How To Use a Tax Free Offshore Company to Trade Stocks & Shares

With the extreme market volatility we are seeing right now, thanks to the Covid 19 inspired economic downturn, the chance exists to make a, potentially once in a lifetime, small fortune Trading Shares on the International Stock Exchanges/Stock Markets.


You’ll be pleased to know that Share Trading is an activity which lends itself well to an Offshore Corporate Structuring (Tax Minimization) Plan.


To summarise how it would work is:


  • You set up a zero tax International Business Company (“IBC”)
  • The Company is set up with a (nil tax jurisdiction based) “Nominee” director and with an Offshore “Office” (ie in a nil tax jurisdiction/the country of incorporation)
  • The IBC opens an account with a Share Broker
  • You are appointed as the IBC’s authorised trader or Trading Manager (ie the Director delegates to you the power to place/responsibility for placing the buy and sell orders on behalf of the company)
  • All legal contracts/agreements (eg Brokerage Contracts) are signed, and all board meetings take place Offshore ie in a/the nil tax jurisdiction wherein the Company and or the Nominee Director is based.
  • Ideally you would provide the Director with some kind of monthly Trading (ie buys and sell records) report.
  • The Director ratifies/confirms all trades placed by you at the end of each Trading month
  • (with this admin system in place) For source of income purposes the IBCs trading profits are seen to be generated by calls made ultimately by the Nominee Director ie in a nil tax environment, tax free/offshore
  • When you need some living/spending money the IBC could pay you a wage, or consulting fees or a commission eg a percentage of trading profits generated (or could provide you with a tax free loan ie to assist with asset/investment purchases, see below)
  • That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are ordinarily resident for tax purposes though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home)
  • If you don’t want the authorities to know how much money you are earning by way of wages potentially you could use an anonymous ATM or Debit/VISA card to withdraw your wages from an Auto Tele Machine (though technically – unless it’s documented as a draw down on an overdraft/loan from the Company – that would be classified as income for tax purposes ie reportable)
  • You could also potentially draw down money from the Company tax free by way of loan or have the Offshore Company (or a subsidiary thereof) buy your investments (ie to avoid you having to receive money directly from the Company – which would likely have tax consequences).
  • The majority of trading profits would be banked and or reinvested Offshore potentially tax free.


Note:- to ensure that your name isn’t recorded in the Company registers as “beneficial owner” (and to get around CFC rules, should you live in a country which has them) ideally you would also set up a Private Foundation to act as shareholder of the Company.


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How to Run an Ecommerce Store using a Tax Free Offshore Company

The Corona Virus has seen a stampede of entrepreneurs rushing to get set up Online. If that’s you (ie if you’re looking to launch an Ecommerce Store Online) you’ll be pleased to hear/read that such a business lends itself (really) well to an “Offshore” Corporate Structuring Plan. Here’s how it usually works:


  • A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated to own/operate the business
  • You design/launch a website which is owned by the Offshore Company
  • The IBC owns all proprietary items (including also the/any Trademarks, Operating software/systems, soft products to be delivered to customers etc)
  • The website ideally should be hosted in a nil tax/private Jurisdiction (Iceland is currently the most popular destination for such web hosting, Singapore is also often favoured)
  • The customers find you and/or contact you via the web
  • The IBC is seen to be managed and controlled from (and ideally beneficially owned from, see below) Offshore. This is achieved via the appointment of a (nil tax jurisdiction based) “Nominee” director.
  • Your standard sale agreement/website terms and conditions should provide (a) that a contract is not formed until the customer’s offer is accepted by you (ie the Offshore Company) and (b) that the source of the income is the contract. Before the customer can click the “Buy”button  he/she must on a button acknowledging that he/she has read and agrees to be bound by your terms & conditions
  • Acceptance of the buyer’s offer would be provided by the Company (which is seen to be managed from “Offshore” via a nil-tax-jurisdiction resident Nominee Director) sending an email to the buyer, after he/she has paid online; In simple terms what that means is that the situs of the Contract ie the place where the contract of sale (ie the agreement between you and the buyer for you to supply goods in consideration of the buyer paying), at law, is formed is the director’s location ie a nil tax environment…
  • Hence the income – from which the contract of sale is the source – has been/is derived, prima facie, in a zero tax jurisdiction (every time a customer buys and you send an email thanking him for payment that concludes a contract of sale at law)
  • An Offshore account (which can/will also be set up to receive card payments via a merchant account) is opened in a nil tax banking centre
  • Customers contract with and pay the IBC; All such monies are banked free of tax in the first instance
  • You or your local company would/could be contracted by the IBC to manage sales/delivery of product/website maintenance/whatever
  • (If you need a regular income) 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 expenses against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income
  • 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 to take orders and receive income in a low tax onshore environment (eg Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google model).


