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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

Income Tax Return for non-resident US citizens

A big part of American citizens residing abroad is convinced that filing their income tax return in the US is not necessary.

Unfortunately, this is not the case, most of the times.

According to the US taxation system, individuals must declare their annual incomes regardless of where they live and where such incomes are generated.

According to the Internal Revenue Service (IRS), non-resident American citizens are often required to file their Tax Return just as US residents are. And to determine which case is compulsory and which is not, different measures are being taken.

The US is investing a lot of resources to try to address this type of tax evasion and have a clear idea about those nonresident US citizens who have not been declaring their incomes.

Through Foreign Bank Account Reports (FBARs) and Foreign Asset Compliance Act (FATCA), foreign financial entities and financial institutions managing their accounts must declare to the US Government all the information regarding their financial assets and the US has signed various agreements to exchange information with several States.

The era of technology and internet greatly facilitates the task.

When an American citizen is found not being compliant with the IRS, he/she may receive a notification from the bank informing that his/her accounts have been blocked. Or it may be an assessment notice directly from the IRS.

What other consequences can US citizens expect when they are not compliant with income tax return in their home country?

  • Tax assessments.
  • Criminal and civil penalties with arrears interests.
  • Money transfer block.
  • Passport can be revoked or not renewed.
  • In extreme cases, even arrest and imprisonment.

In this context, we once again stress the importance to ensure you are in order and, in case you have any doubt, to immediately rectify the situation.

You can read more about this subject in this article.

For US citizens living abroad, the Income Tax return may be more complex due to possible deductions and additional requirements, but consulting an international CPA will keep you safe from surprises and make things simpler.

Our firm has a great deal of experience in this field and can help you fix your situation and take all the due measures to find solutions to eliminate or reduce any pending tax penalty.

Seeking expert advice helps to minimize the fees due by benefiting from tax deductions and tax credits available for non-resident US citizens.

Contact us, we will be happy to assist you.

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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

Italian investments in the USA: end-of-year review

What have the opportunities been and what will they be for Italian investors in the United States: the so-called “Promised Land” of business?

Let’s have a walk through it with this quick recap.

Financial investments

Thanks to the new developments in US domestic policy, investing in Wall Street has, once again, proved to be a great opportunity for Italian entrepreneurs thanks to both a renewed confidence in the markets and the improvement of the dollar/euro rate.

The US Stock Exchange is still a reference point for global investment, despite the rise of other stock exchanges (China, Brazil, South Africa, Korea).

By analyzing equity returns, the increase of bond yields and the growth of corporate profits, the trend is very likely to stay the same in 2018.

We can, therefore, conclude that the growth of US economy is strong and consistent and that, despite the international issues with North Korea, markets are still promising (though investment diversification is still recommended).

Real estate investments

Although the market experienced a downturn during the year, real estate is generally booming in the US. Both property purchases and new construction projects have been attracting foreign investors (including Italians). And prices keep rising.
According to experts, the American cities where it would be more convenient to invest are Fort Worth and Dallas, Texas and Raleigh, North Carolina (which has been elected as the third best American state to do business in 2017).

However, we would like to focus on the South Florida area (particularly the Miami district). In 2009 real estate prices literally dropped, but during this 2017 growth has boosted, for both real estate trading and other types of multi-millionaire investments (e.g. the tunnel construction from Miami port to the Convention Center).
Important to remember: holding a property in the US does not automatically entitle you to the Green Card and, in order to purchase, and you need to have a bank account in the US.

Export

“Made-in-Italy” export has always had the US as one of its biggest buyers. The USA is the third destination country for Made-in-Italy products, after France and Germany.
In figures: in 2016, Italian SMEs exported goods worth $ 44.159 billion to the USA.
In 2017, despite some “protectionist measures” were announced, Italian export has been experiencing non-stop growth. Surely due to the increasing appreciation of our products, and to all those Italian entrepreneurs who have become increasingly aware of how important it is to consider some essential aspects such as:

  • Knowledge of the market and how to best approach it (by being aware of its cultural, communicative, logistical and distribution aspects).
  • An increasing local presence to best interact with their US partners.
  • A deeper awareness of their competitors and the industry trends.

