Company- Management | Offshore Companies International

Income Earning Offshore Asset Protection Structures

Given the economic upheaval caused by the Corona Virus (COVID 19) pandemic, we have been contacted by a number of clients of late looking to set up a (or continue a) business whilst at the same time setting in place a solid asset protection solution.

The ideal scenario for most would be to set in place a Combo structure ie a tax- free Offshore Company PLUS a Private Foundation.

How it would work is:

The Company would/own/operate your business and receive all income in the first instance.

The Foundation would own (ie hold all shares issued by) the Company.

As money is earned (a) the Company pays you a living wage and (b) left over profits/monies are diverted to the Foundation:- The Foundation would either hold those monies at bank or divert the monies into certain investments as you may prefer.

Anyone trying to sue you personally would not be able to touch any of this money, even if you’re named as a beneficiary of the Foundation (in most cases the client his/her spouse and children are named as Foundation beneficiaries).

Why is that so?

Unlike its English cousin the Trust (where the beneficiaries hold a legally recognizable “beneficial” interest in Trust Assets and in certain instances can compel the Trust to pay them distribution), in the case of a Private Foundation, the beneficiaries:

(a) at law have no legal or beneficial interest in assets owned by the Foundation; and

(b) are not entitled to receive a distribution from the Foundation unless or until such time as the Foundation Council actually resolves to pay the beneficiaries a distribution.

In simple terms (if a Private Foundation is the shareholder of your tax-free Offshore Company) you don’t own the Company or any assets owned by the Company or the Foundation.

The end result?

Any person that you owe money to cannot seek recovery from your Offshore Company (or the Foundation)!

You could even transfer ownership of other “at risk” assets to the Foundation comforted by the knowledge that in most cases the would be predator would have little, if any, ability to claw back the asset/s.

Why is that so?

Most Foundation jurisdictions:

(a) do not recognize the operation of foreign law/judgments (ie the predator/creditor, even if he/she has a judgment against you in the country where you or the asset are located, would have to start a separate legal action/suit in the country wherein the Foundation is registered); and

(b) place a time limit on the ability of a Creditor to sue the Foundation (in most jurisdictions any action seeking return of an asset must be commenced within 12 months of the asset being transferred to the Foundation).

The most popular Foundation jurisdictions include:

Seychelles: https://offshoreincorporate.com/seychelles-foundations/ &

Panama: https://offshoreincorporate.com/panama-tax-free-foundations/

If you wanted to make it even more difficult for the predatory creditor (and if your budget can stretch that far!), additionally, you could interpose an Offshore Trust between the Company and the Foundation. Trying to tap into assets held by such a structure would be the Litigation Lawyer’s equivalent of climbing Mount Everest! (Here is an example of such a structure: https://offshoreincorporate.com/how-to-create-the-ultimate-tax-effective-offshore-corp/).

In such a scenario Belize is usually the favoured Trust Jurisdiction because its law uniquely provides that once an asset is transferred to the (ie Belize) Trust the transfer can’t at any time be clawed back by a creditor.

(Most Trust jurisdictions say that a law suit seeking return of an asset by a creditor of the Trust Settlor/Creator can be brought against the Trust if commenced within 12 months of the asset being transferred to the Trust).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Use a Tax Free Offshore Company To Trade Futures & Options

Whenever there is a sudden downturn in the world economy (such as is occurring now thanks to the Corona virus) there is the potential to make a fortune on the Futures market.

If you’re a dedicated Futures Trader (or if you are looking to get in to the field) you’ll be pleased to know Futures and Options Trading are activities which lend themselves well to an Offshore Corporate Structuring Plan.

