DEVIN NUNES raised eyebrows in 2013 when, as chairman of a congressional working group on tax, he urged reforms that would make America “the largest tax haven in human history”. Though he was thinking of America’s competitiveness rather than turning his country into a haven for dirty money, the words were surprising: America is better known for walloping tax-dodgers than welcoming them. Its assault on Swiss banks that aided tax evasion, launched in 2007, sparked a global revolution in financial transparency. Next year dozens of governments will start to exchange information on their banks’ clients automatically, rather than only when asked to. The tax-shy are being chased to the world’s farthest corners.


And yet something odd is happening: Mr Nunes’s wish may be coming true. America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money. The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong. All this adds up to “another example of how the US has elevated exceptionalism to a constitutional principle,” says Richard Hay of Stikeman Elliott, a law firm. “Europe has been outfoxed.”


The Foreign Account Tax Compliance Act (FATCA), passed in 2010, is the main shackle that America puts on other countries. It requires financial institutions abroad to report details of their American clients’ accounts or face punishing withholding taxes on American-sourced payments. America’s central role in global finance means most comply.


FATCA has spawned the Common Reporting Standard (CRS), a transparency initiative overseen by the OECD club of 34 countries that is emerging as a standard for the exchange of data for tax purposes. So far 96 countries, including Switzerland, once favoured by rich taxophobes, have signed up and will soon start swapping information. The OECD is also leading efforts to force multinationals to reveal more about where and how profits are made, and the deals they cut with individual governments, in order to curb aggressive tax-planning.


Because it has signed a host of bilateral data-sharing deals, America sees no need to join the CRS. But its reciprocation is patchy. It passes on names and interest earned, but not account balances; it does not look through the corporate structures that own many bank accounts to reveal the true “beneficial” owner; and data are only shared with countries that meet a host of privacy and technical standards. That excludes many non-European countries.


All this leads some to brand America a hypocrite. But a fairer diagnosis would be that it has a split personality. The Treasury wants more data-swapping and corporate transparency, and has made several proposals to bring America up to the level of the CRS. But most need congressional approval, and politicians are in no rush to enact them. Some suspect that their reluctance, ostensibly due to concerns about red tape, has more to do with giving America’s financial centres an edge.


Meanwhile business lobbyists and states with lots of registered firms, led by Delaware, have long stymied proposed federal legislation that would require more openness in corporate ownership. (Incorporation is a state matter, not a federal one.) America will often investigate a shell company if asked to by a foreign government that suspects wrongdoing. But incorporation agents do not have to collect ownership information. This is in contrast to Britain, which will soon have a public register of companies’ beneficial owners.


America the booty-full


No one knows how much undeclared money is stashed offshore. Estimates range from a couple of trillion dollars to $30 trillion. What is clear is that America’s share is growing. Already the largest location for managing foreign wealth, it has picked up business as regulators have increased information-exchange and scrutiny of banks and trust companies in Europe and the Caribbean. Money is said to be flowing in from the Bahamas and Bermuda, as well as from Switzerland.


A recent investigation by Bloomberg, a news provider, found several wealth managers whose American arms have benefited, including Rothschild, a British firm, and Trident Trust, a provider of offshore services. New business has been booked through subsidiaries in states with strong secrecy laws and weak oversight, such as South Dakota and Nevada. Another investigation, by Die Zeit, a German newspaper, concluded that for the tax cheat looking to pull money out of Switzerland, America was now the safest bet. “It’s going nuts. Everyone is doing it or looking into it,” says a tax consultant, speaking of the American loophole. Some transfers are being requested for legitimate reasons of confidentiality—for instance, by Venezuelans who fear extortion or kidnap if their wealth is known. But much is of dubious legality.


America is much safer for legally earned wealth that is evading taxes than for lucre that was filthy from the start. It has shown little appetite for helping enforce foreign tax laws and, unlike some other countries, does not count the banking of undeclared money as money-laundering. “Foreigners looking to evade tax in America are usually safe because of its secrecy,” says Jason Sharman of Griffith University in Australia. “But for those with dirtier money there is a small though real risk the US will investigate and apply the full force of the law, which is a scary prospect.”


