July | 2020 | Offshore Companies International

How To Set Up a Joint Venture Tax Free Offshore

A prospective client recently approached us seeking International Corporate structuring advice in regards to a project that he and some silent partners were looking to pursue outside of his home country including construction of a Private Hospital in country A and construction of a women’s shelter in Company B.

The query got me thinking about the different ways that a JV could be structured tax effectively using an Offshore Company/entity.

If you are in the same position as the querist, you’ll be pleased to know that there are several ways that you could structure such a project from an “Offshore” Perspective:

You and the financial partner/s could form a JV (Joint Venture) Company in a nil or law tax environment (ie a Company Limited by Shares wherein you all hold shares and receive voting rights in proportion to the amount of shares held). In this scenario the person with the most shares would get to decide who the Director/s of the Company will be; or
You could form a tax free LLC (eg in certain states in the US or in Nevis or in Belize) with membership units (ie the LLC’s equivalent of shares) distributed in proportion to your respective contributions (LLCs are treated for tax purposes as a Partnership ie the LLC doesn’t have to file a tax return or pay tax; It remits nett profits to the members who are then responsible for declaring the income/paying the tax thereon as/if applicable); or
You could form a Limited Partnership (in a zero tax jurisdiction) ie where you would be the General partner and the investor/financier would be the Limited Partner (see below for details); or
You could form an Offshore Company (ideally in a nil or law tax environment) and that Company could enter into a loan agreement with the Funder/s ie whereby your Company would agree to pay back the Loan Principal and or Principal with Interest or just interest only payments at certain agreed junctures (eg monthly or quarterly or yearly or?); or
You could form an Offshore Company (ideally in a nil or law tax environment) and that Company could enter into an investment agreement with the Funder (ie whereby it is noted that the investor agrees to invest $ in your Company and in return your Company agrees to pay a return to the investor based on a formula as may be agreed); or
You could set up a (non-licensed) Closed End Fund Company in a nil tax jurisdiction. In this scenario (wherein the Company has the power to issue 2 different classes of shares) the investor would get Class B shares in the Company ie the right to share in the Company’s nett profits but no voting rights. You would get Class A shares (ie shares that have both voting rights and the right to share in the Company’s nett profits).

What is a Limited Partnership?

Limited Partnerships are commonly used in Joint Ventures when one party is happy to contribute capital to the Partnership but doesn’t want to risk being made responsible for any debts (or legal liabilities) that may be incurred by the Partnership.

We can assist you to register a Limited Partnership in Seychelles or Scotland or the UK. The first thing you’ll need to decide is how to structure the Partnership.

To set up a Limited Partnership you’ll need to nominate one or more General partners and a Limited Partner.

In case you’re unsure as regards who is to fulfil what role you might like to note:

An LP is not a Legal entity and cannot hold property in its own right. The property of the LP is held by the General Partner/s
The General Partner/s is/are responsible for the administration and management of the LP including signing agreements and resolutions on behalf of the LP
The General Partner/s is/are liable for the debts of the LP if the debts of the LP exceed assets owned by the LP
Limited Partners are generally speaking (subject to certain exceptions) not liable for the debts of the LP
A General Partner may also take an interest as a Limited Partner
In most jurisdictions as part of the registration process an LP must file a “Statement of Particulars” which must include the name/s of the General Partner/s and a summary of the LP’s proposed business activities

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How to Set up a Digital Marketing Business Tax Free Offshore

Digital Marketing is really any kind of marketing that assist a business owner to make potential buyers aware, via digital means of the business owner’s product or service offering.

Digital Marketers commonly fall into in one of 3 categories ie

Content marketers (eg someone who writes Blogposts for a particular business);
Social media marketers (ie someone who would help your business promote its blog articles via placing paid and organic posts on the business’s social media account
Email marketers ie persons/businesses whose skill is to who draft/send promotional emails to a business’s client base or prospective client base (and sends product promotions to

What do these 3 lines of business all have in common?

All these services can be created and delivered online/via the web.

Web based businesses lends themselves brilliantly to an “Offshore” Corporate Structuring Plan.

