Offshore Asset Protection (& Tax Planning) Options for Brazilians

Given the decline of the Brazilian Economy (and the resulting political uncertainty), if you are based in Brazil and have a few dollars/assets no doubt you’d be looking at ways to protect those assets. For maximum certainty, ideally, you will be looking for ways to safely move those assets out of Brazil.

 

The solution is to set up an Offshore Corporate or Fiduciary entity and then transfer ownership of the assets to that entity.

 

As a minimum what you should do is set up a Company in a Privacy Haven (that is somewhere that doesn’t have a public register of Directors Shareholders or Beneficial Owners) to take ownership of the asset/s in the first instance.

 

For maximum security, what you could/should then do is set up a Private Foundation to hold the shares of your Offshore Company (and for ultimate protection transfer ownership of the asset/s from the Company to the Foundation).

 

Ideally, to minimize the chances of the Brazilian Authorities finding out who’s behind the Offshore Company, you will want to incorporate your Company (and your Foundation) in a country which has not signed a Tax Information Exchange Agreement (“TIEA”) with Brazil.

 

Jurisdiction etc Options

 

If that plan makes sense to you, you might want to take a close look at the following jurisdictions – as all offer ownership privacy, none of them have signed a TIEA (ie Tax Information Exchange Agreement) with Brazil and all charge no tax on profits realized outside the country of incorporation/registration:

 

 

By far the most popular place to incorporate an Offshore Company is Hong Kong. Check the following link which explains why: https://www.dropbox.com/s/4g1xroin3c8vkoa/Why%20Incorporate%20in%20Hong%20Kong.docx?dl=0

 

If you want to have the option of only having to declare in Brazil income actually paid to you by the Offshore Company:

 

(a)  As Brazil has CFC ie Controlled Foreign Corporation Laws, it would be wise to include a Foundation as part of the Corporate structure. Check the following link which explains why, in detail: https://www.dropbox.com/s/fgv089hjpv5d7e6/Why%20set%20up%20a%20Foundation.pdf?dl=0

 

(b)  For maximum privacy and to minimize the chances of your Offshore Company being taxed onshore (as a Company which is seen to be managed and controlled from onshore can be taxed onshore) you would be wise to include a Nominee Director/Shareholder as part of the Corporate Structure. For information on how/why that will work for you (and for guidance on whether to select Nominee Services or not) please read these pages:

 

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/

 

New/local laws can have an impact. Hence you should seek local legal financial and tax advice before committing to establish an Offshore Corporate or Fiduciary Structure.

 

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

 

Isle of Man ICO Setup Requirements – Overview

The Isle of Man is becoming a popular choice of jurisdiction for Cryptosphere Entrepreneurs looking for a middle ground solution between excessive regulation and zero regulation.

 

In short you can incorporate an ICO in the Isle of Man (“IOM”) and have the business officially registered as an ICO without needing to go through a formal license application such as exists in other Financial Centres.

 

Below is a series of Commonly Asked Questions (and Answers thereto) recently published by the IOM Authorities which should provide a neat summary of everything you will want/need to know when beginning your assessment as to the viability of choosing the Isle of Man as your preferred ICO Launch site:

 

Where does the business of issuing Convertible Virtual Currency (“CVC”) (such as via an Initial Coin Offering “ICO”) fit in Isle of Man legislation?

 

In April 2015 the Proceeds of Crime (Business in the Regulated Sector) Order 2015 amended Schedule 4 to the Proceeds of Crime Act 2008 which lists all of those businesses considered by that Act to be “Business in the Regulated Sector”. One type of such business is convertible virtual currency business which Schedule 4(1) (mm) to that Act describes as:

 

the business of issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including crypto-currencies or similar concepts where the concept is accepted by persons as a means of payment for goods or services, a unit of account, a store of value or a commodity (emphasis added)

 

Therefore issuing CVC (which could be via an ICO or other concept), in or from the Island falls under the above definition and so is classed as “Business in the Regulated Sector”.

 

So does this mean that all business areas listed as “Business in the Regulated Sector” under Schedule 4 to the Proceeds of Crime Act 2008 are regulated by the Isle of Man Financial Services Authority (“IOMFSA”)?

 

No. “Business in the Regulated Sector” does not necessarily mean that the business is regulated in the contemporary sense of the word.

 

“Business in the Regulated Sector” for the purposes of the Proceeds of Crime Act 2008 means that additional legislation applies to those businesses (namely the Anti-Money Laundering and Countering the Financing of Terrorism Code 2015 or “the Code”).

 

Many of the business sectors in Schedule 4 are fully regulated by the IOMFSA, for example, under the Financial Services Act 2008 or the Insurance Act 2008. These businesses are subject to a wide array of regulatory controls and are subject to detailed scrutiny as required by the terms of the legislation they are regulated under.

 

Some businesses listed under Schedule 4 are only overseen for compliance with the Code. These businesses are called Designated Businesses. Their oversight does not extend to conduct of business, prudential and solvency regulation or protection of client assets. For the avoidance of doubt, businesses operating as CVC businesses (including ICOs) fall under this category.

 

If I am registered, what are my legal obligations?

 

The Designated Businesses (Registration and Oversight) Act 2015 imposes a number of obligations on the business. Some of those requirements include that it must keep all of the information submitted as part of its application for registration accurate and up to date, file an annual return and provide information or documentation to the IOMFSA upon request.

