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by luckystartup 2641 days ago
I'm a non-US citizen who moved to San Francisco to work for a startup. I left that job (and the US) many years ago, but that startup is now a unicorn, and they're very close to an IPO.

I believe that if I become a tax resident in Hong Kong, Singapore, Belgium, etc. then I won't need to pay any capital gains tax when I sell my shares. I've heard that California will go after people who try to move to other states to avoid CGT, but I don't know if that applies to non-US citizens who have left the country. (Please let me know if you can recommend a good international tax expert.)

I've been living in many different countries since I left the US, so I don't have any strong ties to any specific countries (not even my home country). My shares could be worth about $5M after the IPO. If I wanted to sell most of them and buy VTSAX, then I might end up with a tax bill of $1.5M if I happened to live in a country with a 30% CGT (or if capital gains are treated the same as income.)

I don't think it's unethical for me to become a tax resident in some country with no capital gains tax. The alternative is paying a huge amount of money to some random country just because I happened to live there over 183 days.

I wouldn't mind moving back to California and paying the tax like everyone else, but it's impossible. There's no visa for people who do freelance work while building a bootstrapped startup. Even if I wanted to go back to a full-time job, it's extremely difficult to get an H-1B or O-1 visa. My startup would need to have at least $100k in ARR before I meet the salary requirements for an H-1B visa. I'd also need to take some investment so that my investors could be on the board and sponsor my H-1B application. My company is already making $50K ARR. I enjoy being independent and going at my own pace, so I don't really need any investors. (EDIT: I just learned about the E-2 and L-1A visas. I might look into those.)

If I was still living in California after the IPO, I might end up paying $1M+ in LTCG tax when I sell my shares. I would be very happy to pay this if I could move back now, get a green card, and work on my own company. I guess California and the federal government would be making a bet based on the likelihood of an IPO, which is still nowhere near guaranteed. This is also an extremely rare situation which only applies to a handful of people. But it would be nice if I could get a green card if I promised to live in the US and pay these taxes.

The other option is to just live in Hong Kong for > 6 months, sell my shares, and pay $0 in capital gains tax. Then I can move to the US on an EB-5 visa, which only costs $500k.

1 comments

Countries with no capital gains taxes (on account of capital, not income): New Zealand, Singapore, Hong Kong, Malaysia, Switzerland. There's others, of course.
New Zealand would be great, but I heard that there are some separate rules for foreign shares. Or is that only for dividends? I need to learn more about that. I saw on this Quora answer [1] that I would need to pay tax on an assumed 5% dividend each year. So if I was holding $5M in shares, then I'd have to pay tax on an assumed dividend income of $250K. But I think there are also exceptions for startups that haven't gone public yet.

Are you available for a consultation?

[1] https://www.quora.com/Im-from-New-Zealand-but-I-own-a-lot-of...