To summarise how it would work is:

You set up a zero tax International Business Company (“IBC”)
The IBC opens an account with a Broker
The Company is set up with a (nil tax jurisdiction based) “Nominee” director
You are appointed as the IBC’s authorised trader or Trading Manager (ie you are given the 100% authority to place the buy and sell orders on behalf of the company)
All legal contracts/agreements are signed, and all board meetings take place Offshore ie in the nil tax jurisdiction wherein the Nominee Director is based. The director ratifies all trades placed by you on a monthly basis.
For all intents and purposes the IBCs trading profits are generated by calls made ultimately by the Nominee Director in a nil tax environment tax free/offshore
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
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.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Set up a Tax Free Yacht Broker Business Offshore

Acting as a Yacht Broker is a line of business which lends itself well to an Offshore Corporate Structuring Plan.

In this model structure (ie as set out below) it’s assumed that you will be acting as a middleman between a buyer and seller and if the buyer and seller do business you get paid a commission ie typically a percentage of the sale/deal proceeds.

To summarise how it would work is:

You set up a zero tax Offshore Company eg an International Business Company (“IBC”) with a nil tax jurisdiction based Nominee Director and a Nominee Shareholder (or a Private Foundation/Shareholder ie if you live in a country which has a CFC law)
You are appointed as the IBC’s Authorised Representative
On behalf of the IBC you negotiate terms with the Seller and or Buyer to pay your IBC a Commission if/when the Buyer and Seller do business
The Broker agreement/contract is signed Offshore by the Nominee Director
The source of the income is the contract.
Because the contract was signed offshore in a nil tax environment there should be no tax payable on income generated by the contract (a) where the Company is incorporated and (b) where you live (assuming you structure and administer the Company in a certain way).
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 tax resident 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). More sizeable amounts could be accessed by way of loan or a 2nd Offshore Company could be formed to buy your onshore investments
If you don’t want the authorities to know how much money you are earning eg by way of wages you could convert your hard currency into Bitcoin and/ or you could use an anonymous ATM or Debit/VISA card to withdraw $ from an Auto Tele Machine (though technically that receipt would be assessable income for local tax purposes)

The majority of trading profits would be banked and or reinvested Offshore potentially tax free.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

For maximum speed and to minimise the chance of mistake we use tailor made software to produce Incorporation packs:

Company/Trust etc specifications are entered in a central database
All Data entries are crosschecked by a second person to minimise the chance of errors
Corporate documents are produced at the click of a button without the need for manual typing
A Manager quality checks all Corporate documents for accuracy before they are dispatched

How To Set Up a BVI Incubator Fund

In 2015 the progressive jurisdiction that is the BVI (British Virgin Islands) recognized there was a gap in the Fund Setup Market for a lightly regulated model of Fund.

Hence regulations were passed allowing for the set-up in the BVI of 2 new models of Mutual Fund ie Incubator Funds and Approved Funds.

Prior to 2015 the only option for a successful trader/prospective fund manager wanting to dip his or her toe into the Fund Management Market was to set up a (non- licensed) Closed End Fund ie a Fund wherein the Investor was/is required to lock in his funds for a fixed investment period.

This limitation often caused a promoter difficulty in fund raising as most investors would prefer a mechanism that would entitle them to withdraw their funds on demand if desired or needed.

The (relatively) new BVI Regulations enable Incubator and Approved Funds to be set up and launched on a fast track, low cost basis with limited regulatory oversight by the BVI Financial Services Commission (“the Commission”).

Fund requirements

An Incubator Fund has a minimum investment requirement of US$20,000, a cap on net assets of US$20M and can take in no more than of 20 investors. An Incubator Fund does not need to appoint an Administrator or a Custodian or an Investment Manager or an Auditor.

An Approved Fund has a net asset cap of US$100 Million and no minimum investment requirement but is limited to no more than 20 investors. An approved fund is required to appoint an Administrator but does not need to appoint a Custodian or an Investment Manager or an Auditor.

Application process

An application for approval as an Incubator Fund or an Approved Fund must be lodged with the Commission and be accompanied by:

the constitutional documents;
details of the investment strategy;
a prescribed form of investor warning; and
an application fee (US$1,500).

An Incubator Fund or Approved Fund can commence business 2 days from the date of receipt of a completed application by the Commission.