Dividing the spoils


Foreign banks losing business to America can sometimes share in the profits, explains one tax consultant. A Swiss bank, say—generally a smaller one, as big ones are too scared—tells its client to close an account and open one with an American custodian bank. The client then appoints the Swiss bank as investment manager on the custodian account, and that bank instructs the custodian which funds to buy, often the Swiss bank’s own products. The Swiss bank earns fees for advice and fund-management; the custodian picks up business; and the account is deemed for regulatory purposes to be American, meaning it avoids the disclosure rules that apply only to countries signed up to the CRS.


Only a few other financial centres have declined to commit themselves to the CRS, among them Bahrain and Nauru. Hong Kong has signed but will implement it one tax-treaty partner at a time rather than using a multilateral shortcut; some regard this as a delaying tactic. Undeclared Asian and Middle Eastern money is moving to Taiwan and Lebanon, respectively, both of which are outside the club. Panama, which vies with Miami for Latin American money, looks set to back out of its tentative commitment to the CRS, using America’s double standards as an excuse (see article).


Frustration with America has grown in Europe, which forms the core of the CRS. A group in the European Parliament argues that, if America refuses to reciprocate fully, it should be hit with a reverse FATCA: a levy on payments originating in the EU that flow through American banks. “We don’t want a tax war, but nor can the US have it all its own way,” says Molly Scott Cato, one of the MEPs. One obstacle is that tax measures must be approved unanimously by the EU’s 28 member states.


Others point out that the CRS itself has flaws. It was drafted in a rush, and one expert thinks it would fail to catch 80% of tax-dodging. Financial firms have been calling to report loopholes that could benefit less scrupulous rivals, most of which will be closed before it comes into force or soon after, promises the OECD. (Keeping banks’ compliance costs within reasonable limits means that some will inevitably remain.)


The Economist



With the impending exit of the UK from the EU increasing numbers of clients are looking at the Irish Agency Company/IBC ahead of the UK Agency Company/IBC Model as a means of doing Tax Effective Business in Europe.


What is an Agency Company? 


An Irish company is formed specifically to operate as a nominee or agent for a principal company – in effect the Irish company acts as a fiduciary or agent for the principal company.


How is it used and implemented?


The two companies sign an agreement which specifies the terms of the agreement between them. All business and sales is then conducted in the name of the Irish company, but on behalf of the principal company. The customer enters into a contract with the Irish company, is invoiced by them and pays the invoices into the bank account of the Irish company. Income is then remitted to the principal company by the Irish company after deduction of an agreed commission.


Ownership and Control of the Company


The Irish company is managed and controlled by the principal company and its officers, as is the bank account of the Irish company. It should be noted that the Irish company cannot trade within Ireland or with any Irish businesses.


The Irish company will pay tax on the profits which it makes on the fees retained in accordance with the agency or nominee agreement.


Why is it Used?


  1. This structure is ideal for use as a European Trading structure where the receipts of invoices from a Non EU company would not be acceptable.


  1. This limits the difficulties normally experienced while directly dealing with Non EU companies.


Apart from the practicality point of view as stated above there are also tax advantages


  • Low tax vehicle – Tax is only payable on 5-10% of turnover of the parent company.
  • Ideal where receipt from Non EU company would not be acceptable.
  • Excellent for situations where an onshore profile is required.
  • Can be used effectively in EU VAT triangulation situations.


Corporate Structure


The Irish Agency Company is a popular trading vehicle with minimum exposing to Irish tax. An lrish Agency Company is only a subject to lrish taxation on the agency fee that it receives, for example 5% on the gross profit, minus administrative costs of the Irish company. Nevertheless high taxation rate 25%, an lrish company in an Agency structure is a tax efficient and cost effective method for structuring the provision of services, commissions and general trading.


Key Advantages

•    Irish company can conduct Agency Contract with Offshore principal.
•    All business is conducted in the name of the Irish company. Ready-made Irish Ltd. with VAT available.
•    Corporate tax applies only on the agency commission that Irish company receives.
•    Financial statements will only disclose the agency fee as turnover. While turnover of the offshore principal is not exposed in the statutory accounts.