 

The AML/CFT obligations imposed on the business are detailed in the Code. In summary it requires that the business must identify and take reasonable steps to verify the identity of their customers including the beneficial owners of the customers and any persons who are empowered to act on their customers’ behalf. The Code also requires that the business must assess the risks facing it as well as the risks posed by its customers and monitor the transactions and activity of the customers on an ongoing basis.

 

Can I start the pre-sale of a token or coin before being registered or while the registration is being processed?

 

No. The business of selling or issuing a convertible virtual currency is undertaking a designated business. No distinction is made as to whether the sale or issuance of a CVC is undertaken as a pre-sale or after a public launch. Care should also be taken to ensure that the business is not holding out as undertaking a designated business prior to its registration.

 

So, if an ICO business is “overseen” by the IOMFSA for AML/CFT compliance, is it therefore “licensed”, “authorised” or otherwise regulated by the IOMFSA or hold a “cryptocurrency licence”?

 

No. The business of issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies is a Designated Business as defined by Schedule 1 to the Designated Businesses (Registration and Oversight) Act 2015. This means it is subject to registration under that Act – not financial services regulation.

 

A Designated Business is not a regulated entity and must not hold out that it is anything but a registered Designated Business.

 

Are there any types of CVC business (including ICOs) which the IOMFSA would refuse to register?

The IOMFSA has published a registration policy which outlines what it expects of an applicant in terms of fitness and propriety.

 

In addition to this general registration policy, it is the IOMFSA’s policy to refuse to register an applicant which engages in the CVC business of issuing a CVC (of whatever type) where the CVC issued provides no benefit to the purchaser other than the CVC itself.

 

Examples of this include, but are not restricted to:

 

  • · ICOs which convey:

- limited or no rights to the income generated from a project;

- limited or no rights to use the assets developed, purchased or acquired from the funds raised by the ICO;

  • · ICOs where there is no reasonable basis for any expected capital growth of the value of the CVC.

 

Such characteristics are generally considered by the IOMFSA to pose an unacceptably high risk that the money raised from the CVC issuance could be used for unanticipated and illegal purposes, as well as posing a risk to consumers. It is because of these risks that it is the policy of the IOMFSA to refuse to register this type of business.

 

If a Designated Business is registered with the IOMFSA, is it required to state this on its website and other correspondence?

 

There is no requirement on a registered Designated Business to state that it is registered under the Designated Businesses (Registration and Oversight) Act 2015 to persons with whom it has communications in the course of its business. However where a business chooses to make such a reference, it should be made very clear that the business is registered under the Designated Businesses (Registration and Oversight) Act 2015 and the business must not ‘hold out’ that it is regulated.

 

Where a business is “registered” with the IOMFSA as a Designated Business, what requirements are imposed on the registered business?

 

As noted above, all businesses listed in Schedule 4 to the Proceeds of Crime Act 2008 are required to comply with the Anti-Money Laundering and Countering the Financing of Terrorism Code 2015 (‘the Code’). The IOMFSA has powers under the Designated Businesses (Registration and Oversight) Act 2015 to oversee compliance with the Anti-Money Laundering and Countering the Financing of Terrorism legislation (which includes the Code, including powers to inspect the accounts, books and records of the business and take copies of those records).

 

Further details about potential legal or regulatory obligations and how they impact your business should be sought from an independent legal practitioner prior to making an application for registration. No designated business must be undertaken without a registration.

 

How do I apply for registration to issue CVC (including via an ICO) on the island?

 

First you need to ensure your business is of a type the IOMFSA will register, and that it has the necessary number of Island directors and is managed and controlled from the Island (see the Designated Businesses Registration Policy page: https://www.iomfsa.im/designated-business/registration-policy/ ).

 

Then, to begin the process you need to create an account on the application system, to do this you can go through the link below: https://www.iomfsa.im/designated-business/registration-forms/

 

This page provides a high level outline of how to go about registering. At the bottom of the page is a link to the registration system itself, once you create an account you will be able to complete the application forms.

 

There is a detailed user guide which takes you through step-by-step how to use the system and how to complete the forms: https://www.iomfsa.im/media/1423/dnfbpuserguide.pdf

 

Does being registered under the Designated Business (Registration and Oversight) Act 2015 mean I can get a bank account and banking services in the Isle of Man?

 

No. Whether a bank will offer services to your business is a commercial decision for the bank to make and is a matter between your business and the bank.

 

CAUTIONARY NOTE: It would be highly advisable to engage an experienced International Corporate Service Provider to assist with formation of the Operating Company and with the ICO Registration Process. There are a number of unseen reefs you will need to successfully navigate your way around (ie legal boxes you will need to tick) in order to succeed with your registration application. Your chances of succeeding without specialist help would be greatly reduced. (The OCI Legal Team can provide such assistance).

 

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 Use a Tax Free Offshore Company to Trade Commodities

Commodity Trading is an activity which lends itself well to an Offshore Corporate Structuring Plan.

 

To summarise how it would work is:

 

  • You set up a zero tax International Business Company (“IBC”) with a nil jurisdiction based “Nominee” Director
  • The IBC opens an account with a Broker
  • You are appointed by the Company as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
  • For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC Is structured properly)
  • When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
  • 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 you could use an anonymous ATM or Debit/VISA card to withdraw your wages from an Auto Tele Machine
  • The majority of trading profits could be reinvested Offshore potentially tax free.

