Hi ,

Some people still think that they can hide money offshore. It completely astounds me that this myth persists. Every week I receive information from offshore consultants who ask me to promote their products and services. Most of these offshore structures are based on the old paradigm, which involves an "offshore asset protection trust". These structures cause more problems then they are worth. Recently an individual was indicted for tax evasions in the U.S. after the IRS unraveled a trust structure that included over 60 IBC's.

Now that Switzerland has agreed to disclose all foreign owned bank accounts, the ripple effect will effect thousands of banks in the 75+ tax havens, where those regional banks enjoyed custodian agreements with once private Swiss Banks. Many unwary customers have money on deposit with a bank on an exotic island somewhere, that is really nothing other than an agent for a Swiss Bank, which has now provided all the names of the account holders to the IRS.

The Regulator Asset Protection Structure (RAPS) works because it is transparent and tax compliant. You can still have your cake and eat it too but you need to forget about the old menu.

Aaron A Day

Here is an example solution (below) for those who would like to use loans in their "Outside the USA" investing. But first, a summary of why we do what we do it.

For a U.S. Person (or U.S. Person Beneficiary i.e. LLC, IBC, Foundation, Trust) to open up an "Outside the USA" Financial Account (Bank, Brokerage, Investment Account) his/her opening account documents are excluded from the Foreign Account Tax Compliance Act (FATCA). Excluded by FATCA from FATCA.

The reason is because:

1. IF his application is to a Complaint FATCA Financial Institution my practical experience is that they will reject his application as a "Not Wanted Account".
2. If his application is to a Non-Complaint Financial Institution then he is subjecting himself to Withholding Tax penalties of potentially 30% going in and 30% going out. (If this reason #2 is not understood then please request my further details)

Therefore, our U.S. Clients are provided a FROM Offshore Investment Account from either or both of two structures below which are excluded from FATCA by FATCA:

• A qualified retirement plan meets certain requirements in order to receive tax benefits not available to other types of plans.
• These plans may be structured so that the plan is part of an employer's retirement benefits package, or they may be independent of an employer plan.
• The qualified plan may accept tax deductible or non-deductible contributions.
• If the contributions are tax deductible, then all withdrawals from the plan are taxable.
• If the plan contributions are non-deductible (as is the case with Roth accounts), the withdrawals are normally tax-free.
• Regardless, all plans allow for tax-free buildup inside the plan.

Non-Qualified Government Regulated, Registered and Recognized Foreign Retirement Plan

• Non-qualified retirement plans fail to meet IRS guidelines for qualified retirement accounts.
• These plans accept only non-deductible contributions.
• Money is taxable to the employee when it is received.
• All money that grows inside the plan is tax-free, however.

Most Clients use both the Qualified and Non-Qualified Structures to organize their financial accounts FROM outside the USA

If you want to use borrowed money in your investments FROM Offshore, we will recommend a strategy used by Mitt Romney, 2012 Presidential Candidate, to deal with Unrelated Business Income Tax (UBIT) and IRS form 990-T.

Unrelated Business Income Tax (UBIT)

If you want to use your IRA to invest with leverage, offshore planning offers a solution to UBIT. This page comes from Mitt Romney's Bain Capital playbook and uses an Offshore Blocker Corporation.

Basically, Mr. Romney was able to grow his U.S. IRA to over $100 million through the use of leverage, UBIT Blocker Corporations, savvy investments, and international tax planning.

Comment: Offshore IRA LLCs and UBIT Blocker Corporations are legal tax mitigation techniques for tax exempt entities such as IRAs.

Generally, an IRA is exempt from U.S. federal income tax on its passive investment income and pays tax on most other types of income. This taxable income is referred to as Unrelated Business Taxable Income (UBTI). UBTI is defined as any net income derived by a tax-exempt entity from an unrelated trade or business that it regularly carries on.

Basically, the percentage of income that is treated as debt-financed is the percentage of the acquisition cost that is financed by borrowed funds. So, as stated above, if one-half of the purchase price of an asset is borrowed, then one-half of the income from the asset may be subject to UBIT.

