How To Set Up a Tax Free Bitcoin Exchange Offshore

A Bitcoin/Cryptocurrency Exchange Business (ie an Enterprise that offers to buy Cryptocurrencies paying for same in either hard currency or some other form of Cryptocurrency in return for a Commission) lends itself well to an “Offshore” Corporate Structuring Plan.

 

In principle here’s how it can/will work:

 

  1. A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated
  2. A website is created and tailor made software developed – the IBC will be the owner of this website and the software and all the hardware required to run it
  3. The IBC owns/operates the business (eg ownership of the web-domain and the website/artworks or trademark/s or any sole distributor rights are held by or transferred to the IBC)
  4. An Offshore account (which received payments via a merchant account) is set up in a nil tax banking centre
  5. Ideally the server is located in a country which does not tax business on the basis of server location (eg Singapore)
  6. Customers contracts with and agreed to pay the IBC a commission on all sales concluded as a consequence of buyer/seller introductions enabled by the site.
  7. All such monies are banked free of tax in the first instance
  8. You or your local company would be contracted by the IBC to manage sales or provide accounting services or do website maintenance/whatever.
  9. You would invoice the IBC periodically (eg monthly) for this service which income would be assessable income in your home state – though a smart Tax Accountant should be able to assist you to claim a series of expense against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income.
  10. Often there is some kind of intellectual property (“IP”) created or behind such a business (even if it’s just the website/design). It may be advantageous to you down the track if ownership of the business and the IP were held by 2 different entities. What you can do there is set up a 2nd IBC to own the IP. The first IBC (ie the Trading Company) pays license fees periodically to the 2nd IBC which fees wold be receipted tax free. This could be advantageous if you wanted to bring ownership of the web-business onshore or if you wanted to sell the business but keep a passive (potentially tax free) income stream
  11. Ideally once you start to grow you and to add substance you would be wise to set up your MD/Board and or a sales team onshore to take orders and receive income in a low tax onshore environment (eh Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google model)

 

To minimise the chances of the IBC being taxed onshore ideally the IBC should be (and be seen to be) managed and controlled from offshore. How this can be achieved is including a Nominee Director etc as part of the Corporate structure. See this page for details of how that can work:

http://offshoreincorporate.com/faq/should-i-engage-nominees-or-should-i-direct-and-hold-the-shares-in-my-offshore-company/

 

http://offshoreincorporate.com/faq/how-can-i-protect-my-underlying-ownership-of-my-offshore-company-where-a-nominee-is-engaged-to-act-as-director-or-shareholder/

 

Additionally if you live in a country which has CFC laws (see below which explains what CFC laws are) and/or if you don’t want your local tax authorities to become aware of your Offshore Company’s Bank Account (and, incidentally, your position as “beneficial owner” of the Company) you’d be wise to include a Foundation as part of the Corporate structure. See below “Why set up a Foundation” which explains how/why.

 

What is a Controlled Foreign Corporation Law?

 

A Controlled Foreign Corporation (or CFC) Law is one which purports to tax onshore income or capital gains made by Companies incorporated Offshore but which are controlled from onshore. Most western countries have them (see below which lists ALL countries with CFC laws presently).

 

Essentially how a CFC law works is if an individual owns or has the capacity to own the overriding majority of shares in an Offshore Company (the percentage of which varies from country to country) the that person is required to declare in his local tax return profits made by the Offshore Company.

 

How CFC laws came about was around 30 years ago the big western countries began to realise that certain of their citizens were using nil tax Offshore companies to avoid having to pay tax at home on their non-local sourced (ie international) income. In particular the CFC laws target the use of Nominee Shareholders and Directors. If you live in a country which has CFC laws (regardless of whether you are the director/shareholder of the Company or not) if you have the capacity to own and control the company by reference to shareholdings then you would be required to declare and pay tax at home on your Offshore Company’s earnings.