As alluded to, in order to minimise the chances of the IBC being taxed onshore, ideally, the IBC should/would be (and be seen to be) managed and controlled from Offshore. How this can be achieved is by including a Nominee Director as part of the Corporate structure. For details of how that can work click on these links:


Ideally – so you can swear on oath in the event of a tax investigation, law suit or regulatory inquiry – I am not the beneficial owner of this Company, (which could get you around what might otherwise be a substantial tax or legal liability eg imprisonment for tax evasion) you will want to set up a Private Foundation to act as the shareholder of your IBC. (This should also assist you to get around CFC rules ie if you live in a country which has such regs).


With a bespoke legal/admin structure in place you should only be liable to declare and pay tax on income paid to you by the company (and/or on any distributions paid to you by the Foundation); The rest of your ECommerce store earnings you should be able to bank, and or invest, Offshore in a nil tax environment.


Similarly, if a product that you sell doesn’t perform and a customer tries to sue you, the good news is your personal assets should not be at risk as the customer has contracted with a Limited Liability Company (ie the Company carries the legal risk, not you personally). Moreover, having your business incorporated Offshore in a foreign/strange land is of itself a deterrent to law suits. (Have you ever tried to sue/get money out of an “Offshore” Company? It’s the Litigation Lawyer’s equivalent of climbing Mount Everest!)


Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an IBC for such purposes.


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How to Form a New IBC Using Nominees

If you’re wanting to set up a new Company – and have/make your existing Offshore Company the owner thereof – here are the procedures that, in our experience, would ordinarily need to be followed (ie assuming your existing Company has a Nominee Director).


  1. You would need to firstly explain to the Nominee director why it’s in the current Company’s best interests to form this new Company – an email sent to your Offshore Corporate Service Provider (“CSP”) addressed to the Nominee Director should suffice in this regard
  2. The Company Director should appoint (or should already have appointed) you as an “Authorised Representative” of the Company. This will give you the necessary authority to liaise with the Company formation agent to arrange for all the docs that need to be prepared for the new Company to be formed
  3. You’ll need to the email to your existing CSP the Incorporation application docs re the new Company that need to be signed by the existing Company “Nominee” Director
  4. You should confirm to your existing CSP/the Nominee Director that you’ve sought legal advice in relation to the Incorporation docs (or explain why you say outside legal advice won’t be necessary prior to the Director signing the docs)
  5. Your existing CSP’s Compliance Manager (or In-house Lawyer as the case may be) should review the docs as submitted and advise the Nominee Director so that the Nominee knows what he/she is signing
  6. The existing Company will call a board meeting
  7. At that Board meeting a Board resolution will be passed authorising (a) the existing Company to form the new Company and (b) authorizing a certain person to sign the incorporation docs for/re the new Company
  8. This resolution will be drafted/put in writing in the form of a meeting minute and will be printed and signed by the Nominee Director
  9. The Nominee Director will then sign the docs authorizing the incorporation of the new Company

10.The docs as signed will be emailed to you (and/or couriered to an address as provided by you as/if requested by you)


If you follow the above procedures at all times you have acted as would an employee or contractor of the Company.


As such your Private situation, ie as the actual Founder of/the person behind the Company, should never be revealed/compromised (ie assuming your existing Offshore Company has been structured/administered in a certain way).


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