Essentially how it works is:

A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated (with a nil tax jurisdiction resident “Nominee” Director) to own/operate the business
An Offshore account is set up in a nil tax banking centre
Customers/clients contract with and pay the IBC
Every contract (ie in your standard service terms/conditions) should provide that (a) the bargain was concluded Offshore (ie in a /the nil tax environment) and (b) that services will be provided from Offshore
The IBC Invoices the clients from offshore
Payment for invoices rendered will be banked free of tax in the first instance
You or your local company would be sub-contracted by the IBC to actually perform the services
You would invoice the IBC periodically (eg monthly) for this work which income would be assessable income in your home country – 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.
The rest of the income earned by the IBC can be held (and potentially invested) offshore tax free.

Management/Ownership Structure

As hinted at above, if you want 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:

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/

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 a law).

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

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.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Run a Tax Effective Consulting Business From Offshore

If you’re providing Consulting Services (in particular to a non-local/International clientele) then you’ll be pleased to know that such a business lends itself well to an “Offshore” Corporate Structuring Plan.

Essentially how it works is:

A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated with a nil tax jurisdiction resident “Nominee” Director
The IBC owns/operates the consulting business
An Offshore account is set up in a nil tax banking centre
Customers/clients contract with and pay the IBC.
Every contract should provide that (a) the bargain was concluded Offshore (ie in a /the nil tax environment) and (b) that services will be provided from Offshore
The IBC Invoices the clients from offshore.
Payment for invoices rendered will be banked free of tax in the first instance
You or your local company would be sub-contracted by the IBC to actually perform the services
You would invoice the IBC periodically (eg monthly) for this work which income would be assessable income in your home country – 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.
The rest of the income earned by the IBC can held (and potentially invested) offshore tax free.

Management/Ownership Structure

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/

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.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How to Open an Offshore Company Bank Account

If you engage OCI (www.offshoreincorporate.com) to assist you to open an Offshore Account for your Company or Trust or Foundation or LP here’s how the system works:

When you first contact us we will email you a bank account brochure showing names and key details as regards the 50+ banks that we can assist to open an Offshore account with. This brochure contains details of each banks’ minimum deposit requirements, details of key services offered and set up costs.
Once you’ve decided where you want to incorporate (and how you wish to structure your Offshore Company/entity) we will email you for completion and return a banking questionnaire. The answers you provide therein will give us a snapshot of your banking requirements such as should enable us to recommend a/the bank most likely to meet your needs.
One of the partners in the firm (ie our Bank Accounts Manager) is a Chartered Accountant. For the past 10 years all she has done all day every day (apart from the firm’s Accounts) is assist clients to open Bank Accounts. She will review (and our In-House Lawyer will also review) your completed Bank Account Questionnaire. Once that’s done we will email you a short list of Banks that we feel are most likely to meet your needs + details as regards each bank (including their fees/charges).
You should review that info and then tell us which bank or banks you wish to open an account with
We will send you an (in house) Instruction form for completion as regards that particular bank
We use the data as captured in that order form to complete the bank account application forms for you
We arrange for the bank account application to be signed by the Company Director (and account/authorised signatory) for delivery to the bank + we will email you to tell you what info/docs you will need to supply
You should then furnish us/the bank with a detailed summary of the company’s proposed business activities + proof of your ID/residency as per the bank’s requirements (ie in the event that you are the underlying beneficial owner of a company applying for the account or nominated as account signatory). Certain banks also require a bank reference.
The Bank typically comes back with 2-3 rounds of questions. We will seek instructions from you as regards the bank/s queries.
We then use those instructions to draft answers to the Bank’s questions.
We then send answers to the bank’s questions directly to the particular Officer at the bank handling your Company/entity’s application
We follow up with the bank until the account is opened
Immediately the Account is opened we will either (securely) send you the account coordinates etc or arrange for the bank to securely send that info (+ any issued debit/credit/ATM card) to you

All the above work/services are included in the fixed fee that we charge you for providing assistance to open a bank account.

The fee for us to assist you to open an Offshore Account for your Offshore Company/Entity would be anywhere from $550 up to $1,550 (ie the amount of the fee depends on which bank you choose).

(Note we only assist to open accounts for Companies/entities formed by us).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com