 

There are several ways to get around CFC laws. Historically clients used commonly to deploy an Offshore (Discretionary) Trust to own the shares of the Offshore Company. However with more and more “Onshore” tax systems claiming tax from any Trust with an onshore resident beneficiary discerning clients these days choose to establish Private Foundations (in particular Seychelles Foundations) as the ultimate holding entity as such entities should not caught by CFC laws or by CFT (Controlled Foreign Trust) Laws. For more detail click on these links:

 

http://offshoreincorporate.com/private-interest-foundations/

 

http://offshoreincorporate.com/seychelles-foundations/

 

http://offshoreincorporate.com/seychelles-foundations-fact-sheet/

 

Why Set Up a Foundation?

 

If an IBC alone is used to own/operate your Bitcoin/Cryptocurrency Exchange Business you will still be liable to declare and pay tax at home on your IBC’s earnings if/when you live in a country which has a Controlled Foreign Corporation (“CFC) law. Failure to do so would most likely constitute tax evasion.

 

What you might do then is set up a Private Interest Foundation to own the shares of the Offshore Company.

 

We used to use Offshore Trusts for such purposes back in the noughties but the problem there is that you have someone (ie a Trustee) holding property for the benefit of 3rd parties who are inarguably beneficial owners of that property and probably/potentially entitled to the income/capital of the Trust (which can have tax consequences onshore).

 

A Foundation is very similar to a Trust in that it’s set up by a Founder (like a Settlor in the case of a Trust) and managed day to day by a Councillor (like a Trustee in the case of a Trust) who manages the Foundation property for the benefit of the beneficiaries of the Foundation. A key advantage of a Foundation is that it’s a separate legal entity in its own right (ie the Foundation actually owns the assets held by the Foundation – unlike a Trustee who holds property for someone else ie the beneficiaries) and generally speaking the beneficiaries are not entitled to the income or capital of the Foundation until it’s actually received.

 

What this means as a beneficiary is that you should be able to defer paying tax at home on the income of investments held by the Foundation enabling you to reinvest 100% of that income not just the after tax component. (One jurisdiction ie Seychelles has even taken this a step further by specifically stating in their law that the legal and beneficial owner of any asset held by the Foundation is the Foundation itself).

 

Seychelles Foundations

 

If you are a resident or citizen of a country which has the ability to track Offshore Bank account beneficiary details and you would like to keep private details of your Offshore earnings (or if you plan to set up a very sensitive business eg one that might illegal if owned/operated from where you live) again a Seychelles Foundation can help:

 

How so?

 

It all comes back to the legal structure/operation of the Seychelles Private Interest Foundation.

 

Bottom line is notwithstanding that individuals (or a class of beneficiary) may be named as beneficiaries in the Regulations:

 

  1. The beneficiaries have no legal or beneficial interest in property owned by the Foundation (unless or until such time as that property is transferred to them – see section 71 of the Seychelles Foundations Act attached).
  2. The Foundation is a legal entity in its own right not a mere Trustee (See section 23)
  3. The Councillor of the Foundation owes no Fiduciary duty to the beneficiaries (see section 63)

 

As such there is no “beneficial owner” of the Foundation. The beneficial owner of any property/asset owned or held by the Foundation is the Foundation itself. Hence when we open a bank account for your Company, if the shareholder of the Company is a Seychelles Foundation, your name shouldn’t be written into the bank’s records as “beneficial owner” of the Company.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

How To Transfer Ownership of Bitcoin 2 an Offshore Company

If you’re looking to trade or invest in Bitcoin/Cryptocurrency using a tax free Offshore Company chances are:

 

(a)  you’ll already have a stash of Bitcoin/cryptocurrency; and

(b)   you are wondering how you could or should go about transferring ownership of that currency to your tax free Offshore Company, once incorporated.

 

However you go about it you’ll want to ensure that at the point when you realize your gain (eg when you convert the Cryptocurrency into Hard Currency) that, at that point in time, the Cryptocurrency is owned by – and the gain occurs in the name of – your tax free Offshore Company (“IBC”).

 

The first step is to transfer ownership of the Cryptocurrency to the Offshore Company/Entity.

