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Best type of company for foreign investment

Asked by: Andrew - 12 July, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 I have diaspora clients in the US, which wants to buy real estate in their home country. Unfortunately local regulations of their home country require to exchange USD in local currency at the time of purchase. Due to high inflation (25%+/year) the loss is programmed.

1. Would it be possible to setup a company in Wyoming or Delaware, which performs the sales in the US and then pays the construction company / real estate developer in the Diaspora's home country upon a payment plan to avoid the loss of inflation?

2. Would such business being taxable under US law or would it be considered as an tax free offshore business, since the value chain is outside of the US?

3. Would be an LLC a trustworthy setup or should it be another form of incorporation, since the company would act like a fund?

Thanks! Andrew
Answered by: Lloyd Johnson - 14 July, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/36.jpg-879792e1197755ef7c796380de659758 Andrew,

I am not sure I understand your situation correctly, so I will try to answer to the best of my understanding:

Since the country you are talking about has its own currency I don't see how you are going to escape the problem of inflation if all transactions are required to be performed in local currency and not US dollars. Even a US company that plans to invest money in that country would be required to do so using local currency, so I see no way how a US company can help (but again, I might not understand something, so please do reply and I will try to help further).

As far as collecting the money in the US to be invested abroad - yes, it is a good idea to form a US company. Wyoming or Delaware would work just fine, with Delaware having the advantage of allowing you and your clients to easily find attorneys who can practice Delaware law in order to have all the investment contracts in place. Also, Delaware could be perfect for an investment company if you choose to form a Series LLC, and have each of the investors separated from the rest of the pool.

Please email me with clarifications and I will try to help further.

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