 

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

 

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 Get Around UK Requirement To Correct Rules

If you are UK resident and own assets abroad (eg non-UK real estate), or if you receive (or are entitled to receive), outside the UK, income from a foreign source (eg dividends from non-UK companies), you may be affected by the new UK Requirement to Correct (RTC) rules.

 

The RTC rules oblige UK taxpayers to correct past non-compliance with their UK tax obligations by 30 September 2018. After this deadline, a new, higher penalty regime will apply.

 

It’s possible to get around these rules but you’ll need to move fast in order to avoid the 30 September deadline.

 

Essentially there are 2 things you could do to avoid having to make such a declaration:

 

(a)  Set up nil tax Offshore Company to own (ie take over ownership of) your foreign assets + set up a nil tax Private Foundation to own (ie hold the shares of) this Company; or

(b)  Set up a nil tax Private Foundation to own (ie take over ownership of) your foreign assets

 

Whether to set up (a) or (b) depends on what kind of assets you hold. If you simply own an asset that produces a passive income stream then a Foundation alone should suffice.

 

The key plank underlying the strategy is how you manage/reconstruct the issue of ownership.

 

The Private Foundation (which is essentially Europe’s version of a Trust) started life in Liechtenstein and then began to slowly make its way across Europe (eg in Holland a Private Foundation its called a Schtichting) before being embraced by sundry Offshore Jurisdictions (including Panama, Belize, Nevis. Mauritius, Seychelles etc).

 

Under European Common Law a Foundation (which, unlike a Trust, is a separate legal entity) is presumed to be both the legal and beneficial owner of any asset it holds. What this means, in event of a law suit or tax investigation or regulatory inquiry, is you can swear under oath “I am not the legal or beneficial owner of this Company/Asset”.

 

Moreover under European Common Law the beneficiaries of a Private Foundation are not entitled to a distribution from a/the Foundation unless or until such time as the Foundation Council actually resolves to pay the beneficiaries a Distribution. So you and your family could be nominated as beneficiaries of the Foundation without needing to make any Declaration under the Requirement To Correct Rules.

 

One jurisdiction has taken this a step further ie the Seychelles by codifying theses aspect of European Common Law and placing them into Legislation: Section 71 of the Seychelles Foundations Act provides that the legal and beneficial owner of any asset held by a Seychelles Foundation is the Foundation itself.

 

And section 63 provides in effect that the beneficiary of a Seychelles Foundation is not entitled to a distribution from a/the Foundation unless or until such time as the Foundation Council actually resolves to pay the beneficiary a Distribution.

 

Conclusion

 

If you have income producing assets outside of the UK that you’re yet to declare to the UK Authorities you can avoid the new UK Requirement To Correct Rules by setting up a Private Foundation and then transferring ownership of the asset/s in question to the Private Foundation (or to an Offshore Company owned by the Foundation).

 

Additionally, you should be able to avoid having to pay tax on any income generated by the Private Foundation and or Offshore Company ie you should only be liable to pay tax in the UK when you receive income from the Offshore Company or Private Foundation (assuming the Company/Foundation is structured/managed a certain way).

 

NB Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an Offshore Structure.

 

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

 

Labuan Offshore Companies

Background

 

The Federal Territory of Labuan is an island group, 92 sq km in size, with a population of 78,000 situated off the north-west coast of the former British Borneo and Brunei Darussalam. Labuan is part of Malaysia and comprises seven small islands of which Pulau Labuan is the largest. Labuan lies off the north-west coast of Borneo, 8 km from the Malaysian state of Sabah and is strategically located roughly equidistant from Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila and Singapore. It is mostly flat with a good harbour and is accessible by air, with daily services from Kuala Lumpur and from most Asian capitals.

 

Labuan is located on the major shipping and air routes of the Asian Region and is Malaysia’s only deepwater harbour. It has a warm humid tropical climate, with daily temperatures averaging 30°C with two monsoon seasons ie from April to June and from September to December. The main language is Bahasam Melayu but English, Tamil and various Chinese dialects are widely spoken. Many documents and publications are available in English (including the Labuan offshore Legislation).

 

Political & Economic History

 

In 1984 the administration of Labuan was taken over by the Federal Government of Malaysia which consists of thirteen states and two federal territories (ie Kuala Lumpur and Labuan). Malaysia has an unusual political system with power held in the hands of nine hereditary sultans, who elect a head of state every five years from among their number. Legislative power is exercised by a bicameral parliament comprising of a House of Representatives (Dewan Rakyat) and a Senate (Dewan Negara), Executive power is held by the Prime Minister who governs with the assistance of a ministerial cabinet. Appointments are for a five year term.

 

Malaysia is economically strong and considered politically stable. Under the auspice of LOFSA (the Labuan Offshore Financial Services Authority) the Malaysian government has invested heavily in improving the physical infrastructure of Labuan which is now completely modernised and boasts a state of the art telecommunications system including an Internet Gateway which provides an e-commerce platform. More than 50 of the world’s top banks have branches in Labuan.