 

Timing is of critical importance – It is clearly preferable for the IBC to acquire the  Cryptocurrency (for example, Bitcoin) at the earliest possible time before the Cryptocurrency becomes highly valuable. That way the capital payment for the acquisition of the Cryptocurrency can be set at a lower amount i.e. before its true worth has been determined in/by the market. (These capital payments may even be deferred and or staggered by way of an instalment contract such as would enable the IBC to use subsequent gains to fund the cost of the Cryptocurrency).

 

If a deal is struck for the IBC to buy the Cryptocurrency before the Cryptocurrency gains traction in the market, ownership of the Cryptocurrency might even be transferred for nominal consideration enabling you to transfer legal ownership of the Cryptocurrency to the IBC before the Cryptocurrency experiences significant appreciation in value.

 

Alternatively, you might transfer ownership of the Cryptocurrency to your tax free Offshore Company for an agreed price but subject to a deferred or gradual payment basis. How that would work is you would transfer ownership of the Cryptocurrency up front and agree for the IBC to pay you in stages in consideration of a price premium and/or in consideration of the IBC engaging you in an ongoing/consultancy capacity.

 

However you transfer ownership of the Cryptocurrency to your IBC the transaction should be seen to be on commercial terms for fair market value.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

Can The Nominee Director Open The Bank Account For Me?

Often we are asked “Can I get a bank account opened for me by the Nominee without my involvement?”.

 

In short we can’t just deliver a Company + an opened bank account without your involvement.

 

In terms of what we need from each client getting the Company set up is easy. We just need via email a completed signed order form, confirmation of payment and proof of the client’s ID and residential address per the requirements.

 

But the bank account is a slightly different story…

 

When we open a bank account we have to supply to the bank as a minimum:

  • Proof, per the bank/s requirements, that the Company is incorporated
  • Proof, per the bank/s requirements, of who the Directors of the Company are
  • Proof, per the bank/s requirements, of who the shareholders of the Company are
  • Proof, per the bank/s requirements, of who the beneficial owners of the Company are
  • Proof of ID and residential address of the beneficial owners of the Company
  • Proof of ID and residential address re the proposed authorized account signatory/s
  • A detailed business plan re the Company

 

Most banks these days also require a professional reference re the beneficial owners of the Company.

 

Many banks these days also want to video interview the beneficial owner/s of the Company.

 

And invariably the bank will put two, often three, sometimes even 4 rounds of questions to us via email back and forth. To answer those questions most times we need to go back to the client to get instructions/info/docs.

 

In short the banks are paranoid (a) about the Company being used to launder money and (b) that the client’s business model might create reputational risk to the bank particularly if the business fails or if it falls foul of onshore regulators.

 

The owners of OCI have been in this line of business for 17 years. When we first got in the business we could get accounts opened in 2 to 3 days. Now, on average, the minimum it takes to get an account opened is 3 weeks post incorporation. Offshore (especially “tax haven”) Companies are considered high risk by the banks; Hence they ask a million questions and want to seemingly conduct a forensic examination of the Company/Enterprise/Owners before even they’ll even consider opening an account for such a Company

 

In short if you don’t want your name to appear in the bank records as “beneficial owner” of the Company what you can do is:

(a)  Include a (nil tax jurisdiction based) Nominee Director as part of the Corporate structure

(b) Set up a Seychelles Private Foundation to act as shareholder of the Company

(c) Set up the Foundation using a (nil tax jurisdiction based) Nominee Founder and Nominee Councillor

(d) Nominate a tax-free charity or a nominee to act as the initial beneficiary of the Foundation

(e)  Have yourself set up as an arms’ length employee or Contractor/Consultant of the Company

 

In the case of (e) the contract could make you responsible for ensuring that suppliers and staff get paid on time. This would necessitate you being appointed as the (sole) signatory on the Company’s Bank Account giving you complete control of the money.

 

Alternatively you could have the Nominee Director act as a “Nominee” Account signatory – in which case, assuming you adopt (a) to (d) above, – your name shouldn’t appear anywhere in the bank’s records.