Also, if an IRA LLC invests in a business, then the IRA's share of the profits derived from that business are likely UBTI. If Indebtedness is incurred by a partnership or limited liability company of which the IRA is a member, the IRA will probably have UBTI. Partnership income from international hedge funds and active businesses is likely the source of Mr. Romney's UBTI and the reason he requires UBIT Blocker Corporation(s).

However, debt incurred by a corporation is not viewed as debt incurred by a shareholder for this purpose. In other words, a corporation can take on debt which will not count against its shareholders (your IRA) and thereby not generate UBTI. Because debt incurred by a corporation is not treated as debt of its shareholders, and there is an exclusion from UBIT for dividends received from a corporation, an investment in or held through a corporation generally does not result in UBIT.

So, the UBIT Blocker Corporation works by taking the income out of the taxable category of business income or income from leverage and placing it in the nontaxable category of a dividend. But, why must it be structured offshore? Simple, if the corporation were in the United States, its income would be taxable in the U.S. at the corporate rate of 35%. Only after paying corporate level tax could the corporation distribute a dividend to your IRA.

By forming the UBIT Blocker Corporation offshore, in a country that will not tax your corporation's income, no U.S. tax need be paid by this entity.

Remember: We are talking about an offshore corporation wholly owned by a U.S. tax exempt retirement account. We do not consider the tax consequences of an active business owned by a U.S. citizen or resident...an individual rather than a tax exempt entity.

The Structure

It is not exceedingly expensive or complex to run an IRA for large investments. First, let's consider the traditional offshore IRA structure.
Step 1, we move your IRA account to a custodian experienced in offshore IRA LLCs. This moves it to a self-directed IRA without tax consequence.
Step 2, we reach a Checkbook IRA LLC by having the new custodian invest in the offshore IRA LLC we created with you as the manager.
Once the funds go from the custodian to your offshore IRA LLC, you have checkbook control and can manage your IRA as you see fit.

In addition, the Checkbook IRA LLC allows for partnering with other investors.

Now, let's say you want to invest in a business or hedge fund (as Mr. Romney does) that will generate ordinary income, and thus UBTI.

• We need to add a UBIT Blocker Corporation to the mix by placing an offshore corporation between your offshore IRA LLC and your investments.
• To allow for this type of investment, we form a UBIT Blocker Corporation in an offshore jurisdiction that will not tax its income which is wholly owned by your offshore IRA LLC.
• Your IRA LLC invests money in the blocker corporation and the blocker corporation invests in those projects that are likely to generate ordinary income / leveraged income / UBTI.

In some cases, each investment is held in its own offshore LLC, which flows through to the blocker corporation.

These LLCs might hold the shares of an active business, a hotel property, and a yacht that you purchased with three friends to be rented out for fishing and other events.

The example above would require an Offshore Checkbook IRA LLC, a UBIT Blocker Corporation, and possibly three offshore LLCs to hold three investments.

Conclusion

Converting an IRA in to a Checkbook IRA LLC gives out client complete control over his most important investment account. Taking that Checkbook IRA LLC offshore allows him to access tax tools and investment models known and understood by the super wealthy.

If he wants to use borrowed money, we are ready to handle Unrelated Business Income Tax (UBIT) and IRS form 990-T. When an IRA purchases real estate using a non-recourse mortgage loan, the debt financed portion of the property's profits are subject to UBIT. Similarly, if an IRA-owned property is sold while a percentage of ownership is debt financed, the profits derived from the debt financed percentage are subject to Unrelated Business Income Tax.

For example, if you purchase a home for $100,000, with $50,000 from your IRA and $50,000 from an unsecured loan, and your net rental income is $2,000 per month, $1,000 per month of that income will be subject to UBIT and $1,000 will flow tax free in to your IRA. If you then sell the property for $150,000, about $25,000 of the profits from the sale will be subject to tax. The applicable tax rate is a sliding scale and ranges from 15% to 35% for tax year 2012.

Key Features

Investment linked to the benchmark indices of the UK, US, China and Taiwan, providing the opportunity for semi-annual returns of 5.0% (10.0% per annum), and 9 opportunities for early redemption over a 5 year investment term.

