A remarkable solution for expats, including Americans & U.S. connected persons. At their simplest, it allows easy and compliant access to the benefits of investing in a diversified portfolio managed by top tier investment managers.
Designed to provide expat investors, including Americans & U.S. connected persons, with a comprehensive and flexible investment structure. The benefits are C.L.E.A.R.
● Compliant - Fully IRS and FATCA-compliant investments.
● Liquid - Money in or out monthly as with a direct managed/mutual fund
● Established - European-regulated investments with proven top-tier asset managers
● Available - Accessible to any investor directly or through a range of platforms
● Reportable - Simple tax filing. For U.S. connected persons 1040 self-assessment
The bond and platform provide the required tax reporting (reported to the IRS in a similar fashion to a domestic U.S.mutual fund). Non-compliant investments (Passive Foreign Investment Companies) for overseas US citizens are taxed as income (up to 37%). By completing a Qualified Electing Fund, our solution makes it eligible for Capital Gains Tax treatment instead (from 0%-20% subject to long/short-term considerations).
a) Offshore regular savings unit linked product. E.g. 20 year, €1,500 per month
Restrictions- limited cash value pre-term. Paid up consequences, i.e. they cease making monthly payments,
expenses remain constant and value reduces
Repatriation- some companies permit repatriation and policy continuation but does not permit further contributions; it becomes paid up policy. Treated as insurance product typically and potentially tax on
unrealised capital gains.
Solution benefits- US tax compliant investment structure. Permits single contribution investment and/ or regular contributions and the flexibility to change, pause, stop, restart without penalty. Total costs are lower to client. On repatriation the Investment remains compliant and the client can bring funds back into US
b) Portfolio bond lump sum investments Restrictions- 7-10 year reducing exit charges. Partial withdrawals permitted but expenses remain on max account value.
Repatriation- Advice needed. Usually not permitted and advice is to cash in with losses pre- repatriation.
Solution benefits- Same as for an offshore regular savings plan
c) Mutual fund investment QEF ruling
Restrictions- Compliant. However, a QEF elected investment in a mutual fund lacks diversification and client carries concentration risk. To establish diversified portfolio in this manner is slow, expensive and Impractical for active portfolio management
Repatriation- Compliant and will be liquidated on return to US
Solution benefits -Client has a FATCA compliant diversified investment that is actively managed and does not require reporting, applications or other delays when switching within the investment
d) US based trading account into ETFs
Restrictions -Limited investment options. Requires funds to be repatriated to US for each investment which may carry short term currency risk. Also requires active management by the client directly as an offshore adviser cannot advise on onshore investments. Similarly the inverse: an onshore adviser cannot advise a client that is
Solution benefits- Provides actively managed diversified and international portfolio in the currency in which they are earning to avoid short term currency risk. Structure is delivered in context of personalised financial advice so client does not have to do it themselves. Adviser can better manage client holistically.