Duration and conversion of incubator fund

An Incubator Fund has a limited life span of two years which can be extended for up to 12 months. An Approved Fund has no such limits. An Incubator Fund can convert to an Approved Fund, a Private Fund or a Professional fund, or may be wound up at the end of its term. An Incubator Fund can convert to a Private Fund or a Professional Fund or to an Approved Fund by lodging the required/prescribed application with the Commission.

Ongoing obligations

Part of what keeps the set up and admin costs low is that service provider requirements are minimal:- Each fund is only required to appoint an Authorized Representative in the BVI and an Approved Fund is required to have an Administrator at all times. Pleasingly, there are no mandatory custody requirements and there is no requirement for the issuance of an Offering Document. If/where the fund decides to not issue an Offering Document, the required investor warnings can be set forth in a separate term sheet.

The key regulatory requirements for an Incubator Fund and Approved Fund are:

An annual fee of US$1,000 is payable to the Commission on or before 31 March of each year
Must have a minimum of two directors at all times, one of whom must be an individual
The Fund Entity must notify the Commission of any change to any of the information submitted to the Commission in the set-up application; (eg you’d need to advise of any conduct which has, or is likely to have, a material impact or significant regulatory impact, changes to directors, changes to ownership/promoter structure etc).
Prepare and file annual financial statements with the Commission (note there is no requirement for an independent audit)
Twice a year you must file a return with the Commission

OCI Service Etc fees

OCI can assist you to register an Incubator Fund in the BVI. Set up cost typically would be circa $US15,000 including:

Incorporation of the fund Company
Regulatory and registry fees to incorporate the Company
Making the application to the FSC for the Fund licence (note if the application becomes complicated additional charges will apply)
FSC application fee
Providing an Authorized Representative (1^st year)
Drafting/suppling CRS Policies and procedures document
Legal fees re drawing & settling the Company Memorandum/Articles of Association and the Offering Document

Annual costs from 2^nd year would be circa $4,850 including annual government license fees. (Some potential additional fees you will need to consider are whether or not you will need FATCA/CRS reporting and who will act as the MLRO. Basic annual fees post year one will be US$3,200, (which again includes Government fees).

(The above assumes that the authorized share capital figure, as stated in the Company’s articles of Association will be no greater than $50,000. If you require a higher amount of authorized share capital additional fees are payable to the BVI registry both at incorporation and yearly thereafter, on a sliding scale).

Documents etc Required

The following documents are required for the application:

Instruction Sheet
FSC application form
Notarized passport and proof of address for each director, shareholder and beneficial owner
Bank Reference for each director, shareholder and beneficial owner,
Professional reference for each director, shareholder and beneficial owner
Police Certificate for each director, shareholder and beneficial owner
Resume for each director
Form A application for the Directors (2 minimum)
Offer document ie if you have prepared your own, (We can also assist with drafting of same. We can draft a standard offering document for $US1,500).

The application process can take anywhere from 8 to 16 weeks depending on the complexity.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Set Up a Software Development Business Offshore

Offshore Companies are commonly used to own/operate Software Development and Computer Programming/Coding Businesses. In principle 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 favored)
The clients 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 client agreement/terms and conditions should provide (a) that the contract is not formed until the customers offer is accepted by the IBC and (b) that the source of the income is the contract
Acceptance would be provided by the Director signing the client service agreement or ratifying the Company’s entry into the service contact in question; In simple terms what that means is the situs of the Contract (ie the place where the contract, at law, is formed) is the director’s location ie a nil tax environment…
Hence the income – from which the contract is the source – has been/is derived, prima facie, in a zero tax jurisdiction
The client hires the IBC to do the coding/engineer the required software
All services would be, and would be seen to be, provided/delivered by the IBC, via the web or via email ie in a revenue neutral environment
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/clients 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
Often there is some kind of intellectual property (“IP”) created as part of, or underpinning, such a business (even if it’s just the website/design/logo). It may be advantageous to you, down the track, if ownership of the business and the IP were held by 2 different entities. What you can do there is set up a 2^nd IBC to own the IP. The first IBC (ie the Trading Company which gets paid by the Clients) pays license fees periodically to the 2^nd IBC which fees would be receipted tax free. This could be useful if you wanted to bring ownership of the web-business onshore or if you wanted to sell the business but keep a passive (potentially tax free) income stream
Ideally once you start to grow – 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:

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) 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 software development earnings you should be able to bank, and or invest, Offshore in a nil tax environment.

