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Subject:  Re: Planning to Retire Oversees Date:  2/17/2000  9:55 AM
Author:  galeno Number:  4146 of 876037

Anya wrote:
We are open to anything at this point (just exploring), including giving up US citizenship and becoming French citizens (after we move there), or setting up a French bank or brokerage account or IBC now, and investing the funds through it. Would this have advantages to leaving the assets (LTBH stocks) in a US account and drawing from them while in France, or moving the whole thing to a French account upon relocating there?

If you LIVE in France and you invest THRU a French corporation, that corporation is NOT an IBC. It's a DBC (domestic business corporation). IBC implies that your corporate investment vehicle is NOT domiciled in either a country you live in or a country where you hold cizizenship or residency. It should also NOT be in the country where your brokerage account is held. It SHOULD be domiciled in a tax haven country.

If memory serves me correctly, investing thru a French corporation and buying US securities would oblige you to pay a 10% withholding tax on dividends and interest income (but no capital gains tax) to the US government. This is because France and the USA have a tax treaty. BUT, you would also be exposed to the VERY SIGNIFICANT French corporate taxes. You would be defeating your purposes. Thus, you do not want to use a French corporation as your investment vehicle.

If you plan to live in Europe, your best investment vehicle is an Irish IBC. For you, Ireland is a great tax haven country. If you do give up your American citizenship or residency, your structure could be as simple as this:
Schwab Europe Account--Irish IBC--Your Family.

If you remain an American, you might want to add another IBC layer domiciled in a different EU country:
Schwab Europe Account--Irish IBC--Other EU IBC--Your Family.

You should see the "What's Wrong with this Picture" thread I (unfortunately) started a few days ago. You need to do a risk-benefit analysis. For example, if you and your legal spouse are going to pull out $36K annually for living expenses, the US will allow you shield approximately $12K in exemptions and standard dedutions leaving you with a $24K taxible capital gains of which you'd pay 10% or $2400 per year. This is an average MAXIMUM tax rate of 6.7% of your income.

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