Investment Description

• A 5 year investment linked to the performance of the benchmark indices of the UK, US, China and Taiwan
• The Notes will "Autocall‟ triggering an Automatic Redemption if on any semi-annual Observation Date all the Underlying Assets are greater than or equal to their Initial Valuation Level
• In the case of Automatic Redemption the Notes return 100% of capital invested and the investor shall receive 5.0% for each semi-annual period the Notes have been active i.e. if the Notes are automatically redeemed at the end of year 3, the investor will receive a Coupon Amount of 5.0% x 6 plus 100% of initial capital
• Capital is at risk with this product: A fall of 50% or more in Performance is required in any Underlying Asset before capital is at risk. The Performance is measured by comparing the Initial Valuation Level to the Final Valuation Level on the Final Valuation Date. If any Performance measures a fall of 50% or more investors will receive the Performance of the Worst Performing Asset at maturity

NOTE: closing Feb. 21, 2013

Issuer: Nomura Bank International plc (NBI), rated as A- by S&P

• The Nomura East to West Autocallable Notes 5 ("the Notes") are linked to the benchmark indices of the UK, US, China and Taiwan
• The Notes provide investors with the potential for returns of 5.0% for each semi-annual period over the life of the investment, combined with 9 opportunities for early redemption
• The Notes are issued by Nomura Bank International plc ("the Issuer"), which is rated by S&P as A-, at the time of a publication
• The Notes are issued in GBP, USD, and EUR, have an investment term of 5 years, and are intended to be held for the entire period

Underlyings:('Stocks')

• FTSE 100 Index (UKX Index)
• S&P 500 Index (SPX Index)
• Hang Seng China Enterprises Index (HSCEI Index)
• MSCI Taiwan Index (TAMSCI Index)

ISIN Codes

• USD - XS0875790346
• EUR - XS0875789413
• GBP - XS0875788878

The Notes are available in USD, EUR and GBP

Risk Disclaimer: Please bear in mind that investors are exposed to the credit risk of the Issuer. The Notes are not capital protected and investors may receive back less than the original amount invested. The value of the investment can go down as well as up and investors can potentially lose all of their investment. Any secondary market provided by Nomura International plc is subject to change and may be stopped without notice and investors may therefore be unable to sell or redeem the Notes until their maturity. If the Notes are redeemed early they may be redeemed at a level less than the amount originally invested.

Royal Bank of Canada - Gold Miners Phoenix Notes brochure, available upon request.

Location: Angra dos Reis, Rio de Janeiro, Brazil

SITUATED:

CONSTRUCTION:

MAINTAINANCE:

DESCRIPTION:

A magnificent executive home built to the highest standards

1. 6 en suite bedrooms. Master suite with separate dressing room, bathroom with Jacuzzi.
2. Enormous lounge dining room (33ft. by 30ft.)
3. Fully furnished
4. Central Air conditioning downstairs(90 BTU with outside silent motors)
5. 160 ft. Ocean frontage
6. Deck 65 ft by 15 ft. built over the water
7. Private jetty extending 200ft. into the ocean plus an additional 2 registered moorings and a boat ramp for a launch
8. Fresh water Swimming pool with waterfall (30ft. by 15ft.) & an indoor heated pool (12ft. by 9ft.)
9. 2 car garage space with additional parking for 3 more cars
10. Own mini substation receiving 440v of electricity allowing both 220v & 11Ov connections
11. Attic office overlooking the ocean ( air conditioned separate )
12. Separate Entertainment building containing an indoor heated swimming pool, Sauna. Snooker table (10ft.), Tennis table, Gymnasium and bar.
13. Private walled beach
14. Own Water spring supplying unlimited pure water

Request more information about unique Brazil real estate.

You can store your metals with:

• VIA MAT - in vaults in Hong Kong, Switzerland and the UK.
• Brink's - in vaults in Toronto and Singapore.
• Rhenus - in a vault at Zurich Airport in Switzerland.
• G4S - in a vault in Hong Kong.

Ready to invest offshore in precious metals? click here

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