August 23, 2021

What Are the Top 4 Categories of Offshore Tax Planning For US Citizens?

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Are you looking for a way to lessen your U.S. tax burden? There have been recent updates to offshore tax planning, much of what was true years ago is no longer the case with recent tax code changes. Much of this is a result of the 2017 Tax Act change. What can you do to lessen your tax burden?  Below are the top 4 categories of offshore tax planning according to Frost Law’s international tax professional, Peter Palsen.

  1. Renouncing your U.S. citizenship.  
  2. Physically move to a U.S. territory
  3. Living and working offshore
  4. Tax referral via a foreign corporation

Renounce Your U.S. citizenship

This may be the least attractive option in regard to offshore tax planning.  The U.S. taxes its citizens on their global income, whether or not they are using any of the countries resources.  Over the last decade, approximately 5,000 people or less renounced their U.S. citizenship each year.

Physically Move to a U.S. Territory

Thinking of moving to Puerto Rico or another U.S. territory? Recently Puerto Rico has made it more attractive to U.S. citizens by implementing a few acts that provide both a corporate business rate exemption and an individual tax exemption.  With these tax exemptions combined, taxpayers may be able to achieve single digits in regards to taxes.

Living and Working Offshore

Are you a digital nomad? If you work outside out of the United States and establish a time of residency outside of the U.S. you can exempt around $107k of salary a year. Hundreds of thousands of people take advantage of this offshore tax planning method each year. With an increase of employees working from home from 31% in 2019 to 62% in 2020, working offshore is more viable now than it’s ever been. Does this sound like an attractive idea to you? Barbados has established a program called“Welcome Stamp” which allows anyone who meets the visa requirements to work remotely up to 12 months.

Tax Referral via a Foreign Corporation

Tax referral via foreign corporation works best if your business is of scale.  If you have highly profitable business activity and your business has portability, this may be an option for you.  This is more of a long-term option for those seeking offshore tax planning alternatives.

Are you a U.S. citizen with questions on offshore tax planning? International tax professional Peter Palsen is available to answer your questions and help guide you to the best strategy for your individual needs. Frost Law tax attorney’s also offer support with tax litigation, tax controversy, international tax consulting and compliance, tax audits and appeals, and many other areas of tax law. Learn more at, email us, or give us a call at 410-497-5947.


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