Dear ,

The Clean Nominee Bank Account is the outcome of A Regulator Asset Protection Structure (see below). This blueprint, the whitepaper of which, has been downloaded thousands of times since 2012, and has now become an industry standard for cross-border tax-deferred enterprise, as it works perfectly in every jurisdiction.

Colleagues that have reverse engineered the RAPS method, soon learned that it requires a FATCA ID# and now CRS AML certification. We are at your service to help you invest offshore.

402(b) Regulator Asset Protection Structure

Under IRS rules, the LLC is considered a 'disregarded entity' because, in this example, you are filing as an individual.

402(b) Regulator Asset Protection Structure - Mind-map

402(b) Regulator Asset Protection Structure mind map PDF Download

Many countries have laws imposing secrecy on information about retirement plans and this is in essence why FATCA allows for the ‘limited conditional’ category.

By their very nature, retirement plans are viewed and governed differently. There are sanctions on dealing with retirement plan information which only a Regulator can decide on. There are so many organizations with powers of search and seizure these days that might otherwise demand access to sensitive information. Preventing this is important because retirement plans are proprietary.

Moreover, the US Treasury has formally determined that pensions carry a low risk of tax evasion and they are therefore exempt from FATCA reporting.

Simplified Tax Reporting

The rule is simple: no W8 BEN-E, no transactions in U.S. dollars, but what exactly is a W8 BEN-E Declaration? A W8 has been in existence for a long time. It is a declaration by a non-U.S. individual concerning their tax status for U.S. tax purposes. The W8 BEN declaration used to be very simple: a foreign company would declare that it was not a U.S. company, not U.S. controlled and that it didn’t have U.S. income. This was all that was necessary to allow any foreign company's U.S. counterparty to remit gross income rather than deducting the required amount.

This has all changed since the introduction of FATCA, which has resulted in the introduction of the new W8 BEN-E declaration. Unless the investment platform is able to sign a W8 BEN-E on behalf of the individual, they cannot be party to any U.S.-dollar investment without having some level of FATCA registration.

The FATCA status ‘limited conditional’ means that the institution is exempt from reporting because it is deemed to be compliant and restricted information secrecy laws override FATCA.. This is explicitly for foreign retirement plans as exempt beneficial owners and also for administrators of FATCA identification number pension funds.

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A Clean Nominee Bank Account structure is not an off-the-shelf product and can be tailor-made in compliance to a statutory tax law mechanism and the clients financial situation.

How To Extend The Tax Holiday On Carried Interest

1. Private Equity because they could be caught by the carried interest definition and three year tax holiday; which means they could suffer to pay tax on money not yet received
2. Captive Insurance Passive income solution
3. Hedge Fund specific solution to continue deferral of carried interest.

Private Equity caught by the carried interest definition; which means they could pay tax on money not yet received.

This structure extends the tax holiday indefinitely.

This structure makes overseas passive income rules irrelevant.

That means the top marginal tax rate applies to overseas passive income because the general tax rate deductions and the new participation exemption rules reductions do not extend to Passive income and gains. (See 4501 and 1297)

The 2018 ''participation exemption'' in tax law changes makes the way an American Company financed their business no longer tax neutral.

Carried Interest

• The Tax Reform Act did not eliminate the tax advantages of carried interest but instead adjusted the holding period for private equity funds and real estate partnerships.
• The Act treats carried interest gains on partnership assets held for three years or less as short-term capital gain and as long-term capital gain if held more than three years. The three year timeline limitation begins at the start of the Fund.

The non-contentious part of that limitation is repatriation of carried interest for Corporations and Funds. Funds will suffer a ''double whammy'' of taxation and loss of yield. Which means funds not only kiss investor money away and suffer a huge tax bill.

Summary of 402(b) solutions for the 2018 overseas tax problem.

1. Extend the tax holiday on private equity, hedge funds and stock options.
2. There are no time limits to a tax holiday

• Removal of a promise by a US tax indifferent entity to pay a carried interest and replacement with a possibility of later payment
• In exchange, the certainty of taxation in 2018 is replaced by the certainty of taxation sometime later: in other words, deferral

The economics

• Tax deferred is tax saved
• The return on deferred tax is always better that the return on the 457A after-tax residue

The legal framework

• Use of a 402(b) compliant non-qualifying unvested deferred compensation plan organized under Hong Kong law with existing hedge fund clearer's as asset-holder of the plan
• Transfer of existing carried interest assets to the plan by the existing US tax indifferent entity as plan sponsor
• Vesting schedule by means of a generic award plan by which plan administrator decides on allocation to plan members, which is a tax event.

Additional benefits

• By-passes probate, useful for business succession planning
• Creditor-proofing
• Not a discretionary trust and 409A and 83 compliant

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