American Chamber of Commerce in Hong Kong Destination USA or the Round Trip Experience for Some! Hong Kong January 18, 2013 Immigration & Tax Planning
AmCham Immigration & Tax Planning Table of Contents Pre-Arrival Planning 1 EB-5 Investor Visa 2 Green Card: Immigration & Tax Inconsistencies 3 Best Structure 4 Best Structure U.S. Real Property Holding Structures 5 Offshore Voluntary Disclosure Initiative (OVDI) 6 FATCA 7 Expatriation Exit Tax 8 Executive Relocation to U.S. 9 Speaker Bios 10
AmCham Immigration & Tax Planning Pre-Arrival Planning Exhibit 1 Pre-Arrival (H) Jack (W) Rose (D) Daughter (S) Son Relocation to U.S. Nonresidents [HK] Nonresidents [China] U.S. Working Visas -E-2 -H-1B - Green Card Citizenship Foreign Investments BVI Holdco U.S. Investments - Real Estate - Stocks & Bonds
AmCham Immigration & Tax Planning Exhibit 2 EB-5 Investor Visa H + W & D & S Nonresident Status Arrival in U.S. = Lawful Permanent Residence (Green Card) BVI Holdco BVI Resident Family = Worldwide Taxation $500,000 to $1 million Ltd. Partners GP U.S. & Foreign Investments U.S. & Foreign Investments Debt or Equity Deal U.S. LP Project Approved by USCIS
AmCham Immigration & Tax Planning Exhibit 3 Green Card: Immigration & Tax Inconsistencies H + W & Children All Green Card Status H lives, works in China 10 months / year W lives in Palo Alto with children H files nonresident return, Form 1040NR Immigration Status U.S. Income tax status Gift and estate tax status H W & D & S BVI Holdco Palo Alto Residence U.S. & Foreign Investment
AmCham Immigration & Tax Planning Exhibit 4-1 Best Structure? H does not obtain U.S. resident status H W & D & S H can freely enter and depart the U.S. Family wealth is outside U.S. jurisdiction Best Structure? - Immigration Concerns - Tax Concerns BVI Holdco Green Card Holders Investments U.S. Citizens
AmCham Immigration & Tax Planning Exhibit 4-2 Best Structure U.S. Real Property Holding Structures Alternatives: (1) (2) (3) (4) Nonresident Nonresident Nonresident Nonresident USP BVI BVI Foreign Trust BVI Management Co USP U.S. Inc. USP Managing Risks (1) Exposure to U.S. estate tax (2) Limiting other taxes: Branch profits tax Income taxes Withholding taxes Partnership Holding Structure USP
AmCham Immigration & Tax Planning Exhibit 5 Offshore Voluntary Disclosure Initiative (OVDI): Problems & Controversy Inside Program Penalties: - 2009 Program 20% x Highest balance in eight years - 2010 Program 25% x Highest balance in eight years - 2011 & 2012 Program 27.5% x Highest balance in eight years Outside Program Penalties: - Foreign Bank Account Reporting (FBAR) 50% x Highest balance in each of six years - Non-reporting penalties related to foreign partnerships, corporations, trusts and partnerships - Potential criminal sanctions H has a green card, lives mostly in (1) Hong Kong, (2) China, or (3) U.S.
AmCham Immigration & Tax Planning Exhibit 6 Foreign Account Tax Compliance Act Foreign Bank Account Reporting (FBAR) - TDF 90-22.1 Foreign Financial Asset Reporting - IRS Form 8938: Foreign Financial Assets Other Reporting Requirements for U.S. Residents and Citizens - Form 926 Transfer of assets to foreign corporations - Form 3520 Gifts, inheritances and distributions or benefits from foreign trusts/estates - Form 3520A Ownership in foreign trusts - Form 5471 Ownership in foreign corporations - Form 8858 Foreign disregarded entity - Form 8865 Foreign partnership
AmCham Immigration & Tax Planning Exhibit 7 Expatriation Exit Tax Who: - U.S. Citizen or U.S. Green Card holder for more than 7 years, and - Assets fair market value exceeds $2 million or - Average taxes paid in each of 5 years exceeds $155,000 (2013) What: - Exit tax exposure (1) Indexed for inflation (2) Mark to market approach since June 2008 (3) Expatriation requires filing of IRS Form 8854 e.g. Fair market value of assets [Worldwide] $10,000,000 Tax basis <1,000,000> Exclusion <668,000> (2013) Taxable 8,332,000 - Gifts/bequests to U.S. beneficiaries taxed at highest estate/gift tax rate.
