Company- Management | Offshore Companies International

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of limitation for initiating proceedings for fraudulent conveyances or transfers – the trust law of Belize has actually repealed the provisions against fraudulent conveyances in relation to a trust.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

Mauritius Tax Free Authorised Companies

Mauritius is a group of lush tropical islands in the south western Indian Ocean and is located northeast of Madagascar approximately 1,000 miles southwest of Seychelles. A former French and British colony, Mauritius offers:

A British system of law and parliament
Political/economic stability
A well-developed Financial Services Sector; and
A well-educated productive bi-lingual French/English speaking workforce

Since gaining independence from Britain in 1968 the Mauritian economy has grown steadily from one based in agriculture to a more diversified economy with Tourism, Financial Services and Agriculture (primarily sugar cane) as its 3 economic pillars. This has seen a resulting rise in standard of living from low to middle income delivering levels of economic and political stability which are the envy of the region.

Whilst better known as a Banking Centre (Mauritius boasts at least 3 world standard “Offshore” Banks) Mauritius offers two forms of nil tax Offshore Company ie the GBC1 ( a domestic designed to do business or hold shares in companies based in DTA Treaty partner countries) and the AC (Authorised Company).

Mauritius ACs ie Authorised Companies – General

An Authorised Company is governed by the Companies Act 2001 and The Financial Services Act 2007.

Permissible activities for an Authorised Company

This flexible business entity can carry out any lawful business activity except the following activities which are set out in the Fourth Schedule to the Financial Services Act 2007:

Banking
Financial services;
Carrying out the business of holding or managing or otherwise dealing with a collective investment fund or scheme as a professional functionary;
Providing of registered office facilities, nominee services, directorship services, secretarial services or other services for corporations;
Providing trusteeship services by way of business; and
Any other activities that the FSC may determine as being detrimental to the good repute of Mauritius as a centre for financial services or contrary to public interest.

Eligibility criteria to apply for Authorised Company status

An applicant for Authorised Company should meet the following conditions:

The majority of shares or voting rights or the legal or beneficial interest in the company, are held or controlled, as the case may be, by a person(s) who is/are not a citizen(s) of Mauritius;
The activity(ies) of the Company is/are being conducted principally outside Mauritius or with a category of persons as may be specified in FSC Rules; and
The company has its place of effective management outside Mauritius.

Authorised Company (Non-resident entity – Tax Exempted) – Key Features

General

Type of Entity: AC

Governed by: Companies Act 2001, Financial Services Act, 2007

Regulated Body: Registrar of Companies, Financial Services Commission

Type of Law: Hybrid

Shelf Company availability: No

Corporate Income tax: Non Resident for tax purposes

Double Taxation Treaty Access: No

Incorporation Time: One week

Share Capital or Equivalent

Standard Currency: USD

Permitted Currencies: Any except Mauritian Rupees

Minimum Paid Up Capital: 1 share

Bearer Shares allowed: No

No par value shares allowed: Yes

Directors

Minimum number: 1 (one)

Local required: No

Publicly accessible records: No

Location of meetings: Outside of Mauritius

Corporate directors Allowed: Yes

Shareholders

Minimum number: 1 (one)

Local required: No

Publicly accessible records: No

Location of meetings: Outside of Mauritius

Corporate Shares Allowed: Yes

Accounts & Taxation

Requirement to prepare & file Financial Summary with FSC: Yes

Audit requirements: No

Requirement to prepare/file Annual Tax Return with the Mauritius Revenue Authority: Yes

Publicly accessible accounts No

Other

Re-domiciliation permitted: Yes

Company secretary required: Optional

OCI Mauritius AC Company Packages

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 Mauritius AC 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 2,100

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 2,500

From 2^nd year $1,990 (+ Nominees as/if needed).

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 Alternative Investments

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 exposure to left of field “alternative” investments.

Investments that come under this category include long hold capital focused assets such as venture capital, private equity, hedge funds, real estate investment trusts, commodities, precious metals, rare coins, fine wine/whisky, artworks, antique furniture, aged/quality name brand musical instruments (eg guitars, violins etc), vintage cars and etc. (Prime/unique real estate could also form part of such a portfolio)

Investing in alternative investments is an activity that lends itself well to an Offshore Corporate Structuring plan.

