Foreign Exchange Remittance

Investors who pay international remittance have to consider different tax declaration requirements in different countries since each countries have their own strict regulations on investments. For example, a tax-free investment product in UK might be subject to strict taxes in the US authorities. Investors might need tax advisors to help them navigate through complex tax requirements in different countries.
According to The Foreign Account Tax Compliance Act (FATCA) enacted by the president Obama in 2010, foreign institutions in U.S. are required to submit documents signed by the local governments and the U.S. investors’ asset information to the Internal Revenue Service (IRS).
Companies that does not comply with the FATCA’s requirement could be subject to significant penalties. The potential risk of paying for the costly penalties discourages foreign financial institutions from accepting US customers. Some companies rather deny U.S. investors to avoid the risk. Some countries such as UK are dealing with FATCA seriously.
In addition, PFICs’ (Passive Foreign Investment Company) internal income service rule divides investment into two types: investment in operating businesses and investing for passive income flows. To be qualified as a legitimate investment, an investment needs to go through income and asset verification.
The definition of a passive income is complicated. Dividends and interests of an enterprise can be reckoned as passive income, but these dividends and interests vary according to the nature of the enterprise. Unfortunately, if this kind of stock is merged into a popular unit trust or other investment portfolio managed by British asset managers, it is likely to fail, so it is regarded as PFIC and becomes a potential higher tax target.

Crowdfunding Investment

Crypto Finance

Last modified 2mo ago

Copy link