 

Advantages of Labuan Companies:

  • All offshore business transactions attract no stamp duty and capital gains are not subject to any form of tax
  • Not subject to Malaysian exchange controls
  • Malaysia enjoys tariff reductions in the ASEAN Free Trade Area (AFTA), and has signed more than 60 Double Taxation Avoidance Treaties (“DTAs”)
  • Malaysia boats an English style legal system
  • Labuan IBFC offers a wide range of financial products and services (including both conventional and Islamic)
  • Corporate documents are written in English
  • There is no requirement to disclose to the authority the names of the beneficial owners of the Company
  • Company names can be in a foreign language

 

Features of Labuan Companies:

  • Speedy setup: A Labuan Company can be incorporated in as little as 3 days.
  • It may use “(L)” as part of its name. An offshore company may also have as part of its name the word “Berhad” or “Bhd” but must then add the word “(L)”.
  • There are no minimum share capital requirements. The share capital may be denominated in any currency except Malaysian Ringgit. Separate classes of shares may be created with differing rights to dividends or otherwise. A minimum of one shareholder is required to establish a company. Shareholder can be individuals or corporations. Shareholders need not be resident.
  • Companies require a minimum of one director.
  • Corporate Directors are permitted
  • Directors may be resident in any country
  • Only one shareholder minimum is required
  • A Local secretary is required (which OCI Provides)
  • Directors meetings can be held anywhere
  • The standard authorised capital is US$ 10,000; divided in to 10,000 shares of US$ 1. The minimum issued capital is one share, which may be fully or partly paid.
  • An annual return in the prescribed form made up to a date not earlier than 14 days before the date of lodgment is required to be lodged each year and not later than 30 days prior to the anniversary of the date of incorporation of the company.
  • Classes of Shares Permitted: Registered shares of par value, preference shares, redeemable shares and shares with no voting rights.
  • There is no exchange control in Malaysia. The Malaysian currency is the Ringgit (RM). Save for certain exceptions, offshore companies in Labuan are required to carry on business in a foreign currency.

 

Procedure to Incorporate

 

To incorporate an Offshore Company in Labuan you must submit to the Registry:

  • Memorandum and Articles of Association,
  • Consent form to act as a director,
  • Statutory Declaration of Compliance with the Companies Act
  • Certificate of Identity
  • Statutory declaration by persons before appointments as directors
  • The incorporation fee.

 

Company Name Options & Restrictions

 

Labuan Company names must include one of the following words, or an abbreviation thereof:
Corporation
Incorporated
Limited
Public Limited Company
Societe Anonyme
Sociedad Anonima
Aktiengesellschaft
Naamloze Vennootschap
Perseroan Terbat

 

Names resembling the name of an existing company or names that in the opinion of the Registrar suggest Royal or government patronage are not permitted. Names, which the Registrar considers undesirable, will be rejected. Certain names/words require consent or a license ie Bank, building society, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, university, municipal or their foreign language equivalents. Re Suffixes to Denote Limited Liability any of the following may be used: Limited, Incorporated, Corporation, Sociètè Anonyme, Sociedad Anonima or their relevant abbreviation. If the Malaysian word Berhad is used then it must be preceded by “(L)” to denote that the company is incorporated in Labuan.

 

Business Restrictions

 

A Labuan Offshore Company should only carry on business in, from or through Labuan. A Labuan Offshore Company may not:

 

(a)  Do business with a resident of Malaysia (except as permitted by the Offshore Banking Act 1990);

(b)  Carry on the business of Banking or Insurance or such similar business unless it is licensed so to do under the Offshore Banking Act 1990 or the Offshore Insurance Act 1990;

(c)   Do business in the Malaysian currency save for defraying its administrative and statutory costs;

(d)  Carry on the business of shipping or petroleum operations in Malaysia

(e)  Operate as a trust company.

 

Exceptions to carrying on business with residents of Malaysia:

 

A Labuan Offshore Company is not treated as carrying on business with residents of Malaysia if:

(i)                it makes or maintains deposits with a person carrying on business in Malaysia;

(ii)               it makes contact with professional advisers carrying on business in Malaysia;

(iii)            it prepares and maintains books and records in Malaysia;

(iv)            it acquires or holds any lease or property for operational purposes or accommodation of its employees;

(v)              it holds directors’ or members’ meetings within Malaysia;

(vi)            it holds shares, debt obligations, or other securities in a company incorporated under the Offshore Companies Act 1990 or in a domestic company, or holds shares, debts obligations or other securities for the purposes of a transaction entered in to in the ordinary course of a money-lending business.

 

Taxation

 

Labuan Offshore Trading Companies pay 3% tax on net audited profits or the sum of RM 20,000 (where no audit is required). Non-Trading companies are tax exempt.

 

The locality of profits from trading in goods and commodities is generally determined by the place where the contracts for purchase and sale is effected. “Effected” means more than where the contract is signed and includes the location of negotiation, conclusion and execution of the terms of the contracts.

 

If a Labuan Company earns commission by securing buyers for products or by securing suppliers of products required by customers, the activity which gives rise to the commission is the arrangement of the business to be transacted between the principals. The source of the income is the place where the activities of the commission agent are performed.

 

Double Taxation Agreements

 

To date Malaysia has signed 74 double taxation treaty agreements (DTAs), making its DTA network the most extensive in the region. Labuan companies can now make an irrevocable election to be taxed under the Malaysian Income Tax Act 1967 (ITA), thereby affording the Company access to all of Malaysia’s DTAs. A Labuan holding company which has a co-located office in Kuala Lumpur must make the election to be taxed under the ITA.

