September | 2020 | Offshore Companies International

Why should I set up my Company in a country that does NOT have a TIEA with my home country?

Whenever a client asks us “Where should I set up my Offshore Company?” as a starting point we always strongly recommend against incorporating a Company in any jurisdiction which has a TIEA (Tax Information Exchange Agreement) with the client’s home country.

Why do we say that?

Let’s just say your home country government (taxman) someday somehow down the track sees that you are doing business with a Company in XXX Offshore Nil Tax Jurisdiction (ie let’s assume it’s a jurisdiction that DOES have a TIEA with your home country), or receiving money from (or sending money to) said Company or receiving mails or packages from (or sending mail or packages to) said Company, what would likely happen is this…

The taxman would look at that and murmur “Hmmm Mr AB is doing business with an XXXX Company….. Hmmm.. XXXX is a tax haven…. Hmmmm… I wonder if Mr AB is secretly behind this Company…. OOOOO! XXXXX has a TIEA with us. LET’S GO AND FIND OUT!”

What would happen then is the local taxman would send an email to his counterpart in the Offshore Company jurisdiction something like this:

Dear counterpart,

Pursuant to clause XXXX of the TIEA between our country and your country please supply the following information as regards the Company XYZ Trading Ltd incorporated in your country:

1. Please tell us the names of the current Directors of this Company
2. Please tell us the names of the current Shareholders of this Company
3. Please tell us the names of the current beneficial owners of this Company
4. Please tell us the names of the current significant controllers of this Company
5. PLEASE TELL US THE NAME OF THE PERSON/S WHO AUTHORISED THE SETUP OF THIS COMPANY

The Offshore Jurisdiction taxman collects this information from the Company’s local Registered agent (who is obliged by law to hand over this info ie in the case of a TIEA request) and sends it to his onshore counterpart.

The first you know about it is you get a knock on the door from the local taxman. “ Hi Sir, There’s a Company in XXXX country that you founded and we’ve seen no declared income from or interest in regards to this Company you’d better come with us for a chat”.

A major tax investigation then takes place wherein you are effectively presumed guilty of tax evasion unless you prove otherwise.

You should be able to prove otherwise (ie if you have structured the Company in a very careful manner) but it’s going to cost you tens of thousands, if not hundreds of thousands, of dollars in legal fees to prove your innocence.

Hence we ALWAYS advise our clients, re choice of Company jurisdiction, wherever you decide to incorporate, make sure it’s in a country/jurisdiction that does NOT have a TIEA with your home country.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How to Open an Amazon Account for a Tax-Free Offshore Company

Re opening an Amazon type account for your tax free Offshore Company or IBC, here’s how that usually works.

1. The Company is set up in a nil tax jurisdiction with a (nil tax jurisdiction based Nominee Director + a Nominee Shareholder (or Private Foundation Shareholder ie where the client is based in a country which has a CFC law). The client/company owner is appointed as an Authorised Representative of the Company. The client then shops for and then recommends a/the Online Store Platform (eg Amazon) for the company to open an account with.

2. To make it quicker and easier for the client what we normally do is provide you/the client with a Limited/Specific Power of Attorney (see sample below) which will enable you/the client to (a) obtain the account opening forms (b) apply to open the Amazon/equivalent account on behalf of the company as an authorised representative of the company and (c) to trade/operate (ie once the account is opened) the account as an authorised Trader (to assist this we also supply a Consultancy Agreement which is included in the price paid for incorporation).

3. The client obtains and completes the Amazon Account Opening Application and emails it to us for signing by the Company Director

4. We arrange for the application forms to be signed and for those + DD/KYC documents as regards the applicant company (and nominee director/shareholder etc) to be sent to Amazon.

POWER OF ATTORNEY

BY THIS POWER OF ATTORNEY given this xxxx day of mmmmmmmm 2020

XYZ TRADING LIMITED of YYY street, XXX City/State/Country(“the Donor”).

Hereby appoints ENTER CLIENT’S NAME HERE of ENTER CLIENT’S ADDRESS AND DATE OF BIRTH HERE (“the Attorney”) as the true and lawful attorney of the Donor for and in the name of and on behalf of the Donor to do all or any of the lawful acts or other things set out as follows:

To do all things necessary and sign all documents as may be required for the Company to open a Seller Account with Amazon International.
To place items for sale on Amazon, at such prices as may be advised by the Attorney, and to reply to sales inquiries received on Amazon

And the Donor hereby agrees at all such times hereafter, in the absence of fraud or gross misconduct, to ratify the actions of the Attorney carried out in good faith in furtherance of the above and to indemnify the Attorney in relation to whatever the Attorney shall do or omit to do by virtue of this Power of Attorney herein.

