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10 Things to Know for Foreign Investors Restrictions on Foreign Investment: The federal government imposes no substantial restrictions on foreign investment in the United States. A few industries are, however, subject to restrictions – these include exploiting specific natural resources, communications, shipping, nuclear and other power-generating facilities, and aviation. Some states have restricted certain foreign investments in some instances, such as in agricultural land.
- Exchange Controls: Under the Currency and Foreign Transactions Reporting Act, individuals crossing into or out of the United States must disclose to U.S. Customs and Border Protection when carrying more than $10,000 in currency or monetary instruments. There is no limit on the total amount of monetary instruments individuals may take into and out of the United States.
- Anti–Money Laundering and Bribery Laws: The U.S. has instituted tough sanctions against money laundering and bribing government officials in foreign nations. The USA PATRIOT Act was enacted to help prevent and detect international money laundering and terrorism financing and prosecute those responsible. The act requires financial institutions to monitor clients’ accounts and report suspicious activity regarding the transfer of funds abroad, especially in countries with a history of money laundering or terrorism.
- There is A vast difference in how the United States will apply its income, estate, and gift taxes to a “tax resident” and a”non-resident” alien. The definition of “Resident” is different for tax and immigration purposes;
- Tax treaties between the United States and the foreign taxpayer’s host country may exist. This type of tax treaty will ensure that there is no double taxation between the two countries;
- States and locations have separate authority to impose taxes and fees. Some states comply with U.S. treaties, but the majority don’t;
- Estate and Gift Taxes: The United States has a gift and estate tax system that applies to taxable gifts of property made by an individual during life and taxable bequests made at death. One estate and gift taxation system applies to U.S. citizens and foreign citizens domiciled in the United States. A separate system applies to foreign citizens not domiciled in the United States. An individual domiciled in the United States may thus be either a resident alien or a nonresident alien for U.S. tax purposes.
- By taking advantage of and meeting the requirements of the “portfolio interest rules,” the Foreign Taxpayer may earn tax-free interest instead of taxable real estate profits or dividends.
- Nonresidents may elect to treat income derived from real property as effectively connected even though they are not otherwise engaged in a U.S. trade or business. This election permits real property income to be taxed on a net basis rather than at the 30 percent flat rate otherwise applicable to rents and other fixed and determinable income from U.S. sources.
- Totalization Agreements: The United States has entered into international social security agreements, so-called totalization agreements, with Belgium, Canada, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The agreements provide relief from the double social security tax.
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