 

Malaysia’s DTA partners include: Albania, Argentina, Australia, Austria, Bahrain, Bangladesh, Belgium, Brunei, Canada, Chile, China, Croatia, Czech Republic, Denmark, Egypt, Fiji, Finland, France, Germany, Hungary, India, Indonesia, Iran, Ireland, Italy, Japan, Jordan, Kyrgyzstan, Kuwait, Kyrgyz, Laos, Lebanon, Luxembourg, Malta, Mauritius, Mongolia, Morocco, Myanmar, Namibia, Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, Philippines, Poland, Romania, Russia, San Marino, Saudi Arabia, Seychelles, Singapore, South Africa, South Korea, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Taiwan (Income Tax Exemption Order), Thailand, Turkey, UAE, UK, USA, Uzbekistan, Venezuela and Vietnam.

 

Financial Records

 

A set of accounting records must be kept in Labuan.

 

A trading company, which pays 3% of audited net profits, is required to appoint an auditor and file audited financial statements. However trading companies which elect to pay tax of RM 20,000 p.a. are not required to file financial statements. Such companies are exempt from appointing an auditor if they have not carried out licensed activities and the members of the company have resolved that no auditor be appointed.

 

There is a filing fee for “adoption of accounts” and if the accounts of the Labuan Company have been audited, and for the “lodgement of the said audited accounts”.

 

A non-trading Labuan Company is not required to appoint an auditor nor file audited financial statements.

 

OCI Labuan Company Formation Services

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your Labuan Offshore Company is the following:

 

Services:

 

  • Unlimited name availability inquiries
  • Advice from an experienced International Corporate Lawyer on how to structure your company
  • Preparation (overseen by a lawyer) of application to incorporate the company
  • Preparation (overseen by a lawyer) of the company’s memorandum of association
  • Preparation (overseen by a lawyer) of the company’s articles of association
  • Attending to filing incorporation request with the company registry
  • Attending to payment of government filing fees
  • One year’s Registered Agent service in the country of incorporation
  • One year’s Registered Office service in the country of incorporation
  • Mailing address in the country of incorporation
  • Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)
  • Unlimited free legal consultations for 12 months

 

Documents included in your Incorp pack:

 

  • Certificate of incorporation
  • 2 sealed/stamped copies of the company’s Memorandum of Association
  • 2 sealed/stamped copies of the company’s Articles of Association
  • Resolution appointing first director/s
  • Resolution appointing first shareholder/s
  • Up to 5 share certificates
  • Resolution to open a bank account
  • Resolution to rent an office
  • Resolution/s to engage a Phone, Internet & Website service provider
  • Resolution to hire a staff member/s
  • Resolution to appoint a company lawyer
  • Resolution to appoint a company accountant
  • Resolution appointing you as the company’s authorised representative in commercial negotiations
  • Resolution issuing a Power of Attorney in your favour
  • Agreement authorising you to represent the company in commercial negotiations
  • Power of attorney authorising you to sign documents on behalf of the company
  • Register of directors
  • Register of shareholders
  • Expression of wishes (ie an “Offshore” Will)
  • Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US 2,750

 

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 3,150

 

From 2nd year: $1,850 (+ Nominees as/if required)

 

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

 

Switzerland Companies

Centrally located at the Alpine crossroads of Western Europe, and renowned for its International Banking/Fund Management Industry, Switzerland, despite a relatively small population (circa 8 million) stands at or near the top of the peak in terms of Internationally focused Company Formation jurisdictions.

 

Boasting a stable, progressive economy Switzerland holds the 2nd highest rating in Europe (behind only Ireland) in the Index of Economic Freedom and the World Economic Forum’s Global Competitiveness Report currently ranks Switzerland’s economy as the second most competitive in the world.

 

With a pro-business regulatory environment, outstanding infrastructure and the ability to deliver one of the lowest Corporate Tax Rates in Europe (as little as 9%, potentially) it’s no surprise that many start-ups (especially since the beginning of the tech boom) have chosen to make Switzerland their Corporate Headquarters.

 

Swiss Company Features

Company Type: S.A. or S.A.R.L.

Time To form: Min 10 days

Paid up Capital: CHF (ie Swiss Francs) 50,000 for an S.A. and CHF 20,000 for an S.A.R.L.

Privacy: Switzerland offers a high level of confidentiality. For an S.A. the names of shareholders remain anonymous. S.A. Companies can have Bearer shares

Accounting: Swiss Companies must generate a set of accounts annually but there is no Audit requirement.

Taxation: Tax can be as little as 9% if the majority of turnover comes from outside Switzerland

Number of Directors: Minimum of 1 director is required (at least 1 director must be resident in Switzerland). Nominee Directors are permitted

Number of Shareholders: Minimum of 1 shareholder. Can be Corporate or natural person

 

 

Differences Between a Swiss S.A. and S.A.R.L. Company

S.A. (Public Limited liability Company)

S.A.R.L. (Company with Limited Liability)

Number of shareholders: 1 (Can be a natural person or a Corporation) 1 (Can be a natural person or a Corporation)
Company name Company name must end with “SA.” Company name must end with: SARL.
Minimum share capital 100,000 CHF with a minimum of 50% subscribed (50 000) 20 000 CHF must be fully subscribed. No maximum.
Contribution in kind towards share capital Is Possible Is Possible
Nominal value of shares A minimum of 1 cent. A minimum of 100 francs.
Local (ie Swiss Resident) director? Required Required
Accounting/Auditing Must keep accounts, but auditing is not compulsory. Must keep accounts, but auditing is not compulsory.
Liability of the shareholders. Limited to the share capital. Limited to the shares.
Privacy Shareholders names do NOT appear on the public record. The names of the members DO appear in the local commercial register.
Convertability Can be converted into a SARL company at any time. Can be converted into a SA company at any time.
Transfer of shares Simple cession. Signature of the share sale/purchase contract must be made before a notary.

