US estate tax for non residents on stocks investment

[desfo2000]

Hello, as you probably know, in case of death, heirs have to pay to IRS up to 40% of all assets US based - stocks on US listed company and ETF included (Apple, Google...), even if carried in a European or Asian bank account.

Tax Consideration When Venturing Your Hard-Earned Money in the US as Alien | US Expat Tax Service

Tax Privilege of Foreign Investors in the United States

www.taxesforexpats.com

It looks like brokerage firms won't release the account without tax proof payment to IRS.

Any clue about this subject or how to avoid that? Selling before passing away is not an option in case of sudden death.

Thanks

 

[Martin Everson]

Any clue about this subject or how to avoid that?

Avoid owning any US assets period.


P.S I discussed this in another thread years ago.

 

[desfo2000]

Avoid owning any US assets period.


P.S I discussed this in another thread years ago.

Ok thanks - I would be interested if someone knows about some real case involving US stocks in European / Asian bank account. Question is if tax is really paid... when stocks are carried in a omnibus account is probably harder for the IRS to know the real owner, especially if the account/bank is not US based. I know that US based brokers needs a proof that the payment to the IRS is done, but not sure for a non US based one. By the way if you have a link to the other thread would be great, thanks

 

[Martin Everson]

Question is if tax is really paid... when stocks are carried in a omnibus account is probably harder for the IRS to know the real owner, especially if the account/bank is not US based.

Yes tax is really paid but by very few who come forward (see below link I posted years ago on here). Omnibus accounts don't protect you when you complete a W8-BEN before you trade US securities. It becomes a case that IRS needs to start receiving the W8-BEN forms people complete but IRS currently do not automatically receive this and it stays in brokers files.

Look who's getting away with not paying this estate tax

Foreign holders of U.S. assets who fail to pay estate taxes could be costing the U.S. Treasury billions of dollars.

www.cnbc.com

A Biden administration may perhaps enact new stricter laws.

Anyway avoid US securities.

 

[troubled soul]

Avoid owning any US assets period.


P.S I discussed this in another thread years ago.

Can you Give a link to that thread, If It is possible.

Thanks

 

[Martin Everson]

Can you Give a link to that thread, If It is possible.

Nevis LLC and general LLC questions

Hello all, I have some questions that I was hoping the members here could help me with. I live offshore in the Caribbean and have no tax obligations where I live or in my country of citizenship. I am interested in forming a Nevis LLC to hold liquid assets and would like to know the following...

www.offshorecorptalk.com

 

[mike400]

US estate tax could be easily avoided by using Ireland domiciled ETFs which hold US securities instead of US domiciled ETFs, right?

For example using VUSA instead of VOO

 

[Vor]

US estate tax could be easily avoided by using Ireland domiciled ETFs which hold US securities instead of US domiciled ETFs, right?

For example using VUSA instead of VOO

my understand is you are correct im a US citizen though buying non US domiciled funds for me is a major headache. Two years to go until im no longer a citizen of the "land of the free"

 

[zzzzzz]

Hello, as you probably know, in case of death, heirs have to pay to IRS up to 40% of all assets US based - stocks on US listed company and ETF included (Apple, Google...), even if carried in a European or Asian bank account.

Tax Consideration When Venturing Your Hard-Earned Money in the US as Alien | US Expat Tax Service

Tax Privilege of Foreign Investors in the United States

www.taxesforexpats.com

It looks like brokerage firms won't release the account without tax proof payment to IRS.

Any clue about this subject or how to avoid that? Selling before passing away is not an option in case of sudden death.

Thanks

Is the owner of assets a US citizen or US resident?

 

[JustAnotherNomad]

US estate tax could be easily avoided by using Ireland domiciled ETFs which hold US securities instead of US domiciled ETFs, right?

Yes, but only for ETFs, not if you hold US stocks directly.

The other way you can avoid US estate tax (or at least minimize it) is by dying as a tax resident of a country that has signed an estate tax treaty with the us. There are a handful of jurisdictions that have done that, of course all have high taxes.
Or, finally, you could use a trust/foundation or some other investment vehicle to invest into US stocks. Possibly even a holding company could work for that, but I'm not sure. You'll want to talk to a US CPA.

 

[Martin Everson]

The other way you can avoid US estate tax (or at least minimize it) is by dying as a tax resident of a country that has signed an estate tax treaty with the us.

The best way to avoid US estate tax is not to die

 

[mike400]

The best way to avoid US estate tax is not to die

That's not a bad advice

 

[mike400]

...not if you hold US stocks directly.

Any solution if I want to hold US stocks directly?

Or, finally, you could use a trust/foundation or some other investment vehicle to invest into US stocks. Possibly even a holding company could work for that, but I'm not sure. You'll want to talk to a US CPA.

Anybody got more info on this or personal experience?

 

[celizo]

it depends on tax treaties aswell. check it for your country.

 

[JustAnotherNomad]

Only a handful of countries have signed estate tax treaties with the US. Germany and Switzerland have signed for example, but Spain hasn't.

 

[celizo]

I follow french investors forum, and they say France has this too.

 

[JustAnotherNomad]

This should be the full list:

Estate & Gift Tax Treaties (International) | Internal Revenue Service

A listing of international treaties affecting estate and gift taxes.

www.irs.gov

You'd have to be tax resident in one of those countries to make use of the treaty. Which is what most people here try to avoid.
It would probably be better to avoid the issue by either not holding direct US investments worth over $60k - or using a trust or trading company or some other structure.

 

[celizo]

Even if we are talking about stocks in this thread, it's good to add that if I'm not wrong (I've checked this in the past) bonds holding are not concerned too with this US estate tax.