

days, you can earn

up to $91,500 in 2010

free of US Federal

income tax.

EXAMPLE

Form a Panama

corporation.

Operate a

business selling

to people

outside of

Panama.

•Therefore, it

should come

from an

offshore

corporation

other than in

your country

of residence

•Take a

salary, and

retain

earnings free

of U.S.

taxation.

Brings jobs,

payroll taxes,

sales tax,

etc. to

Panama.

Form a

corporation Why?

Most

countries will

try to tax your

salary.

Some

countries do

not tax “foreign

source”

profits

What does TAX FREE mean?

Country of Operation

• Country Check List (business)

– Tax Issues

– Time Zone

– Banking

– World Image

– Cost of Labor and Office Space

– Availability of Labor (Language)

– Availability of Professionals (CPAs & Lawyers)

– Quality of Telecom and internet…don’t sound like you

are in a banana republic!

– Availability of computer equipment

Country of Operation

• Country Check List (personal)

– Can you learn the language?

– Is there a community you will fit in to?

– Can you adapt to the culture / speed of life?

– Can you adapt to the weather?

– Is the country accessible by air in 1 day?

– Can you live with the security concerns?

Your Text

Your Text

Your Text

For and Against Panama

Panama

City

Expensive office

and apartment rent

Humid, Humid,

Humid!

Typical “big city”

traffic and pressure

Your Text

Your Text

Your Text

Your Text Cost effective and

educated labor pool

Does not tax foreign

source income

Strong world image

Accepting of

international people

For

Your Text Excellent Internet and

Computer Systems

Against

Your Text Same Time Zone

as the US

Labor Pool

Most businesses moving abroad, including

programming, internet, and call centers want tech

experience.

• Even my business here is looking for tech people

– India has produced over 75,000 IT graduates and

20,000 are English-speaking.

– The Philippines turns out 380,000 graduates

annually, but only 15,000 IT

– China's tech schools turn out 50,000 annually with

English gaining in importance.

Employee Costs

• India costs have increased from $5k to $12k P/A for

technical staff, while back-office salaries range from

$3,500 to $7,500.

• Philippines tech salaries range from $5k to $10k P/A and

back office from $3k to $8k.

• Russia IT salaries range from $6k to $10k.

• China IT salaries range from $3k to $8k P/A.

• Ireland Tech salaries range from $25k to $35k, making

Ireland unattractive if primary objective is cost savings.

Higher costs

vs. Better

Quality

Americans

deal with

Latin accent

much better

•Office rents in the

city about the same

as the US. Will come

down.

•Recent graduates

are making $900 to

$1,600 per month, vs.

$5k to $6k in Los

Angeles

•Top people make

$2,300, which

compares to

$120,000 in Los

Angeles, with 5-7 yrs.

Cayman vs.

Panama

Costs in

Panama

Dell and Citi

moving to

Panama from

India.

HUD / Freddie

and Fannie

returning to the

US

Client Examples

Three

Options

Privacy World

Image

Transparency

Where to Incorporate

It Does Not Matter Where You Incorporate

As Long As There Is No Corporate Tax.

•95% transparent with

the IRS and US Govt.

•Largest offshore banking

center with 350 banks and

deposits worth more than

US$1 trillion.

•Second largest captive

insurance base after Bermuda

with assets worth $20 bn.

•The Cayman Islands trust

sector is thought to manage

more than $500 bn.

•95% privacy from US Govt.

•Only exception is major

crime

•Has recently stood up to

US SEC and IRS

•Most cost effective

•Least reporting / maint.

•Nevis will not be the weak

link in your structure

•No local banking available

Cayman

Islands Nevis

Country Incorporation Guide

•Best financial services in the world

•One-third of all internationally

invested private wealth is (was) in

Switzerland.

•Best combination banking, audit

and related services.

•Private banking plentiful

•Business banking hard to get

•Focus is investment not operating

accounts.

•Best choice where cost is no issue.

•Min account size $500k to $1m.

Switzerland

Country Incorporation Guide

•Experienced offshore

trust administrators

•Leaders in personal

asset protection

•New corporate laws to

compete with Nevis

•Diversify personal $

and business in to

different jurisdictions.

•Privacy to match Nevis

but less tested.

•Small banking sector.

•Belize banks do more

due diligence to keep

correspondent accts.

•Recommend if

operating in Mexico or

Latin America

Cook

Islands Belize

Country Incorporation Guide

•Door to China

•One of the most developed

securities markets

•Hong Kong imposes no

withholding tax, sales, tax,

capitals gains tax, net worth tax,

or VAT

•Individual employment tax is 16%

but there is no tax on investment

income or capital gains

•Strong financial sector

•Current corporate rate is 26%

•Resident companies are only

taxed on income earned within

Singapore or remitted to

Singapore.

•Non-resident companies are only

taxed on Singapore source income.

•Corp requires 2 resident directors,

no bearer shares & audited

financials.

Honk

Kong Singapore

Country Incorporation Guide

Protecting Against Banking Stupidity

• Example: Multibank Account Closing

• Example: MultiSecurities Account Closing

• Guard against changes in bank policy or lapses

in judgment. When a bank closes an account,

they usually issue a local check in the name of

the account holder.

Labor Pool

Protecting Against Banking Stupidity

• Two accounts at different banks in each country

where you do business.

• Develop a good relationship with your primary

bank!

• I recommend only Uni Bank in Panama and

Caye Bank in Belize.

www.RuschLaw.com

Appointments are available to discuss your

international business options