Global Securities Markets: Navigating the World's Exchanges and OTC Markets

NON-RESIDENT ALIEN ESTATE TAX

Another advantage of offshore accounts is that they can lawfully avoid the U.S. Non-Resident Alien Estate Tax if the accounts are established as offshore corporations. Currently, the estate of a nonresident individual who owned more than $60,000 in U.S. situs assets can, generally speaking, be forced to file a U.S. Non-Resident Alien Estate Tax return and pay tax to the United States on the decedent's U.S. situs assets. An offshore corporate structure can lawfully avoid this tax since the U.S. situs assets are not considered to be owned by the decedent, which explains why so many sophisticated non-U.S. investors invest in the United States through offshore corporations or other personal investment vehicles in offshore jurisdictions. It should be noted that some foreign jurisdictions have estate tax treaties with the United States that largely eliminate this problem for residents of those countries.