 

Prices and Inclusions

 

Set up price for a Swiss company: $US5,500 (From 2nd year $3,750)

 

Set up price inclusions:

  • The Certificate of Incorporation issued by the local registrar.
  • Company secretarial maintenance.
  • The Memorandum and Articles of Association.
  • Registered Office in Switzerland
  • Registered Agent in Switzerland.
  • Share certificate(s).
  • Board resolution authorizing appointment of director and the issuance of of shares.
  • Unlimited free consultations with our In-House Lawyer for 12 months

 

Renewal fee inclusions: 

  • Registered office in Switzerland for one year
  • Registered agent in Switzerland for one year
  • Annual Governmental charges
  • Managing all company compliance requirements.
  • Unlimited free consultations with our In-House Lawyer for 12 months

 

Optional Services:

Swiss resident Nominee Director: $3,990

Power of attorney $165

Metal Company Seal: 165

Rubber Corporate Stamp: $75

Local telephone/fax number in Switzerland with answering service: $1,250

Notarisation and apostille of Corp docs: $165

 

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

 

 

 

Launching an ICO From Switzerland

As at the time of writing there are no laws or regulations in Switzerland aimed specifically at ICOs. Moreover, hitherto the Swiss Financial Services Regulator (“FINMA”) has been reluctant to share with service providers etc information about how they deal with inquiries regarding ICOs.

 

In February this year, however, FINMA published a practical guide in regards to ICOs in which it explains how it deals with such enquiries in this field and provides certain details on how FINMA applies Swiss financial market laws to ICOs.

 

Legal Classification of the Token to be issued

 

As outlined in the Practical Guide, FINMA discusses the treatment of three types of digital tokens which boast different functions, whilst at the same time acknowledging that mixed forms of Token are also possible (ie “hybrid” tokens).

 

Payment tokens (ie “pure” cryptocurrencies)

 

Payment Tokens (which are akin to pure cryptocurrencies) include Tokens which are accepted as a method of payment in particular for the purchase of goods or services. These tokens are invariably not linked to other functions or projects. “Cryptocurrencies give rise to no claims on their issuer“. These tokens are considered a digital means of payment or exchange.

 

Utility tokens

 

The second category of tokens, Utility Tokens, are tokens that provide access to a digital application or service by means of blockchain-based infrastructure. Such Tokens do not include any promise of performance or profit expectations.

 

Asset tokens

 

The third and final category of Tokens, Security Tokens, “represent assets such as participations in companies” and provide a right to income, dividends or interest. These Tokens in effect represent a claim against the issuer. “In terms of its economic function, the investment tokens are analogous to equities, bonds or derivatives“.

 

Anecdotally we have seen, that the delimitation set by FINMA between the different categories of tokens is not so obvious in practice. A Token will often have the characteristics of several kinds of Token (e.g. payment token and asset token or utility token and payment token).

 

Once the token has been classified, the Founders/Promoters of the ICO must determine which financial laws apply to his/her project and what license (if any) needs to be applied for authorizing the Token Issuing Company to issue and trade these tokens.

 

Determination of applicable laws

 

On this topic, the Practical Guide provides some guidance:

 

Payment tokens (“ie pure” cryptocurrencies)

 

FINMA is of the view that payment tokens do not represent securities, except in the case of a pre-sale of tokens. If however you intend to issue the Token in Switzerland such issuance must adhere to Swiss anti-money laundering (AML) requirements.

 

Utility tokens

 

Utility tokens are not considered to be securities provided (a) they only confer on the acquirer the right to access a digital service and (b) can already be used in this way at the time of issue.

 

Asset tokens

 

FINMA regards asset tokens as securities and has indicated that the legal and regulatory consequences of such a classification must be adhered to. (For example, if the token has the characteristics of a derivative, its sale may require a dealer’s authorization). Such a classification also invokes obligations under the Swiss Code of Obligations, eg the Promoter will need to have Lawyers draft a prospectus for the issuance of equities or bonds in the form of digital tokens.

 

Practical Tips

 

If you are considering launching your ICO from Switzerland, before you incorporate, it would be wise to send an enquiry to FINMA about the applicability of financial market regulation to your proposed ICO and the potential application of licensing requirements (including with your inquiry a White Paper containing all the required information per the Practical Guide).

 

Next up you’ll need to consider how to legally structure your ICO/Token issuing entity (e.g. via incorporation of a Company or Foundation, type of company, etc.) and how best to minimize taxes both in Switzeland and at home. For example, different tax rates may apply in Switzerland depending on which Swiss Canton you decide to call home.

 

Following receipt of FINMA’s response to your preliminary enquiry, you’ll need to prepare/draft:

 

(i)                the legal documentation necessary for the issuance of the tokens (ie including an application to FINMA for a license should same be required) and/or a prospectus

(ii)              the documents relating to the ICO itself, including the general terms and conditions governing the supply of the Token and the entitlements the Token offers.

