Foreign Financial Accounts

Recent studies have shown that the use of offshore investing increases as wealth increases. In other words, wealthier people are more likely to invest some of their money in foreign financial institutions.  Many taxing authorities believe that this is motivated by a desire to evade taxes, but a close look at where people are keeping more of their money offshore suggests there may be other motivating factors for making the decision to move money out of your home country.

If you are a U.S. taxpayer and you are investing offshore, you should be aware of myriad requirements you must comply with, including filing an annual Report of Foreign Bank and Financial Account and complying with FATCA reporting requirements. If you have not complied with any mandated reporting rules in the past or you are currently not disclosing your offshore accounts, it is important to reach out to an experienced attorney as soon as possible. 

A Boston tax evasion attorney can help you to understand the options available to you and can assist you in taking proactive steps to protect your offshore investments and avoid or limit penalties you could face for failure to comply with tax rules. 

What Countries See the Highest Levels of Offshore Investing?

MarketWatch recently reported on a study showing the countries with the most offshore investing. The study looked at offshore wealth havens as a proportion of GDP. The leading country with the most offshore investing was the United Arab Emirates.  Venezuela was second, Saudi Arabia third, Russia fourth, Argentina fifth, and Greece sixth. Taiwan, Portugal, Turkey and several Western European countries were also high on the list of countries with substantial offshore investing as a proportion of GDP.

While MarketWatch suggests the wealthy in these countries may be putting money foreign financial accounts because they want to take advantage of tax havens, there is no evidence shown in the research that indicates a correlation between high or low tax rates in a home country and offshore investing. 

Some things many of the countries which top the list of offshore investing locales have in common is that they share certain characteristics such as political or economic unrest and instability, substantial natural resources, or a close proximity to Switzerland. In other words, wealthy individuals who opt for offshore investments may be doing so not because they are solely motivated by a desire to hide their assets and avoiding taxes, but may be acting because of political or economic unrest, among other factors.

There are ample legitimate reasons why you might wish to put your money in foreign accounts, even for people who are connected to the U.S. and who have tax obligations here. Unfortunately, offshore investors are typically treated with suspicion. 

If you are an offshore investor, you could become the target of an investigation if the U.S. government has reason to believe you are investing in foreign financial institutions to avoid taxes. You should talk with Boston tax evasion attorney Kevin Thorn to see if you are vulnerable to a potential investigation and to find out what you can do to protect yourself and your offshore assets.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989