Similarly, if a project goes bad and a client tries to sue you the good news is your personal assets should not be at risk as the client 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 would be litigants. (Have you ever tried to sue/get money out of an “Offshore” Company? It’s the Litigation Lawyers 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.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Offshore Asset Protection – Products Reviewed

Often we are asked what Jurisdiction/Product offers the best Asset Protection Features?

The most popular solutions in this regard include the Seychelles Foundation, Belize Trust Cook Islands Trust and Nevis Multi form Foundation.

Here’s a summary of the features of each:

Seychelles Foundations

Once an asset is transferred to a Seychelles Private Interest Foundation (“PIF”) the Foundation is deemed to be both legal AND beneficial owner of that asset. The Foundation Founder and beneficiaries have no legal OR beneficial interest in that asset.

The application of foreign laws (including forced heirship provisions) is specifically excluded.

A transfer of assets to a Sey PIF can only be attacked if a creditor proves that the person transferring assets to the Foundation INTENDED to defraud the creditor – in terms of evidence that is a VERY tough onus of proof.

Such a claim can only be brought within 2 years after that its 100% statute barred.

Seychelles law specifically notes that it does not recognize the judgments of any foreign Courts

The Belize Trust

Generally speaking, when an asset is transferred to a Trust purely to defeat the claims of a creditor such a transfer can be set aside by court order as a “fraudulent conveyance”. Belize is one of the few countries, if not the only country, where immediate protection is available against proceedings for fraudulent conveyances.

There is no minimum period of time for which the Trust must be established before it cannot be attacked. Unlike trust legislations in other offshore jurisdictions – which simply reduce the period of limitation for initiating proceedings for fraudulent conveyances or transfers – the trust law of Belize has actually repealed the provisions against fraudulent conveyances in relation to a trust. Such protection is immediate and (while it can be set aside for duress, fraud, mistake, undue influence, misrepresentation or incapacity of the settlor), the transfer of property/assets to a Belize Trust cannot be set aside even if made for the avoidance of claims by spouses, heirs and creditors.

As provided for in Article 7(6) of the Belize Trusts Act, where a Trust is created under the laws of Belize, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect to – (a) the personal and proprietary consequences of marriage or the termination of marriage, (b) succession rights (whether testate or intestate) including the fixed shares of spouses or relatives, or (c) the claims of creditors in an insolvency.

Belize law says foreign judgments are not recognized.

Cook Islands Trust

In Cook Islands they have limited to the ability of a creditor to set aside a trust.

The only way the transfer of assets to a Cook Islands Trust can be set aside is:

Where a creditor proves that an international trust was settled:

(a) with the principal intent of defrauding a creditor, and

(b) the settlement rendered the Settlor insolvent or without property by which the creditor’s claim could have been satisfied;

There are also limited grounds to set aside the Trust. If a claimant proves (a) and (b) above the Trust is not void or voidable but, rather, the Trust is liable to satisfy the claim of the creditor out of property, which, but for the settlement, would have been available to the creditor.

An international trust and a disposition to a trust is not deemed to be fraudulent against a creditor of a Settlor:

- if the settlement or disposition takes place after the expiry of 2 years from the time the creditor’s cause of action arose; or

- the creditor fails to bring his action before the expiry of 1 year from the date of such settlement or disposition; or

- the settlement or disposition takes place before the creditor’s cause of action arose.

Nevis Foundations

Any claim must be brought within 12 months of the asset transfer.

Cannot be rendered voidable by reference to any foreign law.

Legal claims can only be brought in Nevis.