How it works is:

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

(d) You advance funds to your OC

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

(f) The asset is held by your OC for some time, commonly for the long haul. Eventually one day you may decide to sell the investment having (hopefully) made a substantial capital gain. Sale proceeds are paid into your OC’s tax free bank account

(g) Capital Gains tax is typically paid 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) Provided (a) 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 (b) 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)

Note if you need to draw on these returns at home there are at least 6 different ways to (discreetly) access money banked abroad by your Offshore Company.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Avoid Being Listed as the Beneficial Owner of an Offshore Company

We are often asked Can you set up an Offshore Company for me without my name being listed in any official record as beneficial owner of the Company?

The short answer is this is possible. And the solution is somewhat left field. Let us explain…

Typically, clients who are privacy focused like to deploy a Nominee Director and Nominee Shareholder. But the downside of that is, even if you have a nominee shareholder in place, you would still be classified at law as the underlying beneficial owner (“UBO”) of the Company. The solution is to set up a Private Foundation to act as the shareholder of your tax free Offshore Company.

Why?

The Private Foundation is basically Europe’s version of a Trust (Foundations began in Liechtenstein around about the 1600s) save for one big difference (see below). A Trust is more like a contract between 2 parties ie the person who set up the Trust, called the Settlor, and the person set up to manage it, ie the Trustee (The Trustee manages Trust property for the benefit of the Trust’s beneficiaries). A Trust is NOT a separate legal entity. For example if a Trust buys a piece of real estate on the Title Deed the name of the proprietor says XYZ Trustees Ltd as Trustee for the ABC Family Trust. In other words the legal owner of the property is the Trustee. But the beneficial owner/s of the property is/are the beneficiary/s of the Trust.

A Foundation is similar to a Trust ie it’s a 3 headed creature – its set up by a person called a Founder (like a Settlor in the case of a Trust), is managed day to by a person called a Councillor (which is more like a Company Director than a Trustee) and, like a Trust, it has beneficiaries ie persons who are ultimately designed to benefit from the existence of the Foundation.

BUT, and here’s the key….

A Foundation (unlike a trust) is a separate legal entity ie it can sue and be sued. AND, at law, a Foundation is presumed to be both the legal AND beneficial owner of any asset it holds!

One jurisdiction has even taken this a step further ie Seychelles which has actually codified this aspect of European Common Law ie written it into legislation – in Section 71 of the Seychelles Foundations Act (refer pages 48 + 49 of the Act which can be downloaded via this link: https://seylii.org/sc/legislation/act/32-2) it actually says that the legal and beneficial owner of any asset held by a Seychelles Foundation IS THE FOUNDATION ITSELF.

The end result?

If you set up a Seychelles Foundation to own the shares of your Offshore Company or IBC if anyone (eg a bank or revenue authority or regulator) ever asks who is the beneficial owner of this Company, you can legally say it’s the shareholder, because the shareholder is a Seychelles Foundation and Section 71 of the Seychelles Foundations Act which you’ll find enclosed (ie DO email them a copy of the legislation) provides that the legal and beneficial owner of any asset held by a Seychelles Foundation IS THE FOUNDATION ITSELF.

If you wanted to be extra careful/private you could utilize the Discretionary nature of a Foundation (ie beneficiaries can be changed at any time) to make the initial beneficiary of the Foundation a tax free International Charity (eg UNICEF, The International red Cross, Oxfam or?) or you could install a (nil tax jurisdiction resident) “nominee” beneficiary to act as the initial beneficiary (which is a service that some Corporate Service Providers, including OCI, can provide).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

IBCs – How To Get Around New EU Economic Substance Requirement

Following on from the OECD’s BEPS Action plan, in July 2018 the EU’s Code of Conduct Group (Business Taxation) decided that certain Companies/Legal Entities registered in tax havens would, moving forward, be required to show local substance. In short, the tax havens in question (eg the BVI, Cayman Islands, Bermuda, Guernsey, Jersey, the Isle of Man, Bermuda, Vanuatu etc) were threatened with blacklisting by the EU if they failed to pass laws forcing their International Business Companies etc to show economic substance on the ground in the jurisdiction (eg a local/stand-alone office and local staff).

