The era of protecting your assets by hiding it has ended. Well, you could still do it, by the way, but your options are becoming so limited, that it’s no longer worth doing considering the risks (penalized for tax evasion and not reporting reportable assets is very, very expensive!)
“Thanks” to AEoI, you can no longer hide your assets from the eyes of the taxmen.
The world’s endeavor for financial transparency has led to a black-or-white decision to asset owners: To comply or not to comply.
We obviously recommend doing the former. Unfortunately, complying means you have to relinquish some level of privacy of your assets.
Sure, there are still ways to preserve your privacy legally – e.g.:
- Protecting your assets offshore in non-AEoI jurisdictions;
- Releasing the ownership of your assets to an offshore trust or foundation;
- Renounce your citizenship and become a citizen of non-AEoI jurisdiction;
...and so on. However, given the fact that you need to jump through various legal hoops to protect your assets, things can be resource-intensive (read: expensive) to many.
Fortunately, there are. One of the is through physical precious metal purchases and offshore storage of your precious metals. Let’s discuss about the two parts of this asset protection tactic.
Depending on the laws and regulations of your home country, precious metal ownership can be unreported. Of course, you need to discuss with your law consultant for more details on this, but you get the point: Buying precious metals can be a good tactic for protection your assets.
You can usually buy precious metals, and take them home or store it in a storage facility. The former is inconvenient and can present you a safety issue. The latter, however, is a better option.
You can store your precious metals in a safe deposit box or secure vault. Your decision on this will determine your tax responsibility – which leads us to the second part of the asset protection tactic.
You basically should store your precious metals offshore, as far as possible from the reach of your home country for one good reason: When things go wrong with your country, your government can’t lay their hands on your precious metals (i.e. Confiscation or precious metal ownership taxation.)
However, going offshore doesn’t automatically fully protect your assets. As mentioned above, where you store your precious metals is an important decision. Not only jurisdiction, but the type of the storage is also important.
Let me explain, using the United States tax laws as an example.
The U.S.’ tax laws are known for the complexity. But then again, which countries’ tax laws that aren’t? Nevertheless, the regulations are there to guide us – for better or worse - and here’s one: Where you store your physical gold will determine whether it’s reportable or not.
If you decide to use a safe deposit box at an offshore bank, you’ll certainly need to report your holdings. The end of the case. However, what if you store your precious metals in, say, an independent, non-bank storage facility, such as a secure vault?
In general, your precious metals shouldn’t be reported, but a certain type of your ownership may require you to report your precious metals.
Which leads us to the issue of allocated vs. unallocated precious metal storage.
The allocated storage means the storage of physical precious metal which ownership is shared. Although you technically own the precious metals, your ownership is shared with others. This is usually offered by precious metal dealers who want to offer physical precious metal ownership at lower costs, by ‘sharing’ the purchase with other buyers in a ‘pool.’
Allocated, on the other hand, means the storage of physical precious metals which ownership is fully yours – each bullion has serial number, recorded as yours, and audited regularly in your name.
The simplest way to differentiate between allocated and unallocated is the availability of the bullion when you visit the vault and decide to take the precious metals under your name. From an allocated storage, you can simply take it; from an unallocated one, you can’t do so. Not only that, but you also need to pay what’s called a “fabrication fee” for selling your part of the pool.
There is no right or wrong when deciding on where to secure your assets, and how. One thing to keep in mind, however, is that you need to store yours offshore, regardless. The idea for doing so is too keep threats to your financial sovereignty at bay.
With the AEoI rolled this year, you have to seriously think of ways to secure your assets and protect your privacy. There are still legitimate options available, but considering the costs, offshore gold storage is one of the most cost-effective tactics.
Again, consult with your trusted lawyers, as well as your tax consultants, before deciding on anything.