Latest news with #tax
Forbes
15 hours ago
- Business
- Forbes
Why Americans Abroad Should Watch Out For Foreign Mutual Funds And ETFs
Tom Zachystal is president of International Asset Management providing financial planning and investment advice for Americans living abroad. Instead of paying capital gains rates when you sell, as a PFIC owner, you pay the highest marginal income tax rate, plus interest charges on annual gains. In many cases, the tax owed can exceed the actual profit. Holding a PFIC for five years, for example, and then selling for a modest gain can trigger a large tax bill with compounded interest. These aren't theoretical penalties; they are real PFIC penalties that can apply years after the investment. Furthermore, there may be penalties for not having reported them. The PFIC Reporting Burden You'll need to file Form 8621 for each PFIC you own annually, even if the investment generated no income. It's one of the toughest IRS forms to complete, and errors can disqualify you from making tax-saving elections. Essentially, if you skip filing, you default straight into punitive PFIC tax treatment. There is one exception: If your total PFIC holdings are $25,000 or less ($50,000 for those filing jointly) on the last day of the tax year and you received no distributions, you can skip Form 8621. However, foreign bank account (FBAR) and personal FATCA reporting of offshore foreign assets may still apply. The simple advice if you discover you have a PFIC is to seek advice from a U.S. expat tax specialist as soon as possible. What Are Other Ways To Invest As An Overseas American? The simplest way to avoid PFIC problems is to avoid investing in overseas registered pooled investments and funds in the first place. You have several other choices as an American living abroad if you're looking for international exposure or diversification: If you have earned income and meet eligibility requirements, contributing to a traditional or Roth IRA remains one of the most tax-efficient options for U.S. expats saving for retirement. These accounts are not subject to PFIC rules and allow access to a wide range of U.S.-domiciled investment products with favorable tax treatment. If you earn in U.S. dollars, you'll also save on currency conversion costs compared to investing abroad. By investing in U.S.-based mutual funds or ETFs that invest internationally, you can gain international exposure and diversification benefits while remaining within the U.S. regulatory framework. There are a couple of caveats though: First, if you live in the EU, EU rules may prevent you from investing in U.S. funds; second, most U.S. brokerage firms won't work with non-U.S. residents. If you definitely want to invest abroad, buying foreign equities or bonds directly, rather than overseas mutual funds, can help sidestep PFIC rules. This path requires more active management and an understanding of foreign markets, as well as a relationship with a brokerage firm that will allow trading on non-U.S. exchanges. Real estate can be a tax-efficient and inflation-resistant asset class. U.S.-based property offers familiarity and potential tax advantages for American citizens, while overseas real estate may provide lifestyle and cost-of-living benefits, along with local rental income. Regardless of your preferences, as an overseas American, you should ensure any investments you make are in the context of your overall financial plan and align with your long-term goals. Engaging an advisor familiar with working with expats can help you avoid making costly mistakes related to PFICs, among many other issues. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
The Guardian
17 hours ago
- Business
- The Guardian
Uber loses UK supreme court appeal over tax on rival apps
Uber's rival taxi operators will not have to pay 20% VAT on their profits outside London after the UK supreme court ruled that private-hire operators do not enter into a contract with passengers. Uber had brought the case after a 2021 decision by the supreme court that its drivers were workers, which had an impact on Uber's tax and other obligations. The company sought a declaration that private-hire taxi operators enter into a contract with passengers and the high court in London ruled in its favour in 2023. That decision meant that operators would have to pay VAT at 20%, but the ruling was reversed by the court of appeal in July last year after a challenge by the private hire operators Delta Taxis and the platform Veezu. Uber appealed to the supreme court, which on Tuesday unanimously dismissed the US company's case. In a separate case, the Estonian ride-hailing and food delivery startup Bolt this year defeated an appeal by the UK tax authority HMRC about on what it has pay VAT on at 20%. HMRC has since been granted permission to challenge the ruling that Bolt is only liable for VAT on its margin, rather than the full cost of the trip, at the court of appeal. More details soon …
Reuters
17 hours ago
- Business
- Reuters
Uber loses UK Supreme Court appeal over tax on rival apps
LONDON, July 29 (Reuters) - Uber's (UBER.N), opens new tab rival taxi operators will not face a 20% tax charge on their profit margins outside of London after the United Kingdom's Supreme Court on Tuesday ruled that private-hire operators do not enter into a contract with passengers. Uber had brought the case following a 2021 decision by the United Kingdom's Supreme Court that its drivers were workers, which had an impact on Uber's tax and other obligations. The company sought a declaration that private-hire taxi operators enter into a contract with passengers and London's High Court ruled in its favour last year. That decision meant that operators must pay value added tax (VAT) at 20%, but the ruling was reversed by the Court of Appeal in July 2024 following a challenge by private hire operators Delta Taxis and platform Veezu. Uber brought an appeal to the Supreme Court, which on Tuesday unanimously dismissed Uber's appeal. In a separate case, Estonian ride-hailing and food delivery startup Bolt this year defeated an appeal by Britain's tax authority HMRC about on what it has pay VAT at 20%. HMRC has since been granted permission to challenge the ruling that Bolt is only liable for VAT on its margin, rather than the full cost of the trip, at the Court of Appeal.
The Independent
21 hours ago
- Business
- The Independent
How ‘Amazon tax' could save your local pub and community
A new report by the Institute for Public Policy Research (IPPR) proposes a tax on wealthy firms, such as Amazon, to fund community regeneration and foster social cohesion. The suggestion follows summer riots, including those in Southport, which the IPPR links to community disrepair and the loss of shared physical spaces. The report highlights a significant decline in community venues across the UK, citing the closure of hundreds of pubs, youth clubs, and local authority spaces. It recommends establishing a '21st-century welfare fund' through higher levies on online retailers' warehouses or an online sales tax, targeting companies with revenues over £1 million. The IPPR argues that rebuilding local infrastructure is vital to combat division and counter the influence of the far-right, which exploits the void left by lost community solidarity.
CTV News
a day ago
- Business
- CTV News
'He needs to focus on his number one customer': Doug Ford on trade talks with Trump
Watch Ontario Premier Doug Ford comments on the Canada-U.S. trade talks, saying that 'a tariff on Canadians is a tax on Americans.' CP24's Beatrice Vaisman reports.