 

Would you like to know more? Then please Contact Us:

 

 

 

www.offshoreincorporate.com

 

 

 

info@offshorecompaniesinternational.com

 

 

 

ocil@protonmail.com

 

 

 

oci@tutanota.com

 

 

 

oci@safe-mail.net

 

 

 

ociceo@hushmail.com

 

 

How To Launch an Initial Coin Offering (“ICO”) Offshore Tax Free

With the raging success of Bitcoin and Ethereum new Cryptocurrencies seem to be hitting the market every other day.   This Article examines how you might launch an Initial Coin Offering (“ICO”) Offshore and bank the profits free from tax.

 

There are several ways you could launch an ICO from Offshore. Ideally you would either:

 

(a)   Form a tax free Offshore Company and have that Company enter into an Agreement/Contract with first up investors; or

 

(b)   Set up a tax free Collective Investment Company Offshore (ie a non-licensed Closed End Fund) whereby investors receive shares in the Company in proportion to the amount of money they invest.

 

The first option is the most commonly used. How it usually works is:

 

  • The creators of the new Cryptocurrency form a tax free Offshore Company (“OC”)
  • This Offshore Company develops the new Coin/Cryptocurrency (or holds the rights, under license from a 2nd tax free Offshore IP Holding Company, to promote/market the new Coin/Cryptocurrency)
  • The initial Investors and the OC enter into an Agreement whereby the OC, in consideration of a payment made by the investor to the OC, agrees to issue a certain number of Redeemable Tokens to the Investor
  • Each Token entitles the Token holder to certain rights and can be traded on the open market.
  • In the perfect investor model, the Token would entitle the Investor to a certain number of the ICO’s Cryptocoins when the Coin goes to the open market and/or to receive a share of the Company’s profits
  • When the Coin goes to market the profits can be banked and or reinvested Offshore potentially tax free (and away from the prying eyes of Onshore Regulators)

 

A variation on the above is to set up a Foundation (which owns a/the Coin Issuing Company) and have investors make donations to the Foundation. The Foundation passes on all monies so collected to the Company which develops the coin. In return for a/the donation to the Foundation the Company issues a Token to the investor/donor.

 

Another similar way for a Start Up Cryptocoin Company/Business to raise venture capital is via Crowd Funding (https://www.fundable.com/learn/resources/guides/crowdfunding-guide/what-is-crowdfunding )

 

Closed End Fund

 

In this model a tax free Offshore Company is set up and shares in the Company are issued to the investors in proportion to the amount of monies invested.   Usually how it works is:

 

  • The Promoters/Creators of the new Cryptocurrency form a tax free Offshore Company (“OC”)
  • The Company has a specially tailored Articles of Association which enable it to issue 2 classes of shares ie Class A Shares (also known as management shares) and Class B shares (also known as equity shares)
  • The Promoters/Creators of the new Cryptocurrency decide how much capital they want/need to raise and, how many shares they are prepared to/wish to issue and the price of each such share
  • The Investors sign off on an Information Memorandum (ie in effect a Prospectus) that stipulates, amongst other things, a/the minimum amount of time the investor has to commit his funds before being able to cash in his shares (eg it could be a month, or 3 months, or 6 months or 12 months or 2 years or etc).
  • The investor pays his money to the OC and receives shares in the Company in proportion to the amount of money contributed. These shares entitle the investor to a share of the profit that has been realized by the Company as at the end of the agreed investment period but carry no voting rights.
  • The Promoters/Creators of the new Cryptocurrency receive shares that have both equity rights and voting rights Once the desired amount of Capital is raised the Company goes to market and starts selling the Cryptocurrency to the general market
  • At the end of the agreed investment period the investor has the right to cash in his shares and walk away or reinvest for a further period.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

How To Avoid Automatic Exchange of Information by Changing Residency

Much has been speculated about the possible impact on financial privacy of the OECD’s MCAA driven Automatic Exchange of Information program (also known as CRS). Smart pundits are beginning to pick up on the fact that MCAA/CRS is unlikely to have anywhere near the impact of what the OECD claims. We stumbled across this article recently in the Tax Justice Network website which highlights but some of the weaknesses of the High Tax Countries Cartel’s latest faux pas:

 

The OECD’s Common Reporting Standards (CRS) is the big game in town for curbing cross-border financial transparency. As we’ve often noted, it is a good project, with global reach, but with loopholes.

