This is a question we get a lot, as Americans are the largest group of visitors to most regions of the Caribbean. American investors however are some of the most difficult to assist due to all of the compliance requirements of the US government. If you follow the rules however, offshore investing is not only possible but can also be rewarding.
Do American Investors Have to Declare Their Investment Income?
There is often a misconception that offshore investment income is something that you do not need to report on your taxes. This is incorrect, and regulated investment funds must ensure that American investors follow the law when in comes to claiming this income. On top of all the normal compliance requirements for signing up a new investor, Americans specifically must prove to the investment fund manager every year that they are claiming this income. The IRS has a long reach, and they can certainly come down heavily on those who do not follow the laws with regards to US citizens.
Even if you are an American living in the Caribbean, you are required to not only file taxes, but also declare any income derived from investments. And the regulated bodies you work with, are required to ensure you do. The Caribbean is no longer the wild west when it comes to financial reporting.
Why Do Some Investment Fund Managers not Work with Americans?
Again, this all comes back to the compliance and risk taken by the fund that American investors will follow the reporting requirements. For many investment companies the risk is just not worth the reward, as they can find themselves in difficulty with the US government. For some firms however, American clients are not necessarily exempt but they may require a higher minimum investment to warrant the extra work required to hold their investments.
If you are from the United States and would like to know about the options of investing offshore, talk to us today. Again, the investment requirements can be significant, but there are certainly options.
