Throughout its history, the USA has been very open to foreign investment. For example, there are no restrictions to foreign ownership of real estate and limited restrictions in just a few strategic industries, such as aircraft, shipping, mining and energy, and in government contracting. According to the Office of the Press Secretary of the White House, the USA is the largest recipient of foreign direct investment, which brought $292 billion into the country in 2017.
Foreign investors are attracted to the USA’s stable regulatory environment, skilled and productive work force, predictable legal protections and the benefits of the world’s largest consumer market. US tax laws provide incentives to foreign investors by exempting them from income tax on portfolio interest and capital gains on financial assets. There are also specific elections available for foreign investors enabling them to be taxed as US residents with respect to rental income and capital gains realized from their US real estate investments. International tax treaties provide additional opportunities for favorable tax treatment.
Most of MHTax’s work with foreign investment is related to tax planning for income and estate taxes. Income tax planning is focused in minimizing tax liability and reporting requirements by taking advantage of incentives in the tax code and income tax conventions. Estate tax planning looks at minimizing estate tax exposure at the lowest cost to the investor. Absent an estate tax treaty limiting this exposure, nonresident aliens are subject to estate taxes on their US located tangible assets that exceed the $60,000 exemption at a 40% tax rate (2018).
These are some of the most common questions we help foreign US investors with:
– Can I invest in US investment funds and how much tax will have I to pay?
– I want to start a US business. What are the tax implications of the different possible structures?
– Will I have to pay US estate tax if I have an US investment?
– Are there any ways to avoid US estate taxes on my US investments?
– What are the benefits of US trusts?
– Do I need to file a US tax return if I have a US investment?
– Do I need to report my foreign assets to the US government?
– Can I start a business or a joint investment with a US citizen? What do I need to know ?