 

One of the biggest of these loopholes, perhaps — after Loophole USA — is the problem of ‘fake residency’, where countries allow wealthy people from elsewhere to “buy” their way into being residents of that jurisdiction, perhaps in exchange for their investing a certain amount there, or paying a flat fee.

 

How does this enable people to escape the CRS?

 

Very simply: the CRS collects information about the beneficial owners of assets, then transmits that information to the owner’s place of residence. If the residence is fake, then the CRS system will require relevant agencies to collect and transmit the relevant beneficial ownership information to Dominica, say, and Dominica will ignore it, and not tax it either. End of story. The information trail goes cold. Banks, which are a core part of the CRS project, willingly collude in this monkey business.

 

For most of these fake residency schemes, there is a requirement to hand over relatively serious cash. Dominica, with only 70,000 residents, charges $100,000 for individual fake residency, and they only need a relatively small number of applicants to receive revenues that are meaningful for its 70,000 odd residents, many of whom are quite poor fisherfolk and so on. (No matter that the scheme may be cheating the citizens of other developing countries out of tens of billions: that’s not their concern.)

 

All sorts of places are jumping on this bandwagon. Following the recent decision of St Lucia to dive in, there are now five such places in the Caribbean alone, including St. Kitts and Nevis, Antigua and Barbuda, Grenada and Dominica.

 

Of course, this is a recipe for a race to the bottom. The next jurisdiction will offer residency for $75,000, and then it’ll be 50,000.

 

Well, in fact, the race already appears to be scraping the bottom. And it’s that fast-growing purveyor of offshore sleaze, Dubai. Take a look at this.

 

In short, you can obtain residence visas through three main avenues.

 

First, buy real estate in one of the United Arab Emirates, worth over a million Dirhams.

Second, get an employment contract there.

Third – and this is the super-sleazy one…

Incorporation of your own company in the United Arab Emirates. This is the most convenient and efficient option for obtaining business visas in the UAE. It takes only a few weeks to obtain visa and the expenses incurred are relatively low. Moreover, it is not necessary for a company to perform real activity – its business may be purely formal.
. . .

 

within a few days you are issued a certificate of incorporation of onshore company. Thereupon you and your family members receive residence permit in the UAE.”

 

The other thing the Article failed to pick up on is that Information Exchange will only effect passive investment Companies. If your company can be characterized as a Trading Operation there will be no information exchange. 

 

The other obvious things you can do to avoid the risk of Information Exchange are:

(a)  Open a bank account for your Company in  a country which has not signed the MCAA (We have solutions in that regard); &

(b)  Set up a Seychelles Foundation to hold the shares of your Offshore Company (Because section 71 of the Seychelles Foundations Act deems a Seychelles Foundation to be both the legal AND beneficial owner of any asset it holds).

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

 

 

Can a Second Residence Assist Me To Avoid Tax At Home?

We’re seeing a lot of interest in this field in particular clients looking for a second residency or a 2nd passport. The UAE is doing a lot of business in this regard as a number of Emirates offer a nil tax Company product that comes with a residency permit.

 

The key question with a second residency is how it would all work from a taxation perspective ie who has the right to tax you and why and which country’s tax laws would/should apply?

 

As we see it there are 2 angles:

 

(a)   Application of tax laws in theory

(b)   Disclosure and practicalities

 

Re (a) most countries (particularly big western countries like the USA, EU, Canada, Australia, UK etc) have a very broad definition of “resident for tax purposes”. Regardless of what passport or residency permit you hold if you’re in that country for more than 6 months and or if you have a substantial connection to that country (even if you’re on the ground there for less than 6 months in any tax year) you can be classified as a “resident for tax purposes” making you liable to declare your worldwide income in and pay tax there.  