Internationalization

Given the excellent export results (and the positive forecasts), many Italian companies have decided (or are currently considering the idea) to relocate to the US, at least from a commercial point of view.
When assessing all the different risks a company may face when going international, the following should always be included:

– Economic risk
– Political risk
– Exchange risk

The US is certainly listed as a low-risk country, since, in 2017, internal variations have not been significant enough to shift the “alert level”.
Starting-up a business in the United States is faster and less expensive than in Italy but bear in mind that legislation may differ (remarkably) from State to State.

Tax Cuts and Jobs Act

Last but not least, we cannot but mention the Tax Plan, which has been at the center of the public debate and has grabbed a lot of international investors’ attention as well.
As many may already know, the recent Republican bill would, if approved, cut the US corporate tax rate from 35% to 20%. Other important points:

  • Deduction limitation for executive compensations of over $1 million
  • One-time tax payment for US multinationals on overseas profits
  • 10% US tax on foreign subsidiaries’ income

The Tax Plan will probably generate $1.5 billion income over the next ten years by cutting taxes on employees and businesses. With certainly positive spillover effects on the domestic market.

If you’ve decided to invest in the US because you believe (and you are right!) it is still a great opportunity for your business, you will definitely need a specialist international consultant who can support you in all the administrative, fiscal and legal aspects this project entails.
We are here to help you! Contact us now.

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01
Nov 2019
  • BY: italiancpafirms
  • TAG: Documents, Business, tax
  • 01 COMMENT

US Tax Reform Plan: the biggest Tax Cut of all time

The long-awaited tax reform was quietly approved by the House and then signed by the US President on 22 December 2017.

A nice end-of-year gift for many SMEs and many investors. A gift that has not been seen since Reagan’s presidency, in terms of tax reduction.

It is, in fact, the most drastic change to US tax code of the last 30 years!

Corporations and upper classes will obviously benefit the most from the reform, but the middle class (although to a lesser extent) will obtain significant advantages from this action too.

But what is this exceptional reform all about?

Here’s a list of the main points:

  • The corporate tax rate has been permanently cut from 35% to 21% for companies of all sizes and industry fields.
  • Top individual tax rate would drop to 37% from the current 39.6%
  • “Bonus depreciation” is increased to 100% (for machinery and equipment purchases it applies immediately and until 2022)
  • Multinationals and giant corporations (e.g. Apple and Microsoft) will be able to bring their capitals back to the US with an 8% one-time tax on their earnings (15.5% in case of offshore cash) instead of the average 35% under current federal law (which will be terminated)
  • Meaningful advantages in the real estate industry
  • Business premises income deductibility
  • Tax reduction on individuals until 2025
  • Estate tax exemption (which lets heirs save on millions of dollars)
  • Student loan interest deduction
  • End of tax penalties for individuals who do not obtain health insurance coverage

What will be the medium to long-term results desired by the reform?

It is estimated that the federal budget will decrease of 1.5 billion $ over the next 10 years.

Since such great amount of money will remain in the business circle, US economic growth will literally boost and experience the following effects:

  • GDP growth up to 4%
  • The US stock-market could head a lot higher and grow dramatically
  • A medium-to-long term increase on banks and corporate earnings
  • Increase in jobs
  • The repatriation of foreign earnings and companies who had previously relocated (causing some understandable fears in Europe and China about possible economic losses in the coming years).

It is all too good to be true, someone would say. And, indeed, this has actually been said.

In such a scenario, interest rates are also expected to rise and, according to James Bullard, President of the St. Louis Federal Reserve (Fed), the fact that an increase in the cost of money could favor recession, is a tangible risk for 2018.

We will surely monitor the situation in the future months and assess the impact of the tax reform on both the US economy and international markets.

If you, as well, have decided to invest in the US because you are convinced that:

  • This Tax Reform can be an excellent launch pad for your business
  • It is a golden opportunity to internationalize your business

Then contact our firm for all the administrative, fiscal and legal support you might need!

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