 

In summary, to avoid regulatory challenges, would-be ICO Launchers are strongly advised to carry out a preliminary Swiss legal assessment as regards the token to be issued, and/or to submit an enquiry to FINMA about the applicability (or non-applicability) of Swiss financial market regulations/laws to ICOs and the likely applicability (or not) of licensing requirements.

 

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

 

 

 

ICOs – Do I Need A Special License?

At OCI we incorporate a LOT of ICOs/Token Offering Businesses every month.

 

By far the most common question we get asked is “Do I need to apply for a Special License For My ICO?”

 

In summary it comes down to this.:

(a)  If what you are offering is in effect a Security you will need to apply for a Special License in pretty much any jurisdiction you might be thinking of incorporating in.

(b)  If what you are offering would not be classified at law as a Security does the proposed jurisdiction classify a Utility token issuance as a Licensable Activity? If it does then, to incorporate in that particular country, you will need to also apply for the relevant license

 

Tokens

 

In an ICO the Issuing Entity (usually a Company) commonly issues a Token in return for a financial contribution by a third party.

 

Depending on their function, crypto tokens may be classified as Utility Tokens or Security tokens.

 

Security Tokens typically require Registration as a Security in the country of the offering entity before same can be offered for sale.

 

Utility tokens, (also known as user tokens or app coins), entitle future access to a company’s product or service. The defining characteristic of utility tokens is that they are not designed as investments; if properly structured, this feature can exempt utility tokens them from laws governing securities.

 

By creating utility tokens, a startup can sell “digital coupons” for the service it is developing, much as electronics retailers accept pre-orders for video games that might not be released for several months. (Filecoin, for instance, raised $257 million by selling tokens that will provide users with access to its decentralized cloud storage platform).

 

Utility tokens however present challengers to Regulators as regards their legal characterization. The nature of a utility token typically is to permit the holder to access a service provided by the issuer’s platform. This is commonly a pre-sale made by a start-up seeking capital to develop the promised service. While token-holder rights bear resemblances to, for example, licensees, franchisees, or club memberships, utility tokens may have other features that lend securities-like properties to them.

 

What is a Security?

 

Generally, the term “Security: is used to describe a financial instrument which contains a promise by the issuer, (which is usually a company), to pay the holder of the instrument a defined amount on or by a specified date (this date is when a debt security is said to “mature”), usually with interest.

 

In the United Kingdom, the term “security” applies only to equities, debentures, alternative debentures, government and public securities, warrants, certificates representing certain securities, units, stakeholder pension schemes, personal pension schemes, rights to or interests in investments, and anything that may be admitted to the Official List.

 

Some jurisdictions however have given the term Security a very broad definition For example in the USA a Security is defined as “ any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing“

 

The scope of the term “security” has been more extensively explored in the U.S. The most well known case on this point is a decision of the U.S. Supreme Court in SEC v. W.J. Howey Co. (328 U.S. 293 1946) (‘Howey’s case). Howey’s case established that an “investment contract”, which is one type of security as defined by the Securities Act of 1933, means “a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party”

 

If the Token you are offering clearly operates like equity or debt (via payments, voting rights, etc), then almost certainly your Token would be classified as  Security.

 

Under Hong Kong Law the concept of what is a Security, is in general consistent with best international practices that prohibit accessing public capital unless registration or authorisation requirements are complied with or a relevant exemption applies. The Securities and Futures Ordinance (‘SFO’) s definition of “security” provides little assistance in relation to tokens that do not clearly fall into pre-established categories, such as shares or debentures. In Hong Kong an  entitlement to participate in a Collective Investment Scheme (“CIS”) ” can also be considered a Security That said the definition of “collective investment scheme” (‘CIS’), is widely drafted and remains open to interpretation in its application.

 

Summary

 

In short if a crypto token derives its value from an external, tradable asset, it would be classified as a security token.

 

Specifically if a Token promises the holder the right to share in the profits of and or management of the issuing Company, or a relative thereof, almost certainly such an offering would be considered a Security and would need to be registered as such in the proposed country of incorporation.

 

If, however, what you are offering is but a Utility Token then in 90% of tax free or law tax jurisdictions (eg Hong Kong, Seychelles, Belize, Nevis, Panama, Dominica etc) you should not need to apply for any form of Special License.

 

That said certain jurisdictions have decided to specifically make Utility Token Offering ICOs a licensable activity. These jurisdictions currently include Gibraltar and Malta. Hence if you intend to incorporate in one of these jurisdictions (even if what you are offering is not a Security) you will need to apply for an ICO License.

 

If you are about to launch an ICO and are in any doubt about your licensing obligations/requirements you should seek legal advice in the proposed country of incorporation, prior to launch.

 

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 Get Around The New ESMA Forex Trading Rules – GO OFFSHORE!

On the 1st June 2018 the European Securities and Markets Authority (ESMA) announced radical changes to the ability of EU Forex Traders to access leveraged trading. The new changes which came into effect on 30 July 2018 include a cap on the amount of leverage that can be offered to retail traders, negative balance protection and a 50% margin close-out rule.

 

If you are a European forex trader the net effect of these changes is that you now have a greatly reduced ability to make profit from forex trading.

 

But there is a solution.