 

Substantial Connection

 

So what constitutes “substantial connection”?

 

In considering whether you still have a “substantial connection” to your mother country a number of factors are looked at including:

 

  • Do you retain a residency/home in your mother country?
  • Do you own any personalty in your mother country (eg a car, furniture/home contents/boat/leisure toys etc etc)
  • Do you have a bank account in your mother country?
  • Do you have investments or business interests in your mother country?
  • Do you retain a professional or trade license (eg Lawyer/Plumber/Doctor/Teacher/Nurse/Engineer/Architect/Builder/Dentist etc) license in your mother country?
  • Do you keep current a golf/tennis/leisure club membership in your mother country?
  • Do you regularly renew a driver’s license in your mother country?
  • Do you have children at school in your mother country?
  • Do you have a spouse/partner living full time in your mother country?
  • Etc etc etc

 

Chances are, as a minimum, what you will need to do in order to become non-tax resident in your mother country is:

 

(a)   Sell your home/residence in your mother country (or cancel any lease you might have over residential premises there)

(b)   Sell any business you own on the ground in the mother country

(c)   Sell all personalty owned/held in your mother country

(d)   Hand in (and not renew) any professional/trade license you may have in your mother country

(e)   Close down any bank/investment accounts you might have in your mother country

(f)    Write to your local IRS/Tax Office and advise that you have departed the country permanently and filed your last tax return.

 

Disclosure & Practicalities

 

Re (b) the question here is will a 2nd residence enable you to incorporate an Offshore Company and or open a bank account for your Company wherein your name won’t be recorded as being a resident of your home/birth country. Generally speaking in these instances you’d need to produce photographic proof of ID AND proof of residential address. If you can produce evidence of ID/Residential address from/as being in your country of 2nd residence, in the event of information exchange, your details won’t be given to the tax authorities of your home/birth country.

 

The ideal end game there would be that your mother country’s tax authorities would (hopefully) never find out about the existence of your Offshore Company or your connection to it giving them no chance to apply a potentially extensive tax residency law/definition in their favor.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

 

 

SEYCHELLES IBCs – ACCOUNTING REQUIREMENTS

We are often asked by Seychelles IBC owners “what are my Accounting obligations”?

 

Seychelles Companies are not required to keep audited accounts. In theory a Seychelles IBCs is supposed to keep books of account but that requirement is not enforced (ie nobody ever actually checks or asks “Are you keeping Books of Account? If so please show me copies”.

 

The only requirement is you will have to tell your Corporate Service Provider where the Company’s “Accounting Records” are being kept.

 

To summarize by Accounting Records I mean the raw data from which a set of books of account could be created/drawn (By raw data I mean bank statements, receipts, invoices, vouchers, contracts, etc, see below).

 

Whether to keep accounts in effect is up to you; That said in our view every small business should keep books of account. Which is easy to do yourself these days. There so many DIY (Do It Yourself) Accounting packages on the market presently (eg MYOB, Quickbooks, MS Books etc), for anyone who can use a computer, it’s child’s play.

 

Here’s a synopsis of the relevant provisions of the new Seychelles IBC Act in so far as Accounting Requirements are concerned:

 

  • Section 2 of the Act: “Accounting records”, in relation to a company, means documents relating to: (i) the company’s assets and liabilities; (ii) all receipts and expenditure of the company; and (iii) all sales, purchases and other transactions to which the company is a party (e.g., bank statements, receipts, title documents, agreements, vouchers, etc).

 

  • Companies are not required by the Act to prepare or file annual accounts or to appoint an auditor. However, under section 174(1) of the Act a company is required to keep reliable accounting records that: (i) are sufficient to show and explain the company’s transactions; (ii) enable the financial position of the company to be determined with reasonable accuracy at any time; and (iii) allow for accounts of the company to be prepared (notwithstanding that a company is not required under the Act to prepare accounts). For such purposes, accounting records shall be deemed not to be kept if they do not give a true and fair view of the company’s financial position and explain its transactions.

