OzWizard,
Your Ukrainian gf owes personal income tax on worldwide income of 15% depending on how much her account made or lost.
In Ukrainian individuals are classified into two categories for income tax purposes:
- Residents are liable for tax on their worldwide income. The standard rate is applicable to most types of income, including salary, dividends, royalties and investment income. Special tax rates apply in some cases specifically established by the law (e.g. inheritance, gifts, winnings and prizes, interest from deposits). Taxable income of foreign nationals who are tax resident in Ukraine is determined in the same manner as for Ukrainians.
- Non-residents are liable for tax only on their Ukrainian source income. A double tax rate (i.e., 30%) applies, except for interest, royalty, dividends and for salary received from a Ukrainian employer.
Generally you are tax resident if you are Ukrainian citizen or reside there for 183 days during the calendar year.
Investment income
Income from the sale of investment assets is determined independently of other income. The gain or loss is determined for each investment asset sold (sales proceeds less acquisition cost), and then aggregated for the year. If the aggregate amount is positive, it is subject to tax at the standard 15% tax rate. If the aggregate amount is negative, it is carried forward and applied against investment income in subsequent years. There are no requirements in the law for individuals to report sales income based on market values. However:
- The tax value in the hands of the person buying the financial asset will be the amount paid. In the case of a gift, the recipient is deemed to have acquired the asset for a zero value.
- If an investment asset is sold to a related person at a loss, the loss is disregarded. Losses when an asset is gifted are also disregarded.
The following transactions are also treated as the sale of an
investment asset:
- The exchange of one investment asset for another investment asset. The sales proceeds are deemed to be the market value of the shares that the individual transfers.
- The redemption of a corporate right by the issuer.
CONSULT YOUR TAX PROFESSIONAL - for more information.
Now you !
Unless you have paperwork that when you got money from her account, she gave those money to you as a low cost loan and there is evidence that you are paying it back, even if its "interest only" at 0.5% a year for first 50 years, i.e. its not a sham loan, you will have to declare it as taxable income in US if you are US citizen or live in US for over half a year (read Tax law for more specifics of how long of your stay in US will make you incur US tax liability)
I don't like phrase "Tax avoidance" too close to "Tax evasion", I like "Lowering tax liability" and any such work can't be based on shaky financial "confidentiality" or "secrecy" practices or laws. In recent years most of them were penetrated or amended to let law enforcement to look into any account. So, minimizing of your tax liabilities should not be based on secrecy if you don't want to be nailed at some time.
My guess paying 15% is better than 40%, but if you are making a lot of money on her account and want to report it there you should make sure that she has adequate protection since in Ukraine its easy for mafia to find people who make a lot of money and demand that they share.
-= Not an advise or practice of law. =-
But I know of ways for US citizen/tax payer to legally pay 10% or less. And no I would not publicly talk about it since IRS could be reading it and does work to close loop holes every year by passing new tax laws, well unless I get reimbursed since I had spent a lot to learn about it. BTW, loop holes are not illegal in US as they are in some other countries. And there are some that are so huge that are not likely to be closed since there are powerful lobbing groups that would not let them to be closed.