The jurisdictions affected moved promptly to pass laws requiring such Companies to show substance, in particular with respect to the following business types:

Banking
Insurance
Shipping
Regulated fund management
Finance/leasing
Distribution and service centre
Headquarters
Intellectual property
Holding company activities

The argument for requiring businesses such as banking and insurance etc to have a local presence is hard to counter but of far greater concern is the requirement for Holding Companies to show presence on the ground. Given its passive nature, if a Company is just to set up to hold a parcel of shares for example why would it need to have a stand alone office (or staff for that matter)? It is self evidently an absurd requirement.

The good news is that for Holding Companies at least the requirement is easy to get around.

How so?

Across the board per the model legislation (eg in the BVI) to fit the definition of a Holding Company the Company in question must just hold shares. If it holds any other asset it doesn’t meet the definition of a “Holding” Company.

Any other asset could (would) include a bank account.

So, if you have a Holding Company in any of the effected jurisdictions – and you want to get around this ridiculous new EU requirement – (if you haven’t done so yet) we’d suggest you take steps NOW to open a bank account for your Company!

And if your current Offshore Company Service Provider (“CSP”) doesn’t believe you when you tell him/her that you shouldn’t be required to set up an office or hire staff refer him/her to this article and tell him/her to read the fine print of the legislation! (and or sack your CSP and change to a Provider who actually knows the fine print eg OCI).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Where To Incorporate a Crypto Business With No License?

We are often asked, Where can I set up a Crypto business (eg a Crypto currency Exchange) without a license?

As at the date of writing (ie 24 November 2019), the following nil tax jurisdictions do not license such activities currently:

Seychelles
Belize
Nevis
Panama
Hong Kong
Cayman Islands
Dominica
Hong Kong

To clarify the position last week we wrote to Lawyers we know in 11 different jurisdictions and asked this question: “We have a Japan based client who wants to incorporate a new business namely a Cryptocurrency Exchange business where they buy Cryptocurrencies and sell Cryptocurrency (ie they will exchange one form of Cryptocurrency for another and charge a commission or margin. What special license/s if any will the client need to apply for in your jurisdiction?”

Here are the answers we received, verbatim:

Estonia

“First, regarding your question: we recommend to order a service for preliminary legal analysis for specific cases for full assurance but from the first view I would say that the company would also need a Crypto license.

The crypto licenses for which we can apply are:

· providers of a service of exchanging a virtual currency against a fiat currency
· providers of a virtual currency wallet service”

Hong Kong

“Cryptocurrency exchange is not yet officially regulated in Hong Kong but presumably they will need to have their own operating office, staff, compliance officer and follow the Anti-Money Laundering rules as a minimum. However, they are not likely to open an account in HK for its operation.

Alternatively, the client can consider setting up a company in Malaysia Labuan where they can apply for a money operator license that include Crypto currency in the license like fiat currency.”

Seychelles

“Agreed that it is not a prohibited business and will thus depend on DD issues.”

Panama

“Presently there are no regulations or licenses in Panama for Crypto business.”

UAE

“In UAE all financial and non financial licenses are regulated in DFIC , FSA and ADGM authorities.

Currently we are working on details clarification with the authorities and we will revert you ASAP. “

Dominica

“Cryptocurrency exchange is not regulated by the IBC Act 1996 of Dominica, and as amended thereafter. It remains a grey area, just as in the majority of jurisdictions. Thus we confirm that this type of activity for an IBC is not restricted. Legal opinion can be available upon request.”

Nevis

“At this time we do not have any cryptocurrency legislation.

I suppose the better option is number 1. The entity can be formed and the Articles allows the company to do any legal business. To ensure nil tax in Nevis, it would be better not to operate the business activities in Nevis, in addition to the fact that cryptocurrency activities are not regulated in Nevis (it would be hard to make a claim if monies are lost).”

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