Question...US taxes on profits from foreign business?

[SECplayer]

Let's say you have a small business overseas. Any profits are held in a bank or investment account in that foreign country. Obviously the profits would be subject to whatever the foreign country's taxes are (whatever they may be).

So long as those profits are not brought into the US, I assume they would not be subject to any US taxes?

If brought into the US, I would assume at that point there would be reporting requirements and the IrS would want their cut. But so long as the money is kept in the foreign country where the actual business is located, then no US taxes right?

 

[Seymour]

I'm pretty sure u r subject to taxes here too - regardless of whether the money is brought here

 

[tatehill2000]

I'm pretty sure u r subject to taxes here too - regardless of whether the money is brought here

YEPP,,,, Hence the fines and seizures in switzerland,,,

Hypothetically speaking,,, you could hire an atty to HOLD money for you,,, that rate is low,,,, much less secure than the swiss scenario,,, however you are protected in that context,,

 

[SECplayer]

I think a lot of the recent problems with Swiss/offshore accounts is because that was money that was earned in the US and then hidden in Switzerland/Cayman Islands, etc.

from a brief look online, I think that money earned overseas is taxed according to the host country's tax structure and then ONLY taxes the difference in the US if and when the funds are "repatriated."

So if you had a business in Country A and their taxes were 20% whereas US's rate was 35%. You would pay 20% taxes to Country A. Then, IF you brought the funds to the US (i.e., repatriate the funds), you would pay the difference (35%-20%=15%) to the US.

But out as far as I can find, if you chose to NOT bring the funds to the US (and not repatriate the funds) you would not owe the US any taxes.

 

[PatsFan1283]

no the $ needs to be brought back into the US to be taxed

like 2/3rds of apples cash hoard is actually still overseas, several other companies as well to avoid paying US taxes

there has been talk of a "tax holiday" to bring those profits back here but hasnt happened yet....decent 60 mins piece on this few years back if you can find it on youtube

 

[SECplayer]

no the $ needs to be brought back into the US to be taxed

like 2/3rds of apples cash hoard is actually still overseas, several other companies as well to avoid paying US taxes

there has been talk of a "tax holiday" to bring those profits back here but hasnt happened yet....decent 60 mins piece on this few years back if you can find it on youtube

I will try and look for that. Thanks.

 

[jay6s]

i think you have to pay tax regardless if the money is repatriated or not. http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx FATCA, I have 2 friends working for diff financial institutions here in CR and they were telling me that they have been holding training sessions to enforce this FATCA, because if they fail to comply and report any US taxpayer account or any account associated to a US taxpayer the institution will have to pay a hefty fine.