My wife and I are non-US citizens and residents of Japan. We set up an offshore trust a couple of years ago (in Belize) to hold our investments. The trust has an account with a well-known US securities brokerage. At time of establishment the purpose of the trust was not tax avoidance but something else, doesn't really matter what.
My wife and I are the grantors and beneficiaries of the trust. A friend, also resident in Japan, is the trustee. As such, the trust is a pass-through vehicle and we (my wife and I) are liable for taxes on gains etc., and must report these in Japan. Up until 2017, we didn't report the trust's existence or any gains it accrued, as that seemed safe enough up to that year. But the climate is changing and the tax authorities here are becoming more aggressive about offshore assets.
Now, I just found out that it is not possible, under current J tax law, to offset losses on investments in one year against gains in another year, if the investments are held outside of Japan.
I wasn't too thrilled to pay capital gains tax anyway but this is seriously pissing me off. So I'm looking for ways to "disappear" our investments. This is just too much.
Very short-term, my understanding is that the US does not automatically inform any other countries of accounts held by their residents with US banks and securities brokers. That the country in question needs to ask the US to provide information on specific persons, if they want to know. In other words, unless the Japanese tax man has a specific interest in me, and asks the US about me or my wife, they will not know about the trust and its investments with the US broker. Can someone confirm that this is correct?
And secondly, any suggestions as to how I can make sure that the investments stay off the Japanese tax man's radar screen? I browsed the forums here and see that citizenship of another country would be one route but very expensive. It would also require being a resident there, I guess, at least for a short period of time, to be able to obtain proof of residence. So this seems a very elaborate and probably unrealistic method. Any other suggestions?
My wife and I are the grantors and beneficiaries of the trust. A friend, also resident in Japan, is the trustee. As such, the trust is a pass-through vehicle and we (my wife and I) are liable for taxes on gains etc., and must report these in Japan. Up until 2017, we didn't report the trust's existence or any gains it accrued, as that seemed safe enough up to that year. But the climate is changing and the tax authorities here are becoming more aggressive about offshore assets.
Now, I just found out that it is not possible, under current J tax law, to offset losses on investments in one year against gains in another year, if the investments are held outside of Japan.
I wasn't too thrilled to pay capital gains tax anyway but this is seriously pissing me off. So I'm looking for ways to "disappear" our investments. This is just too much.
Very short-term, my understanding is that the US does not automatically inform any other countries of accounts held by their residents with US banks and securities brokers. That the country in question needs to ask the US to provide information on specific persons, if they want to know. In other words, unless the Japanese tax man has a specific interest in me, and asks the US about me or my wife, they will not know about the trust and its investments with the US broker. Can someone confirm that this is correct?
And secondly, any suggestions as to how I can make sure that the investments stay off the Japanese tax man's radar screen? I browsed the forums here and see that citizenship of another country would be one route but very expensive. It would also require being a resident there, I guess, at least for a short period of time, to be able to obtain proof of residence. So this seems a very elaborate and probably unrealistic method. Any other suggestions?
