10.13.2020

Savvy Tax Strategy For Non-US citizens Owning US Stocks

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Are you a non-resident alien who owns US stocks?

Non-resident aliens include anyone who is not a US citizen and does not have a green card or pass the “substantial presence test”

If so, you can lose up to 40% of their value if you die with them in your personal name!  

Sadly, this happens to more people than you might imagine. Many non-resident aliens have managed financial or retirement accounts and do not realize they own US stocks. 

Double check your portfolio to see if you own US stocks!

Problem

Under US law, stocks of US companies are considered “US property.”

As a result, such stocks are subject to US estate taxes!

Yes, the estate of non-US persons are subject to US estate taxation just because they own US stocks – even if they do not live in America.

US estate tax rates start at 18% and top out at 40% on estates valued at $1,000,000 (USD) or more – based on your stocks’ fair market value (not what you paid for them).

How the US Estate Tax Works

Here’s a simple example to demonstrate how the US estate tax works.

Tobias is 70 years old and has a stock portfolio valued at $1,500,000 (USD) including stocks like Apple, Amazon, Google, Facebook, and Tesla.

According to his will, Tobais’ stocks will transfer to his son Lukas.

US law exempts the first $60,000 (USD) of fair market value from estate taxes.

The remaining $1,440,000 worth of stock is subject to a 40% US estate tax.

$1,440,000 x 40% = $576,000 in US estate taxes are owed by Tabias’ estate.

His son Lukas will only receive $924,000 (or, 61.6%) of his $1,500,000 inheritance!

US Estate Tax Blocker Solution

Fortunately, there’s an easy solution for non-US persons owning US stocks to avoid the US estate tax – a non-US company.

If Tobias were to transfer his US stocks out of his personal name and put them in a non-US company, his estate would save $576,000 in taxes.

How?

Shares in non-US companies, such as a RAKICC company (based in the United Arab Emirates), are not “US property” and are, therefore, not subject to the US estate tax. And, there’s ongoing protection – because RAKICC companies exist perpetually, their shares can be passed through the generations without being subject to the US estate tax.

The US Estate Tax Blocker Solution allows Lukas to receive his entire $1,500,000 (USD) inheritance compared to just $924,000 if his father dies while personally owning US stocks.

What Is A RAKICC Company?

The Ras Al Khaimah International Corporate Centre (RAKICC) is a Corporate Registry in the United Arab Emirates and responsible for the registration and incorporation of International Business Companies.

Esquire Group is one of a limited number of licensed corporate service providers and legally authorized to form RAKICC companies.

What Will You Receive?

The US Estate Tax Blocker Solution includes:

  • One United Arab Emirates RAKICC company
  • Formation fees
  • First year Registered Agent Fees
  • Company documents
  • Memorandum and Articles of Association
  • Sample Resolutions
  • Certificate of Incorporation
  • Register of Members
  • Register of Directors
  • Banking introductions upon request
  • Best practices guide

Plus, you’ll get to speak one-on-one with an international tax expert who will answer your questions.

Finally, you’ll receive peace of mind knowing you’re in good hands – Esquire Group has boots on the ground in Dubai. We have a great relationship with the people at the RAKICC. You can relax knowing your RAKICC company will be formed quickly and in compliance with all regulations.

Read an FAQ about the US Estate Tax Blocker Solution.

Click here to get started and protect your stocks and heirs!

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