Claimant must prove “beyond all reasonable doubt” that the purpose of the transfer was to defeat a creditor = a VERY strong onus of proof.

The Foundation is only liable to the value of the property that should have been made available to the defrauded creditor.

The Foundation cannot be set aside if such a claim is proved – only damages are payable.

Downside: Nevis Foundation requires a minimum endowment of $US10,000 (which can be in assets or $).

Costs

To set up a Seychelles Foundation with OCI would cost $1,600 (+ $300 for a Nominee councilor + $400 for a Nominee Founder – it would be advisable to deploy both of these, for tax planning reasons). From 2^nd year $715 + a Nominee Councillor (if required).

To set up a Belize Trust would cost $2,500 and from 2^nd year $1,990.

To set up a Cook Islands Trust would cost $5,500 and from 2^nd year$3,990.

To set up a Nevis Foundation will cost $3,500 (+ $300 for a Nominee councilor + $400 for a Nominee Founder – it would be advisable to deploy both of these, for tax planning reasons). From 2^nd year $1.450 + a Nominee Councillor (if required).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Offshore Company Structures for American Forex Traders

Are you a US based Forex Trader and looking for better Trading Terms?

If so, then you might want to set up a Company Offshore to get you access to a wider range of Brokers abroad, such as are guaranteed to offer you better trading conditions than you could ever hope to get at home.

Since the GFC, American Brokers have been limited by regulation in terms of the range of trading terms that they can offer Forex Traders particularly in terms of leverage.

Hence more and more American based Forex Traders have begun to look abroad for better terms.

The challenge however is that most brokers won’t accept an individual natural person American as a client.

The smart Traders are beginning to realise that by setting up a Company Offshore one can get access to Offshore (non-American) Brokers most of whom offer better Trading Terms than their American counterparts

The devil, as always however, is in the detail.

Howso?

In most cases Offshore Brokers won’t accept an Offshore (ie non-American) Company as a client if:

The director of the Company is an American; or
The shareholder of the Company is an American; or
If (say where a nominee shareholder is deployed) the beneficial owner of the Company is an American

If you want to get access to the widest range of Brokers what you’ll want to do is set up an Offshore Company wherein the Director is not American and the shareholder is not an American and the beneficial owner of the Company is not an American.

To achieve that you will need to:

Set up an Offshore Company with a Nominee (ie non-American) Director;
Set up a Private Foundation to act as shareholder of the Company.

Why will you need a Foundation?

The Private Foundation is a creature of European Common Law. It is in essence Europe’s version of a Trust.

Like a trust a Foundation is a 3 headed creature:

(a) It is set up by one person called a Founder (a Trust is set up by a person called a Settlor)

(b) It is managed day to day by a Councillor (a Trust is managed day to day by a Trustee)

(c) A Foundation, just like a Trust, has beneficiaries – ie persons who are designed by law to benefit financially from the set-up of the Foundation and any assets it might own.

Unlike a Trust (which is more like a contract or an arrangement between the Settlor and Trustee) a Foundation has Corporate/Legal personality, that is, it can sue and be sued AND (here’s the key part) a Foundation is presumed under European Common law to be both the legal owner AND beneficial owner of any asset it holds;- If a Foundation owns, for example, a piece of real estate the legal AND beneficial owner of that real estate is the Foundation itself. (If a Trust owns a piece of real estate the registered owner of that piece of Property is the Trustee but the beneficial owner of that piece of property is the beneficiary/s of the Trust).

Whenever we open a Brokerage Account we have to tell the Broker the name of the Beneficial owner of the Company.

In most cases if the beneficial owner of the Company applying for a Brokerage Account is an American the Broker will refuse to open the account.

But if the beneficial owner of the Company is a Foundation (that is, if the shareholder of the Company is a Private Foundation) the Broker should open the account.