Typical Structure

An lrish company in an agency structure can be used for the supply of services, commissions and the purchase and sale of goods. The lrish company will enter an agency agreement with an offshore principal. The lrish company will undertake as agent to enter into contracts, commission agreements, etc. on account of and on behalf of the offshore principal:

•    Contracts for the purchase of products or services are concluded by the offshore principal directly or through the lrish company on the instruction of the offshore principal.
•    Contracts for the sale of products or the provision of services are concluded by the offshore principal directly (but formalized by the lrish company on the instruction of the offshore principal).
•    The lrish company to be instructed by the offshore principal for all action required to be taken.
•    lrish company will issue invoices with its VAT number. The lrish company will also sign documents and handle funds.
•    The lrish company cannot deal with lrish suppliers/service providers or lrish customers.



An lrish company in an agency structure will only be subject to lrish taxation on the agency fee that it receives.  The agency fee will generally be equivalent to 5% of the gross profit on transactions undertaken on behalf of the offshore principal. An lrish company in an Agency structure cannot rely on any of the lrish double tax treaties.


OCI Irish Company Package Inclusions


The incorporation fee as quoted below includes the following documents:


  • ·       Original Certificate of Incorporation
  • ·        2 bound copies of the Memorandum and Articles of Association
  • ·       PDF copies of the above documents
  • ·       Share Certificate/s
  • ·       Minutes of Directors First Meeting
  • ·       Luxury Company Seal


The fee also includes us supplying Irish Registered agent and office service for the 1st year + mail forwarding and full Company Secretarial Service. 


The registered office/registered agent/annual company secretarial service includes specifically the following:


  • ·       Electronic Filing of the Companies Registration Office (CRO) Annual Return using our Company Secretarial Software.
  • ·       Sending updated information and documents on time to the CRO and other relevant bodies
  • ·       Looking after all Company Secretarial matters e.g. miscellaneous changes in directors, registered office, shareholders, increase in share capital
  • ·       Holding, updating and maintaining the company’s registers including the register of members, registers of directors and company secretaries and their interests in shares and contracts in the company
  • ·       Preparation of Annual General Meeting (AGM) Proxy Forms, notices and minutes
  • ·       Keeping of AGM, EGM and Directors minutes with register (if required)
  • ·       Keeping custody of the Company Seal (if required)
  • ·       2.5 hours of company secretary time included
  • ·       Monitoring of company on CORE system (protects against fraud)
  • ·       Provision of Corporate Company Secretary


Price all inclusive $US1,650

Plus (if required):

·       For a non-Irish resident Nominee Director: $US1,000 (or)

·       For an Irish resident Nominee Director: Price on application




Why (And How To) Incorporate Offshore

Every now and then it’s good to revisit and re-evaluate the benefits of Incorporating Offshore.


Whilst more thought is now required when planning an Offshore Corporate Structure than what was required say ten years ago, those with years of experience in the Offshore Company Formations Industry will tell you that that solid demand will continue for Offshore Company Formations.






(i) Businesses and individuals are increasingly residing, owning assets and carrying on business in multiple countries (i.e. love it or hate it, globalisation is irreversible)

(ii) Continued scope for legitimate tax planning and reduction

(iii) Cost-effectiveness of offshore companies compared to onshore companies

(iv) Less red tape and admin in respect of offshore companies than onshore companies, despite increased compliance paperwork for offshore companies

(v) Asset protection & estate planning,

(vi) Despite some dilution in privacy, offshore companies continue to offer significantly more privacy than onshore companies.


An Offshore Corporate Structure (capable of facilitating your privacy, investment, tax planning, succession planning and/or asset protection objectives as/if applicable) can certainly be tailored to your specific needs.


The key is to ensure you consult with an Experienced Professional Offshore Formation Specialist prior to committing to incorporate Offshore.

Shortcuts can be costly…






Cyprus Set To Become The New UK?

Cyprus has revamped its Tax Laws to facilitate a new category of tax payer ie a “non-domiciled” resident individual.


The move mirrors the UK law of yesteryear whereby expat businessmen were lured to live in London “as non- domiciled” leaving them non liable for tax in the UK on non-UK earnings.


The introduction of non-domicile status  by the Cypriot Law makers presents an opportunity for high-income earners to relocate to Cyprus and achieve thereby genuine “substance” in the eyes of the law.  This should facilitate substantial reductions in personal (and by relation Business/Corporate) tax bills.


