Question About Non-US Citizen Clients

[Prime_Chuck]

I have a client who is from Europe and has been in the US for about two years on a temp work visa. He may plan to move back to Europe eventually and is interested in a Fixed Index Annuity. Does anyone know if there would be any downside effects if he moved back to Europe with an annuity in place? Would he have tax consequences for example?

Anyone have any experience with this?

Thanks, Prime_Chuck

 

[Josh Landis]

I have a client who is from Europe and has been in the US for about two years on a temp work visa. He may plan to move back to Europe eventually and is interested in a Fixed Index Annuity. Does anyone know if there would be any downside effects if he moved back to Europe with an annuity in place? Would he have tax consequences for example?

Anyone have any experience with this?

Thanks, Prime_Chuck

Prime Chuck, he would be responsible for the taxes associated with the annuity in the U.S., but as far as any taxes from his home country in Europe, that would be something that he would need to find out in their tax laws. Is the client using the FIA for an income stream?

 

[Prime_Chuck]

He is not planning it for income, just wondering if it would hurt him with double tax or if he would just possibly loose his tax deferral status if he moved back to his home country. Hoping I could find someone who has dealt with this before.

We have a lot of people in my area who are in the country on temp visa's and a lot of them have money in the bank.

 

[scmb]

He is not planning it for income, just wondering if it would hurt him with double tax or if he would just possibly loose his tax deferral status if he moved back to his home country. Hoping I could find someone who has dealt with this before. We have a lot of people in my area who are in the country on temp visa's and a lot of them have money in the bank.

In general, after he's in the country under a working visa for over 5 years, he's no longer considered a non-resident alien for tax purposes.

Each country has their own set of rules for tax on foreign income/gains.

Double tax is avoided if the countries have a tax treaty with each other. Most likely his country does.

 

[Prime_Chuck]

Thanks SCMB

Wonder how I could find out if Belgium has a tax treaty with the US and how it may effect him when and if he moves back.

Anyone have any ideas for how to get him more tax info regarding this Annuity.

 

[scmb]

Thanks SCMB Wonder how I could find out if Belgium has a tax treaty with the US and how it may effect him when and if he moves back. Anyone have any ideas for how to get him more tax info regarding this Annuity.

You would have to consult with a tax advisor from Belgium most likely to handle this right.

Too many variables to take into consideration, there's a limit to what an agent would know. Tax professionals on both sides would be able to give you better answers.

 

[ScottLFB]

Another thing to check on is which carrier will take the client. Some of the carriers will tell you that if the client has a SSN or Visa number, a US checking account, and a US address, the client can buy the policy.

The typical tax answer is to "consult a CPA". But the foreign Nationals that I've seen written are typically having to liquidate funds and pay taxes on the gain before they move it into an account in order to do an international wire transfer to the other country. Otherwise, if they maintain the Visa and US checking account, there's nothing to say that the client couldn't keep the deferred policy in force. If the client is trying to put International funds into the US Annuity, the client has to wire the funds into a US domiciled bank before they can fund the annuity.

I don't know if that helps, but good luck.

 

[Two Hats]

We do indeed have a tax treaty with Belgium, as we do with all western European nations. With tax treaties, the idea is to avoid double taxation so that citizens of friendly nations can go work back and forth between nations, and not have to pay taxes in two countries. There will be times when all one can do is reduce the tax burden, and not totally eliminate it.

Another poster said there were too many variables to counsel the prospect and that sounds about right. You might have to know how much he earns here, whether he has any residual income in Belgium, what the income limitation is in Belgium (on income earned here in the United States before Belgium's income tax kicks in), and how Belgium views passive income...among other things.

I think most American CPAs would scratch their head and say WTH???

I betcha there is a broad, catch-all guideline that is right in about 2/3rds of these cases, but I don't know it.

I am curious why he wants to purchase an annuity here. Does Belgium not have such a product? Figures..apparently all they can do is play soccer..lol

What carrier will allow the sale of an annuity? I know a foreign national can get whole life insurance, but an annuity.

 

[scmb]

We do indeed have a tax treaty with Belgium, as we do with all western European nations. With tax treaties, the idea is to avoid double taxation so that citizens of friendly nations can go work back and forth between nations, and not have to pay taxes in two countries. There will be times when all one can do is reduce the tax burden, and not totally eliminate it. Another poster said there were too many variables to counsel the prospect and that sounds about right. You might have to know how much he earns here, whether he has any residual income in Belgium, what the income limitation is in Belgium (on income earned here in the United States before Belgium's income tax kicks in), and how Belgium views passive income...among other things. I think most American CPAs would scratch their head and say WTH??? I betcha there is a broad, catch-all guideline that is right in about 2/3rds of these cases, but I don't know it. I am curious why he wants to purchase an annuity here. Does Belgium not have such a product? Figures..apparently all they can do is play soccer..lol What carrier will allow the sale of an annuity? I know a foreign national can get whole life insurance, but an annuity.

I agree. There's even more variables that could be involved. Some countries also have a minimum amount of years spend abroad before they can have a full tax break when they move back, or they will have to pay taxes on income earned abroad in all previous years.

Overly complicated case if you ask me..

 

[SMAguy]

Put him in a Secondary Market Annuity. It is essentially a Fixed annuity but the rates are significantly higher than your traditional SPIAs or DIA's. Since they are structured settlement reassignments the purchaser is not issued a 1099 considering they were tax free to the initial plaintiffs. Insurance companies are lazy and do not want to send them out since it is an added cost to them.

Quote from a high up retired IRS client "If I am not issued a 1099 I am not responsible to claim it."

I would not go this route nor direct any agent to pass along this advice but there are advantages to these types of products over your traditional ones. He can speak with his CPA in his country to determine what he will owe.

One main issue he needs to worry about is currency risk. I have placed a client before in an Secondary Annuity who was from Germany and he is well aware of the currency risk and it is working out great for him.