One jurisdiction (ie Seychelles) has actually taken this aspect of European common law and codified it ie put it into legislation. In section 71 of the Seychelles Foundations Act, it actually provides that the legal and beneficial owner of any asset of the Foundation is the Foundation itself. Hence most clients in your position usually choose to set up a Seychelles Foundation…

Such a Corporate Structure (if set up and administered a certain way) can also enable you to potentially defer paying tax at home on your Trading Profits.

Local laws can have a unique impact. Hence it’s always wise to seek local legal/financial advice before committing to set up an Offshore Corporate structure.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Use a Tax Free Offshore Company To Invest in Real Estate

The advent of the global village has broadened the scope of potential investment activities considerably.

These days it’s not uncommon for an investment portfolio to include multiple pieces of international real property (ie Real Estate).

Investing in Offshore Real Estate is an activity that lends itself well to an Offshore Corporate Structuring Plan.

How it typically works is:

(a) You incorporate a tax-free Offshore Company (“OC”)

(b) You structure the Company in such a way as to ensure that the Company is seen to be managed and controlled from Offshore; This can/will be achieved by via deployment of a tax haven based Nominee Director (which is a service that OCI can/will provide).

(d) You advance funds to your OC

(e) The OC then purchases the Property/Real Estate Investment. Any purchase contract is concluded/signed “Offshore” by the Nominee Director

(f) The piece of Property/Real Estate is held by your OC for some time, commonly for the long haul. Eventually, you may decide to sell the investment having (hopefully) made a substantial capital gain. Sale proceeds in this instance would be paid into your OC’s tax free bank account

(g) Depending on where you buy, Capital Gains Tax (“CGT”) may be payable on any Capital Gain realized upon sale. (Where CGT applies) CGT may be payable by the/an investor to the taxman of the country wherein the investor is domiciled. If you are smart you will have set up/domiciled your Offshore Company in a jurisdiction that does not levy Capital Gains Tax

(h) Usually however CGT is payable in/to the country in which the real estate is located. Whilst CGT can sometimes be as much as 25% of nett gain a lot of countries (eg the UK) offer CGT concessions to non-locals to foster foreign investment

(i) CGT payable (and tax that might otherwise be payable on property rents) might be substantially lessened (and access to the local property market enhanced) if you were to set up a local Company to own the real estate. In this scenario the Property would be owned by a/the local Company but the local Company would be owned by a nil tax Offshore Company. The Offshore Company would advance funds to the local Company for the purchase and a mortgage over the real estate bought could be afforded to the Offshore Company.

(j) If you were to pay taxes as a local on the nett rental profits, and or on Capital Gain realized, tax could potentially be 30% plus. But where a local Company is owned by an Offshore Company and the nett profits are distributed as dividends or interest payments then WHT ie Withholding Tax (ie instead of Corporate Tax or Personal Income Tax) would be applied.

(k) Whilst WHT is typically around 20-30% this rate can often be lessened to as little as 5-10% by interposing a low tax Holding Company (incorporated in a country which has a favorable DTA ie Double Taxation Avoidance Treaty with the country wherein your real estate is located) between the local Company and the ultimate owner ie your nil tax Offshore Company (“OC”). In this scenario the local Company that owns or owned the Real Estate pays the nett profits (ie after deduction of the say 5-10% WHT) to the Offshore Holding Company.

(l) The Holding Company (which would be set up in a country that does not levy WHT on outgoing dividends) would then pay all of its profits as dividends to its owner ie your nil tax Offshore Company (“OC”). The nett result? The Holding Company pays no tax. And your OC pays no tax. That is you’ve received potentially 90-95% of your rental profits and Capital Gains tax free (ie you should only have paid max 5-10% tax on profits made on your Offshore Real Estate purchase).

Provided (i) your OC is seen to be managed and controlled from offshore (which can be achieved via deployment of a nil tax jurisdiction based “Nominee” director) & provided (ii) you are not, at law, the beneficial owner of the Company (which can be achieved by setting up a Private Foundation to own/hold the shares of your OC) returns paid to your OC can be banked and/or reinvested Offshore potentially free from tax (ie without you needing to declare/pay tax on this income at home)

Local laws can have an Impact. Hence you should seek local legal/financial advice before committing to set up an Offshore Company for such purposes.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Use a Tax Free Offshore Company To Invest in Real Estate

The advent of the global village has broadened the scope of potential investment activities considerably.

