[purplepatrick]

The answer is No (as you can easily confirm by googling this). You should hold the shares personally.

Holding your shares through a US entity is not an advantage. Holding your shares through a foreign entity will cause you to get penalized if you continue to remain a US tax citizen.

The only situation where I could see an advantage would be if shares were held through a foreign entity and you hold them there (without an liquidation event) until you have surrendered your greencard and no longer meet the substantial presence test for US tax purposes and the resulting tax situation for you would be better than it was when you were a US citizen for tax purposes.

For example, if you held equity through, say, Malta, Panama, or the Caymans and you leave the US permanently, surrendering your greencard, and become a resident of a tax-advantaged jurisdiction for long enough that you are no longer taxable by the US, and only THEN your company exits, generating capital gains that could/would be distributed to you would be tax advantaged.

[ck_one]

Do you know how you would get penalised?

Is there no similar instrument in the US which allows you to not withdraw money & delay the taxation event?

[purplepatrick]

You’d have to ask a tax attorney, but this exact scenario happened to a friend of mine who held his equity through a foreign entity. When he wanted to cash out, he was hit by an extra US tax penalty specifically for when you hold your equity through a foreign entity.

I was in the same boat as you when I started my company and looked into the same kind of setup. I researched it at the time but cannot remember the details.