AmCham Immigration & Tax Planning Exhibit 8 Executive Relocation to U.S. HK / China Enterprise Need for executive sales & support team in U.S. Different forms of business in U.S. Branch U.S. incorporated subsidiary Expansion into U.S. Immigration issues re: Visa status & employment Employees present in U.S. without office Employees present in U.S. Branch Office Employees present in U.S. Subsidiary Corporation Tax risks
AmCham Immigration & Tax Planning Speaker Bios JOSEPH FIELD, ATTORNEY: (Joe.Field@withersworldwide.com) Mr. Joseph Field, Senior International Counsel of Withers LLP in New York, represents substantial international families on structuring their affairs and estate planning, advises financial institutions with respect to the establishment of international trust companies and a wide variety of financial services. He is a frequent speaker at international conferences on legal issues facing international families and family offices. He also writes extensively for legal periodicals. Mr. Field graduated magna cum laude from Princeton University with an A.B. and Columbia University Law with a J.D. He is admitted to practice law in California, the District of Columbia, New York, as well as registered in the United Kingdom and Hong Kong. BRIAN ROWBOTHAM, CPA: (br@rowbotham.com) Mr. Brian Rowbotham, Managing Partner at Rowbotham & Company in San Francisco, advises executives and high net worth families on global tax planning. He provides consulting services on complex real estate funds and technology companies in U.S., Hong Kong, China, Germany, Middle East and India. Mr. Rowbotham is a frequent speaker to many international tax associations and is a frequent guest lecturer at the Haas Business School at the University of California, Berkeley. He was recently featured on the cover of the California CPA Magazine for tax and business planning for U.S. companies expanding into China. Mr. Rowbotham has a Bachelor s degree and MBA from the University of California, Berkeley, and is a Certified Public Accountant in California. GRACE SHIE, ATTORNEY: (Grace.Shie@bakermckenzie.com) Ms. Grace Shie, Special Counsel with Baker & McKenzie in Hong Kong, manages the firm s Global Immigration & Mobility practice for Greater China. She has extensive experience counseling clients on U.S. immigration law and cross-border mobility issues, and previously practiced in Baker & McKenzie s Washington, D.C. office. Her U.S. practice includes advising multinational executives and investors on available visa categories for immigration to the United States and related citizenship and residency issues. She regularly partners with tax and wealth management professionals to devise immigration strategy that best meets clients business and personal needs. Ms. Shie graduated from the University of California at Berkeley with a B.A. and Georgetown University Law Center with a J.D. She is admitted to practice law in the District of Columbia and Virginia. HARRIET LEUNG, CPA: (hleung@rowbotham.com) Ms. Harriet Leung, Partner of Advisory Services at Rowbotham & Company in San Francisco, heads the firm s substantial Asia practice of high net worth individuals and works with many technology startup companies in multi-media gaming and social media. Ms. Leung has spoken at various tax and financial conferences in China, Hong Kong, Thailand and the U.S. Ms. Leung serves on the Board of Directors for the Hong Kong Association of Northern California where she recently organized and chaired a highly successful event on tax and immigration planning. Ms. Leung is originally from Hong Kong, and moved to the U.S. in 1991. She has a Bachelor s degree in Accounting and an MBA in Finance with honors from Golden Gate University, and is a Certified Public Accountant in California.