U.S. estate taxes
In the last few years the regulatory environment for international executives working for U.S. companies has become increasingly complex. The U.S. in particular is increasing its reach by imposing its tax laws beyond its borders.
In this context, the most challenging is the U.S. inheritance taxes. Anyone who holds assets from a U.S. company (such as shares and options) is exposed to U.S. inheritance taxes, regardless of nationality and domicile.
In case of death, all accounts and assets based in the U.S. will be blocked and not released before completing the IRS filings.
Taxation of non-U.S. citizen/resident
There is an important distinction to how these taxes are applied for non-U.S. persons. Where a U.S. taxpayer currently enjoys a tax free amount of more than USD 5 million, a non-U.S. taxpayer will only have USD 60,000.
Assets at risk
Contrary to common knowledge it is not only real estate that is considered when estate taxes are applied. All of the below and more are at risk:
- Shares & stock options in U.S. corporations
- U.S. based pension plans
- USD cash, U.S. common stocks and bonds
- U.S. real estate
Most of our executive clients have the following wealth characteristics at the start of the relationship, they are invested in:
• One derivative
• One company
• One market
• One currency
• Multiple tax exposures
Every decision we make aims to reduce all of these exposures.