 

  • A company shall preserve its accounting records for at least 7 years from the date of completion of the transactions or operations to which they each relate.

 

  • A company that contravenes the requirements to keep accounting records in accordance with section 174(1) of the Act is liable to a penalty fee of US$100 and an additional penalty fee of US$25 for each day or part thereof during which the contravention continues. A director who knowingly permits a contravention of the requirements to keep accounting records in accordance with section 174(1) of the Act is liable to a penalty fee of US$100 and an additional penalty fee of US$25 for each day or part thereof during which the contravention continues.

 

  • Section 175(1) of the Act: A company’s accounting records shall be kept at its registered office or such other place as the directors think fit. Where a company’s accounting records are kept at a place other than its registered office, the company shall inform its registered agent in writing of the physical address of that place (section 175(2) of the Act). It is sufficient if the company provides the Registered Agent with an emailed scanned copy of the completed, signed and dated Notice.

 

  • Where the place at which a company’s accounting records are kept is changed, the company is required to inform its Registered Agent in writing of the physical address of the new location of the accounting records within 14 days of the change of location (section 175(3) of the Act). It is sufficient if the company provides the Registered Agent with an emailed scanned copy of the completed, signed and dated Notice.

 

  • A company that contravenes section 175 of the Act (location of accounting records requirements) commits an offence and is liable on conviction to a fine not exceeding US$2,500.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

Tax Free Offshore Companies For Expat Workers

In a previous article we looked at how Contractors can potentially minimize tax through Offshore Incorporation.

 

This article revisits the specific situation of expat workers ie persons working abroad, away from their home country, temporarily on a contract basis.

 

A compelling reason of itself to incorporate Offshore as an overseas contractor is to avoid being called on by your home Authorities to pay tax at home. You see, as an expat worker unless you’ve taken certain legal steps to become non-resident for tax purposes in your home country almost certainly you would still be liable to declare your contracting income in, and pay tax on that income in, your country of origin (see below which explains in details what resident for tax purposes means/is) .

 

In fact, if you are living in a country which does NOT have a Double Taxation Avoidance Treaty with your home country you could even be liable for double tax ie liable to pay tax on your income where you work and liable to pay tax again on that income in your country of origin. All such scenarios can potentially be avoided if you set up a tax-free IBC to act as your contracting entity.

 

The last thing you want to see happen when you return home is to be presented with a letter from your home tax authorities asking you to pay tax on the money that you earned whilst abroad. Such a scenario can be avoided with advance planning.

 

What is “Resident for Tax Purposes”?

 

We are often asked by individuals where (ie in what country/s) am I liable to pay tax?

 

The starting point is this: If you are regarded at law to be tax resident (ie resident for tax purposes) in a particular country you are liable to pay tax there on your (usually, worldwide) income.

 

The concept of tax residency however (ie what it takes to be classified as non-tax resident) varies from country to country. Depending on where you originate from you may pass the non-tax resident test of one country but fail the same test had you originated from the country next door.

 

Let me explain….

 

The most well-known tax residency test is in fact the oldest ie the days spent at home test. Historically, in most countries (USA excepted – see below), you would be considered non-tax resident for a particular tax year if you have spent less than half of that the year inside your “home” or mother country.

 

Over the years, and particularly with the proliferation of “fly in-fly out” jobs (seen most prevalently in the oil/mining industries) a number of countries (in particular the more developed countries) have brought into play a multifaceted tax residency test. In other words notwithstanding that you might spend less than half the year on the ground in your mother country if you have a “substantial connection” with your mother country you may still be classified as tax resident of/in that country.

 

So what constitutes “substantial connection”?