 

The Solution is to set up an Offshore Company and have that Company open a Brokerage account a/with a non-European Broker. This will afford you access to the best possible trading terms, particularly in terms of leverage (and can potentially deliver a tax planning opportunity, see below)

 

To summarise how it would work is:

 

  • You set up a zero tax International Business Company (“IBC”)
  • The IBC opens an account with a non EU Broker
  • You are appointed as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
  • Ideally the IBC should be seen to be managed/controlled/owned from Offshore (which can be achieved via the deployment of an Offshore based Nominee Director and Nominee Shareholder etc)
  • For all intents and purposes the IBC’s trading profits are generated in a nil tax environment ie tax free/offshore (ie provided the IBC is structured/administered properly)
  • When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
  • 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 you could also use an anonymous ATM or Debit/VISA card to withdraw your wages from an Auto Tele Machine (though technically, unless it’s a loan drawdown, such a receipt would be assessable income for tax purposes)
  • The majority of trading profits could be reinvested Offshore potentially tax free.  This will enable you to build your Capital base much faster thanks to the power of compounding

 

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

 

 

Scottish LPs (Scotland Limited Partnerships)

A Scotland LP is a privately-owned Limited Partnership wherein 2 or more persons or corporate entities are nominated as the Partners/Members of the LP. At least one of the Partners in the LP must be nominated as “General Partner (i.e. “Managing Partner”). The Partners/Members may be natural persons or corporate bodies from any country (ie there is no requirement to have a Scottish resident Partner).

 

Key Features:

 

  • Minimum two partners (Nominee partners can be provided)
  • Company House will hold in the public records only the names of the Members/Partners (which are commonly offshore entities).
  • Each Scottish LP must have a Registered office in Scotland (which service OCI can provide)
  • There is no requirement to keep accounts
  • There is no requirement to file a tax return with the Scottish/UK Revenue Service
  • There is no audit requirement
  • Shelf partnerships are available for purchase
  • Not perceived as a “Tax Haven” Entity but can achieve the same ends (ie a nil tax result, see below)
  • Particularly advantageous for those looking to do business in Europe
  • Low set up cost (can be capitalized with as little as GBP2!)
  • No requirement to file beneficial owners’ details
  • Nominee Partners can be deployed
  • Board Meetings can be held anywhere
  • VERY high political/economic stability
  • Affords access to UK Banks

 

Common Uses For Scottish LPs

 

Non-Resident Scotttish LPs (ie where the Partners are companies/persons based outside the European Community) are commonly used for:

  • the holding of investments/assets including real property, Mutual Fund Interests, IP etc
  • holding the shares of limited companies
  • international trading operations
  • consultancy and personal service companies

 

Taxation

 

A Scottish LP is not liable to declare income or pay tax in the UK where the members of the Scottish LP are based outside the UK and there is no business activity taking place inside the UK.

 

LPs are classified, for tax purposes as pass through entities. That is the Partnership is not liable to file a tax return or pay tax provided it distributes its income to the Partners. In accordance with general UK tax protocols, the income of the LP is treated as being the income of its Partners, and therefore the Partners agreed share of Partnership profits are only taxable in the Partners’ countries of residence (eg the jurisdiction of incorporation, in the case of corporate Members).

 

Where the Partners of a Scottish LP are themselves zero tax entities (eg 2 tax free International Business Companies or nil tax Offshore trusts or nil tax Private Foundations) profits generated from a Scottish LP can be banked free from tax.

 

Price and Inclusions

 

OCI (www.offshoreincorporate.com) can assist you to set up a Scottish LP.

 

Included in the all-inclusive set up price of $800 for a Scottish Limited Partnership are the following components:

 

Services:

 

  • Unlimited name availability inquiries
  • Advice from an experienced International Corporate Lawyer on how to structure your Limited Partnership
  • Preparation (overseen by a Lawyer) of application to register the Limited Partnership
  • Preparation (overseen by a Lawyer) of the Limited Partnership agreement
  • Preparation (overseen by a Lawyer) of the Statement of Particulars
  • Attending to filing the Limited Partnership registration request with the registry
  • Attending to payment of government filing fees
  • One year’s Registered Agent’s service in the country of registration
  • One year’s Registered Office service in the country of registration
  • Mailing address in the country of registration
  • Delivery of registration pack by international courier (ie DHL/Fedex/TNT etc)
  • Unlimited free legal consultations for 12 months

 

Documents included in the Set Up Pack:

 

  • Certificate of Incorporation
  • Partnership Agreement (drafted/tailored by our In House Lawyer)
  • First Minutes recording formation
  • Membership Certificates
  • Combined Company Register
  • Certificate of Incorporation (on Companies House card)
  • First Minutes recording formation
  • Membership Certificates
  • Combined Company Register
  • Resolution to open a bank account for the Partnership
  • Resolution to appoint a lawyer for the Partnership
  • Resolution to appoint an accountant for the Partnership

 

From 2nd year: $600

 

Includes:

  • Annual Government fee
  • Provision of Registered Office in Scotland
  • Provision of Registered Agent in Scotland
  • Mailing address in the country of registration
  • Unlimited free legal consultations for 12 months

 

Additional Services Available:

 

Provision of 2 (OCI Owned) Tax Free IBCs to act as Nominee Partners: $US800 per year

 

Assistance to open bank account: From $475

 

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