Where to Stash Your Cash Legally Offshore Financial Centers of the World Seventh Edition Robert E. Bauman, JD THE SOVEREIGN SOCIETY, Ltd. 98 S.E. 6th Avenue Delray Beach, FL 33483 Tel.: (561) 272-0413 Email: www.sovereignsociety.com/contact-us Website: http://www.sovereignsociety.com ISBN 978-0-615-71732-6 Copyright © 2013 Sovereign Offshore Services LLC. All international and domestic rights reserved, protected by copyright laws of the United States and international treaties. No part of this publication may be reproduced in any form, printed or electronic or on the worldwide web, without written permission from the publisher, Sovereign Offshore Services, LLC, 98 SE 6th Ave., Delray Beach, FL 33483. Notice: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold and distributed with the understanding that the author, publisher and seller are not engaged in rendering legal, accounting or other professional advice or service. If legal or other expert assistance is required, the services of a competent professional advisor should be sought. The information and recommendations contained herein have been compiled from sources considered reliable. Employees, officers and directors of The Sovereign Society do not receive fees or commissions for any recommendations of services or products in this book. Investment and other recommendations carry inherent risks. As no investment recommendation can be guaranteed, The Sovereign Society takes no responsibility for any loss or inconvenience if one chooses to accept them. The Sovereign Society advocates full compliance with applicable tax and financial reporting laws. U.S. law requires income taxes to be paid on all worldwide income wherever a U.S. person (citizen or resident alien) may live or have a residence. Each U.S. person who has a financial interest in or signature authority over bank, securities, or other financial accounts in a foreign country that exceeds $10,000 in aggregate value must report that fact on his or her annual federal income tax return, IRS Form 1040. The Foreign Account Tax Compliance Act (FATCA) requires an annual filing along with IRS Form 1040 IRS Form 8938 listing specified foreign assets. An additional report must be filed by June 30th of each year on an information return (Form TDF 90 22.1) with the U.S. Treasury. Willful noncompliance of reports may result in criminal prosecution. You should consult a qualified attorney or accountant to ensure that you know, understand and comply with these and any other U.S. reporting requirements. Where to Stash Your Cash Legally Offshore Financial Centers of the World Seventh Edition Robert E. Bauman, JD About the Author Robert E. Bauman, JD Bob Bauman, legal counsel to The Sovereign Society, served as a member of the U.S. House of Representatives from 1973 to 1981 representing the First District of Maryland. He is an author and lecturer on many aspects of wealth protection, offshore residence and second citizenship. A member of the District of Columbia Bar, he received his juris doctor degree from the Law Center of Georgetown University in 1964. He has a B.S. degree in International Relations from the Georgetown University School of Foreign Service (1959) and was honored with GU’s Distinguished Alumni Award. He is the author of The Gentleman from Maryland (Hearst Book Publishing, NY, 1985); and the following books, all published by The Sovereign Society: The Complete Guide to Offshore Residency, Dual Citizenship and Second Passports (10 editions, 2001–2012); The Offshore Money Manual (2000); editor of Forbidden Knowledge (2009); Panama Money Secrets (2005); Where to Stash Your Cash Legally: Offshore Financial Centers of the World (7 editions through 2013), Swiss Money Secrets (2008); How to Lawyer-Proof Your Life (2009). His writings have appeared in The Wall Street Journal, The New York Times, National Review, and other publications. Author’s Comment sk any reasonably intelligent person in the United States (or many other countries) what they know about “offshore” financial activity and usually you will get an answer loaded withA uninformed, even preposterous theories. Offshore, you will be told, is an evil place populated with secret numbered bank accounts, sinister con men and fraudsters, money launderers, drug kingpins, rapacious bankers and corrupt foreign politicians on tropical islands grasping for briefcases full of cash bribes. Thanks to U.S. Internal Revenue Service propaganda, a complicit and lazy “news” media, far too many potboiler novels, sensational Hollywood movies and TV shows, the popular notion of “offshore” has been carefully crafted as an international sinkhole of tax evasion, fraud, and criminally corrupt, greedy officials. Too few people realize that offshore financial centers (formerly known as “tax havens”) serve as vital links in international finance, banking and investment, as well as providing much needed low tax competition for the high tax, deficit spending, hugely indebted welfare states. For a quarter century, I have been researching and writing about offshore financial matters. That has included topics such as tax ha- vens and asset havens, offshore banking, asset protection trusts, international business corporations, family foundations, limited lia- bility companies, financial privacy, residence and second citizenship and about the general state of the offshore financial world. Even though I had earned a degree in international relations, a law degree, served in the Maryland State Senate and also spent eight years as a member of the U.S. House of Representatives, when I began this work I quickly discovered how little I knew about the real “offshore” world. My early and limited acquaintance with “offshore” matters had created a similarly erroneous impression that too many people have to this day. For 25 years or more, tax-hungry politicians from high-tax wel- fare states — including the U.S. government, together with their global leftist political allies — have mounted a series of largely false attacks on the offshore financial world. They intentionally have smeared offshore financial centers as venues of tax evasion, drug money and terrorist cash. At one point these attacks even advanced the preposterous claim that tax havens caused the 2008–2012 global housing and banking recession. Their collective motive is obvious: the politicians want to tax more so they can spend more, hoping to buy popular support, thus enabling continued power and the continuation of their failed policies. Then too, many American attorneys, accountants, insurance agents and stock brokers have a vested interest in keeping their clients close to home, thus they warn against going offshore. They, like the U.S. Internal Revenue Service, want to keep you and your money where they can get to it. Don’t be fooled. In spite of recent restrictions it is fully legal for Americans to bank, invest, and purchase real estate, annuities and life insurance offshore. When this fog of manufactured lies is cleared away, the truth about “offshore” opportunities and profits is very impressive. But finding the truth for the first-time offshore adventurer can be a frustrating, discouraging task and, if you get burnt, a very short and unpleasant journey. Care is called for because there are many offshore fraudsters waiting to fleece the unwary. The offshore world offers Americans few tax savings, certainly not as many as slick promoters claim. That’s because American citizens and U.S. resident aliens are taxed on their worldwide in- come, while most other nations impose “territorial” taxes, mainly on earnings within their own national borders. For those more sensible countries, taxes end at the border. But going offshore for Americans does offer some limited tax deferral and, most of all, in this lawsuit-happy age, it offers ironclad asset protection. It also guarantees far more financial privacy (and yes, secrecy) than can be found in many other countries or most certainly in the United States, where the so-called PATRIOT Act has destroyed all financial privacy. During the 14 years since the first edition of this book appeared, U.S. politicians and government bureaucrats have become an army of control freaks when it comes to Americans’ offshore financial activity. They have imposed an entangling web of border controls, travel controls, currency controls, foreign investment and banking controls, all the while repeatedly implying that “going offshore” is somehow illegal (it is not) and even unpatriotic. The politicians shamelessly used the New York City and Washing- ton, D.C., terror attacks on September 11, 2001, as an excuse for even greater control. The continuing 2008 global financial crisis serves as yet another pretext not only to impose more financial controls, but to spend trillions of taxpayers’ dollars to bail out banks and businesses, foreign and domestic, greatly increasing the ranks of those who are indebted to the existing system of Big Brother government. Counter-productive government controls and regulations stifling the American economy have grown exponentially. The invasion of every aspect of law-abiding Americans’ privacy, we now know, is carried out in secret under the PATRIOT Act by the U.S. National Security Agency (NSA) and numerous federal, state and local police agencies. The record of the NSA and the FBI in the last decade is one long list of abused powers and unconstitutional acts, followed by apologies and promises to sin no more