Any US Citizen Green Card Holder, or future resident looking to save as part of their retirement in a tax efficient savings vehicle holding should consider pension planning utilising a Maltese pension plan and these are particularly attractive to individuals aged 50 and over when compared to traditional variable annuity contracts or qualified insurance contracts. If you are a US Citizen Green Card Holder, or future US resident looking to save as part of your retirement and you would like information regarding this tax deferred pension plan, please email julian.galvin@tyche-group.com and remember to include your name & contact number.

1. November 2014
LIBERATE YOUR PENSION PLANNING OFFSHORE
The FATCA scheme “has inadvertently ensnared every
United States Citizen living overseas due to its overzealous
invasion of privacy and punitive taxation and enforcement.”
- The U.S. Republican National Party (Resolution – Jan 2014)
No doubt you will have been talking about the Foreign Account
Tax Compliance Act (FATCA) and its use by the U.S. Government
to combat tax evasion by U.S. persons holding accounts and
other financial assets offshore?
If you are a U.S. individual taxpayer holding financial assets
outside the United States you are now required to report these
assets to the IRS on Form 8938, Statement of Specified Foreign
Financial Assets and there are serious penalties for not reporting
these. If you hold foreign financial assets with an aggregate value
of more than $50,000 you must report information about these
assets by attaching this declaration to your annual return, this
exemption is higher for married taxpayers filing a joint annual
income tax return.
FATCA also now requires banks, brokers, and certain insurance
companies to report information directly to the IRS about financial
accounts held by U.S. taxpayers or by foreign entities in which
U.S. taxpayers hold a substantial ownership interest. Therefore, if
you set up a new account with a foreign financial institution, it will
ask you for information about your citizenship.
What this means is there are now very few opportunities available
for US tax payers to access a gross roll up and tax efficient
savings vehicle that enable you as a high-earner to build a
pension fund which is more commensurate with your current and
future earnings within the US tax-approved regime. This is
because of restrictions regarding how much you can fund in to
qualifying retirement plans such as 401(k) or Individual Retirement
Accounts.
Fortunately there is an offshore pension solution to this problem,
as there are tax efficient savings vehicles for US tax-payers
resident abroad that allow for income and gains derived from
savings to accumulate without US tax liabilities. Furthermore
through the payments of the initial lump sum and programmed
withdrawals it is possible to frank untaxed income and gains
against these payments, thus providing an absolute saving in US
taxes. There is a double taxation agreement between Malta and
the USA that treats a bona fide Maltese pension scheme very
much like a US domestic pension scheme for US tax purposes.
investments where income & gain is sourced outside of Malta are
not taxed in Malta, and are not liable to US tax on an arising
basis, resulting in long-term, compound tax-deferred investment
growth. US source dividend income can also be received by the
plan without US withholding taxes applying.
Any US Citizen Green Card Holder, or future resident looking to
save as part of their retirement in a tax efficient savings vehicle
holding should consider pension planning utilising a Maltese
pension plan and these are particularly attractive to individuals
aged 50 and over when compared to traditional variable annuity
contracts or qualified insurance contracts.
In essence the primary reasons for considering are it enables high
income earners to build up savings in a tax deferred environment
that is not possible within the current US tax-approved regime that
limits annual contribution limits to around USD 51,000. Malta on
the other hand does not place limitations on funding in cash or in
specie. Plans receive the benefit of tax-deferred investment
growth, which is generally very difficult for US taxpayers to
achieve without using more expensive and more restrictive
insurance & annuity products; whereas the Maltese Treaty
exempts income and gains realised within the plan from US tax.
Investments standing at an unrealised gain can also be
transferred into the plan without a charge to US tax arising and
Investments can be sold and the treaty claim will exempt them
from US taxable gains.
Current reporting on Investments in the US is complex and Malta
allows investors to take advantage of the ability to invest freely
into Passive Foreign Investment Companies without US tax
penalties and complex tax reporting procedures. If you are a US
Citizen Green Card Holder, or future US resident looking to save
as part of your retirement and you would like information
regarding this tax deferred pension plan, please email
contact@tyce-group.com and remember to include your name &
contact number.
Julian Galvin , Executive Director – Investment
Member of Investment Committee, Tyche Group Limited
DISCLAIMER: This newsletter is intended for information purposes only and should not be regarded as a substitute for professional
financial advice. Tyche Group Limited shall not be liable for any pecuniary loss arising from the use of any information provided herein.
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