 

In considering whether you still have a “substantial connection” to your mother country a number of factors are looked at including:

 

  • Do you retain a residency/home in your mother country?
  • Do you own any personalty in your mother country (eg a car/furniture/home contents/boat/leisure toys etc etc)?
  • Do you have a bank account in your mother country?
  • Do you have investments or business interests in your mother country?
  • Do you retain a professional or trade license (eg Lawyer/Plumber/Doctor/Teacher/Nurse/Engineer/Architect/Builder/Dentist license etc) in your mother country?
  • Do you keep current a golf/tennis/leisure club membership in your mother country?
  • Do you regularly renew a driver’s license in your mother country?
  • Do you have children at school in your mother country?
  • Do you have a spouse/partner living full time in your mother country?
  • Etc etc etc

 

Chances are, as a minimum, what you will need to do in order to become non-tax resident in your mother country is:

 

(a)   Sell your home/residence in your mother country (or cancel any lease you might have over residential premises there)

(b)   Sell any business you own on the ground in the mother country

(c)   Sell all personalty owned/held in your mother country

(d)   Hand in (and do not renew) any professional/trade license you may have in your mother country

(e)   Close down any bank/investment accounts you might have in your mother country

(f)    Write to your local IRS/Tax Office and advise that you have departed the country permanently and filed your last tax return.

 

For USA citizens however a unique situation applies. Generally speaking if you are a US citizen you are required to declare worldwide income in and pay tax in America regardless of (a) whether you spend less than half the year there and (b) whether you have any substantial connection with the USA. (For Americans the only way to be classified as “non tax-resident” of the US is to hand in your passport and denounce your citizenship then do all the above things and leave the country indefinitely).

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

How To Invest in a Start Up Using a Tax Free Offshore Company

Investing in a Start Up is an activity that lends itself well to an Offshore Corporate Structuring plan.

 

How it works is:

 

(a)    You incorporate a tax free Offshore Company (“OC”)

 

(b)   You structure the Company in such a way as to ensure that the Company is seen to be managed and controlled from Offshore; This can usually be achieved by via deployment of a tax haven based Nominee Director (which is a service that OCI can/will provide)

 

(c)    Your OC either signs a general investment with the Start Up Company or subscribes for shares in the Start Up Company

 

(d)   You advance funds to your OC

 

(e)   The OC then advances funds to the Start Up Company

 

(f)     The Fund Company utilizes your money to help it launch or expand

 

(g)    The Fund Company pays a return (eg dividends ie a share of the profits) periodically to your OC (eg monthly or quarterly or 6 monthly or yearly).

 

(h)   Returns paid to your OC can be banked and or reinvested Offshore potentially free from tax

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

How To Bring Home Cryptocurrency Trading Profits

Do you trade Cryptocurrencies?

 

If so, are you experiencing difficulties in transferring funds, being your Cryptocurrency Trading profits, (ie cryptocurrencies converted, via an Exchange, into hard currency) back to your home country?

 

The solution is to:

 

  1. Incorporate an Offshore (eg tax free) Company. Ideally this Company would be characterized as an IT or etc Services Company (eg you could call it International Coding Services Ltd)
  2. Open up a Bitcoin/Cryptocurrency wallet in the name of the Company
  3. Open up a Cryptocurrency Exchange Account in the name of the Company
  4. Transfer all Cryptocurrencies you hold in your name presently to the Company’s Bitcoin/Cryptocurrency wallet
  5.  All future trades moving forward should be placed by and in the name of the Company
  6. Open up a Corporate Account for the Company Offshore
  7. As you generate Trading profits take the Company’s Cryptocurrency to an Exchange and have it converted into hard currency
  8. Transfer hard currency held at the Exchange from your Company’s Exchange account to the Company’s Corporate Bank Account
  9. You should be appointed as Consultant of/to the Offshore Company
  10. Periodically (eg monthly or quarterly or yearly, whenever you feel is appropriate) you would invoice the Company (and your invoice would be stated as being payable in hard currency eg $USD)
  11. The Company would transfer hard currency to your personal account at home upon receipt of the invoice

 

The end result? Money is banked at home without your home country bankers knowing that the source of the money is in fact Cryptocurrency Trading/Speculation.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com