IN WITNESS of which the Donor has duly executed this document on the date first appearing above:

EXECUTED AS A DEED )

By XYZ TRADING LIMITED)

Acting by and in the presence of: )

Director… ………………………….

Name:

Secretary… …………………………

Name:

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Protect Assets From Divorce using an Offshore Company

Are you looking to protect certain assets that you own from a Divorce/Family Court Attack?

If so, you’re in luck! I’ve been a lawyer for 29 years. For the first 10 years I was a divorce lawyer then I picked up a job in the Seychelles and for the past 19 years I’ve specialized in designing/constructing International Tax Planning/Asset Protection/Succession Planning strategies. I know exactly what you need to do in order to remove “at risk” assets from the “asset pool” that would otherwise be up for division in the event of Divorce/Property Settlement litigation.

If there are particular assets that you own in your name that you feel morally your spouse shouldn’t be able to claim any part of, what you would need to do to protect them is transfer ownership of these assets to an entity (a) that you are not seen to manage/control and (b) that you are not seen to be the beneficial owner of.

In years gone by I’ve seen people in such a position transfer assets to an Offshore Trust. But a better option in my view would be to transfer your “at risk” assets to a Private Foundation.

Why?

Because (unlike a Trust) a Private Foundation is presumed at law to be both the legal AND beneficial owner of any asset it holds. Provided you’re not seen to be in control of the Foundation ie provided on paper you’re not the seen to be the Founder or Councillor of the Foundation (which situation we can assist to cultivate ie using Nominees) then any assets held by the Foundation at divorce time should be excluded from the “joint” asset pool.

If you want to be really clever what you might want to do is set up 2 Offshore entities (eg a Company AND a Foundation) and then transfer the at risk assets to Offshore entity 1 and then from Offshore entity 1 to Offshore entity 2. That should also place the assets beyond not only the reach of the Family Courts, but also beyond the reach of any Bankruptcy Trustee should the spouse try and take steps to bankrupt you as a means to try and claw back assets transferred by you to a/the 3^rd party in the first instance. (See below for details re that strategy ie beneath the heading “ How to get around insolvency clawback provisions“).

In short what I’d probably do if I were in your shoes is is (a) transfer ownership of the “at risk” assets from myself to an Offshore Foundation and then (b) transfer ownership of those assets to a nil tax Offshore Company owned by the Foundation (as this will give you maximum flexibility in terms of how to utilize those assets).

How To Get Around Insolvency Clawback Provisions Via Offshore

If an asset is owned by an “Offshore” Company (and especially if that Company is registered in a privacy haven) it can be very hard to seize the asset or the Company (ie if a judgment is entered against you and you are the underlying beneficial owner of the Offshore that has received the asset). This is so on 2 counts:

(a) Foreign judgments are rarely recognized by “Offshore” Courts; &

(b) Generally the judgment creditor would need to be able to prove that you are the underlying beneficial owner of the Offshore Company (which would be all but impossible to do if the Company is registered in a privacy haven ie somewhere which has no public register of directors or shareholders or beneficial owners).

What you would need to be wary of however is the possible impact of onshore Insolvency Laws. For example in most developed countries:

(a) any transfer of assets within 6 months of you going bankrupt can be overturned and the asset clawed back by the Bankruptcy Trustee

(b) a transfer of an asset where the primary purpose of the transfer was to defeat a creditor can be overturned and the asset clawed back by the Bankruptcy Trustee at anytime (ie regardless of when the asset was transferred).

That said the claw back power only pertains to the initial transfer of the asset (eg from you to the Offshore Entity). So what you would want to do is ensure that the asset is transferred through 2 sets of hands ie from you to Offshore Entity One and From Offshore Entity One to Offshore Entity Two.

Why so?

Because the Bankruptcy Trustee should have no power to overturn the 2^nd transfer of the asset.

So if you live in a country which has this model of Insolvency Law you will want to set up 2 Offshore Entities and transfer your at risk assets from you to Offshore Entity 1 and then from Offshore Entity 1 to Offshore Entity 2.

(and for maximum security the smart thing to do would be to set up the 2 Offshore Entities in different countries)

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com