Effective global tax management involves strategizing and implementing an overarching plan designed to reduce overall tax liability.
Not Just The Fortune 500
When many hear the phrase “global tax management” the Fortune 500 immediately comes to mind.
Large multinational companies have teams of lawyers and accountants to manage their taxes.
But multinational individuals and small business owners often need help with global tax management as well.
When Is Global Tax Management Necessary?
Generally, you’ll need help managing your taxes once you move yourself and/or your assets to another jurisdiction.
The Problem
International tax rules are extremely complex.
It can be difficult to simply determine your tax liability when you live (and/or have assets) in a jurisdiction other than your home country.
Strategizing to reduce overall tax liability requires expert guidance.
Common Mistake
Many people fail to get tax advice prior to making a major life change.
Here are questions many do not consider:
- What is the tax impact of leaving my home country?
- Will I be subject to an “exit tax”?
- What is the tax impact of moving to a certain country?
- How will that country tax my foreign income and assets?
- What is the tax impact of purchasing assets located in a certain jurisdiction?
Taking action without accounting for these questions (and others) often leads to unnecessary taxes.
Considerations
Your global tax liability is impacted by many variables such as:
- Your residencies and citizenships
- Where your children reside
- The location of your assets
- The location of your businesses
The America Problem
America poses a difficult tax challenges – for US citizens and both resident and non-resident aliens.
The US has a citizenship based taxation system making life difficult for Americans living abroad.
The US also has creative ways of taxing non US citizens.
Having American business partners, making gifts to Americans, having a child move to America for school, marrying an American, owning US real estate, etc. all involve difficult tax planning.
Not only is expert advice needed at the planning stage but also expert US international tax preparation services year-after-year.
The Inefficient Approach
Most people have a domestic tax advisor in their home country.
After moving themselves or assets to another jurisdiction, they often find another domestic tax advisor.
Most often, these advisors are not aware of how the tax laws operate between the two (or more) countries.
Frequently, the two tax advisors never even speak with one another!
This lack of communication often leads to tax inefficiency. Advisors often recommend a strategy that achieves a goal in one country but has a negative impact in another.
A Better Approach
Effective global tax management is much easier to achieve if one advisor or institution constructs and implements a centralized plan or “blueprint.”
This requires the work of an international tax expert who accounts for the laws of every relevant jurisdiction.
Depending on the complexity of an overarching plan, experts and advisors within a given jurisdiction may need to be hired.
Providing such advisors with a specified and defined role will help maintain the integrity of the overarching plan.
Constant monitoring
Tax rules and regulations change on a daily basis.
An out of date plan or strategy can quickly turn into a liability.
Constant monitoring is often required for proper global tax management.
Want Some Help?
We in Esquire Group are here for you! Contact us here.