The ability to show “substance” in international structures and tax planning is becoming more vital. Certain tax authorities and courts around the world are attacking structures which lack ‘substance’. Simply put its all well and good to claim that you or your Company are based Offshore (ie in a nil or low tax environment) eg via deployment of an Offshore Registered Office and or Incorporation. But authorities are increasingly wanting to see actual business activity happening (eg key persons/decision makers being based) on the ground in the nil/low tax country (ie “substance”).


Historical Position


Hitherto Cyprus tax resident natural persons have been subject to a special form of taxation (ie in addition to normal income tax) on certain types of income (known as the “Special Contribution for Defence” or “SDC”), at the following rates:

            30% on passive interest income

            17% on dividend income

            3% on 75% of rental income


The SDC law also included provisions for the deemed distribution of profits of Cyprus tax resident corporations where the owners of such companies are Cyprus tax resident individuals.


An individual is considered a Cyprus tax resident if they are physically present in Cyprus for 183 days or more during a calendar year. This general rule only applies to an individual if he or she is both a resident for tax purposes in Cyprus and is also domiciled in Cyprus. (Domicile = the place you call home). Consequently non-domiciled Cyprus resident individuals (eg non Cypriots living in Cyprus) can benefit from this new status. 


When domiciled in Cyprus:


An individual can be considered as domiciled in Cyprus either (i) by domicile of origin; or (ii) by domicile of choice. In order to understand the concept of ‘domiciled in Cyprus’, one must look to the Wills and Succession Law Cap. 195 which provides:


            A person at any time can have either the domicile which he/she acquired at birth (domicile or origin) or the domicile which he/she acquired or maintained as a result of actions taken by him/her (domicile of choice)

            For a legitimate child, who was born when the father was alive, the domicile of origin of the child is the domicile of origin of the father, at the time the child was born

            A person may acquire a domicile of choice with his establishment in any country outside Cyprus with the intention of permanent or indefinite residence in such a country.


For the purposes of the SDC Law only, an individual who has a domicile of origin in Cyprus as described above may still be considered not to be domiciled in Cyprus if:


            He/she had the domicile of origin in Cyprus on the basis of the Wills and Succession Law but has obtained a domicile of choice in another country, provided he was not a tax resident of Cyprus for at least 20 years before the tax year in which he became a tax resident of Cyprus

            He/she has not been a tax resident of Cyprus for a period of 20 years prior to the introduction of the amendment to the SDC Law (July 17, 2015)


Notwithstanding the above, an individual who has been a tax resident of Cyprus for at least 17 years out of the last 20 years prior to the tax year will be considered to be “domiciled in Cyprus” and as such will be subject to special contribution for defence from the 18th year.


The advantages of being a Non-domiciled Tax Resident


Non-domiciled individuals who become tax residents in Cyprus will not pay any taxes (subject to the double tax treaty in place with the country from which the dividends are paid out of) on:


            Any dividends received from anywhere in the world: no taxes apply on dividends received even if the profits being distributed are out of accumulated profits from previous years; exemption becomes available immediately after declaring your Cyprus tax residency and non-domicile status.

            Any interest income from anywhere in the world: all interest income from bank accounts in Cyprus and abroad is not taxable in Cyprus and may potentially be non-taxable in the country where the bank account is located.

            Any rental income from Cyprus or abroad: rental income from property situated in Cyprus will be exempt from defence tax but is still taxable under income tax for individuals (certain deductions available); rental income from property situated outside Cyprus is tax free in Cyprus.


Exemption to the Personal Income tax


In addition to the advantages of being a Cyprus non-domiciled tax resident the Cyprus personal income tax regulation provides additional exemptions which provide further benefits:  For example remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment, is exempt from personal tax for a period of 10 years for employment commencing as of 1 January 2012 provided that the annual remuneration exceeds €100,000 (note also the exemption concerns 50% of the remuneration).


For employment commencing as of 1 January 2015, the exemption does not apply if the said individual was a Cyprus tax resident for 3 (or more) tax years out of the 5 tax years immediately prior to the tax year of commencement of the employment nor in the preceding tax year.


In certain cases it is possible to claim the exemption where income falls below €100.000 per annum.


Capital invariably flights to where Capital gets the best deal. These changes to Cyprus’s tax laws invariably will attract wealthy foreigners and deal makers alike.


The nett result can only be an increase in business activity (and all that flows from that) within the geographical confines of Cyprus.