These days it’s not uncommon for an investment portfolio to include multiple pieces of international real property (ie Real Estate).

Investing in Offshore Real Estate is an activity that lends itself well to an Offshore Corporate Structuring Plan.

How it typically works is:

(a) You incorporate a tax-free Offshore Company (“OC”)

(d) You advance funds to your OC

(e) The OC then purchases the Property/Real Estate Investment. Any purchase contract is concluded/signed “Offshore” by the Nominee director

(i) CGT payable (and tax that might otherwise be payable on property rents) might be substantially lessened (and access to the market enhanced) if you were to set up a local Company to own the real estate. In this scenario the Property would be owned by a/the local Company but the local Company would be owned by a nil tax Offshore Company. The Offshore Company would advance funds to the local Company for the purchase and a mortgage over the real estate bought could be afforded to the Offshore Company.

(j) If you were to pay taxes as a local on the nett rental profits and or on Capital Gain realized tax could potentially be 30% plus. But where a local Company is owned by an Offshore Company and the nett profits are distributed as dividends or interest payments then WHT ie Withholding Tax (ie instead of Corporate Tax or Personal Income Tax) would be applied.

(l) The Holding Company (which would be set up in a country that does not levy WHT on outgoing dividends) would then pay all of its profits as dividends to its owner ie your nil tax Offshore Company (“OC”). The nett result? The Holding Company pays no tax. And your OC pays no tax. That is you’ve received potentially 90-95% of your rental profits and Capital Gain/s tax free (ie you should only have paid max 5-10% tax on profits made on your Offshore Real Estate purchase).

Provided (i) your OC is seen to be managed and controlled from Offshore (which can be achieved via deployment of a nil tax jurisdiction based “Nominee” director) & provided (ii) you are not, at law, the beneficial owner of the Company (which can be achieved by setting up a Private Foundation to own/hold the shares of your OC) returns paid to your OC can be banked and/or reinvested Offshore potentially free from tax (ie without you needing to declare/pay tax on this income at home).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

or maximum speed and to minimise the chance of mistake we use tailor made software to produce Incorporation packs:

Company/Trust etc specifications are entered in a central database
All Data entries are crosschecked by a second person to minimise the chance of errors
Corporate documents are produced at the click of a button without the need for manual typing
A Manager quality checks all Corporate documents for accuracy before they are dispatched

Why Retain or Keep a Foundation?

Are you wondering whether you really need to keep/retain a Private Interest Foundation (“PIF”) as part of your Corporate structure?

In terms of why have/keep your Foundation you may recall a PIF serves two purposes:

(a) It gets you around Controlled Foreign Corporation (“CFC”) laws (most countries have CFC laws)

(b) In the event of a law suit or tax investigation or regulatory inquiry, if you have a valid Foundation in place to own/hold the shares of your Company, you can swear under oath “I am not the legal owner or beneficial owner of this Company”.

Retaining a Foundation to own your Offshore Company will do two things in effect:

It should enable you to avoid having to report/pay tax on any income earned by the Foundation and any assets/Companies it owns, (ie assuming you are not the Councillor of the foundation and assuming the Company is seen to be managed and controlled from Offshore)
In the event of a tax evasion investigation it gives you wriggle room. That is, it (ie having a valid PIF in place to hold the shares of/own your Offshore Company) gives you the chance to argue I’m not liable to report any income earned by the Foundation (or any Company it owns). Without a Foundation in place (ie in the event of a tax investigation) if you have an Offshore Company – and you haven’t declared that Company’s income where you live – you will almost certainly be found guilty of tax evasion and sent to jail… (call it a get out of jail free card in the game of life, if you like that’s what a Foundation is or should be, bottom line)

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com