Category Archives: Company- Management

Do you trade Cryptocurrencies?

If so, are you experiencing difficulties in transferring funds, being your Cryptocurrency Trading profits, (ie cryptocurrencies converted, via an Exchange, into hard currency) back to your home country?

The solution is to:

1. Incorporate an Offshore (eg tax free) Company. Ideally this Company would be characterized as an IT or etc Services Company (eg you could call it International Coding Services Ltd)
2. Open up a Bitcoin/Cryptocurrency wallet in the name of the Company
3. Open up a Cryptocurrency Exchange Account in the name of the Company
4. Transfer all Cryptocurrencies you hold in your name presently to the Company’s Bitcoin/Cryptocurrency wallet
5.  All future trades moving forward should be placed by and in the name of the Company
6. Open up a Corporate Account for the Company Offshore
7. As you generate Trading profits take the Company’s Cryptocurrency to an Exchange and have it converted into hard currency
8. Transfer hard currency held at the Exchange from your Company’s Exchange account to the Company’s Corporate Bank Account
9. You should be appointed as Consultant of/to the Offshore Company
10. Periodically (eg monthly or quarterly or yearly, whenever you feel is appropriate) you would invoice the Company (and your invoice would be stated as being payable in hard currency eg $USD)
11. The Company would transfer hard currency to your personal account at home upon receipt of the invoice

The end result? Money is banked at home without your home country bankers knowing that the source of the money is in fact Cryptocurrency Trading/Speculation.

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

With the boom in growth and value of Cryptocurrencies around the world doubtless demand for Cryptocurrency exchanges is going to increase.

For the uninitiated a Bitcoin or Cryptocurrency Exchange is an Online market place where you can buy and sell cryptocurrencies and even pay for one type of Cryptocurrency using another form of Cryptocurrency.

Such a business lends itself well to an “Offshore” Corporate Structuring Plan. In principle here’s how it can/will work:

1. A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated to own/operate the Exchange business
2. A website is created and tailor made software developed – the IBC (or a subsidiary) will be the owner of this website and the software and all the hardware required to run it
3. The IBC owns/operates the business (eg ownership of the web-domain and the website/artworks or trademark/s or any sole distributor rights are held by or transferred to the IBC)
4. The Company would be seen to be managed/controlled from Offshore (ie nil tax jurisdiction) – this would entail the deployment of a nil tax jurisdiction based “Nominee” director
5. An Offshore account (which received payments via a merchant account) is set up in a nil tax banking centre
6. Ideally the server is located in a country which does not tax business on the basis of server location (eg Singapore)
7. Customers contracts with and agreed to pay the IBC a commission on all sales concluded as a consequence of buyer/seller introduction enabled by the site.
8. The website/terms conditions would be worded in such a way as to provide that the service contract with the customer is to be concluded upon acceptance of the Customers offer by the IBC which shall occurr in the (nil tax) jurisdiction from which the IBC is managed/controlled
9. All such monies are banked free of tax in the first instance
10. You or your local company would be contracted by the IBC to manage sales/delivery of product/website maintenance/whatever.
11. 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 expense against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income.
12. Often there is some kind of intellectual property (“IP”) created or behind the website based business (even if it’s just the website/design). 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) pays license fees periodically to the 2^nd IBC which fees wold be receipted tax free. This could be advantageous 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
13. Ideally once you start to grow you and to add substance you would be wise to set up your MD/Board and or a sales team onshore to take orders and receive income in a low tax onshore environment (eh Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google model)

Management, Control & Beneficial Ownership

To minimise the chances of the IBC being taxed onshore ideally the IBC should be (and be seen to be) managed and controlled from offshore. How this can be achieved is including a Nominee Director etc as part of the Corporate structure. See this page for details of how that can work:

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/

Additionally if you/the owners of the IBC live in a country which has CFC laws (see attached which explains what CFC laws are) and/or if you don’t want your local tax authorities to become aware of your Offshore Company’s Bank Account (and, incidentally, your position as “beneficial owner” of the Company) you’d be wise to include a Foundation as part of the Corporate structure.

Decentralized or a Centralized Exchange?

In crypto, a Centralized Exchange (“CEX”) is an online trading platform that allows people connected to the internet to buy, sell, and swap crypto assets. It acts as an intermediary ie like a Bank in that it accepts and holds Client Funds (typically in either Fiat or Crytocurrency format) pre exchange. Unlike a Decentralized Exchange (“DEX”) a CEX  ie actually takes custody of a buyer and or sellers funds pre exchange (and then charges a commission for moving currency form the buyer to the seller or vice versa.

These days most CEXs require new clients to provide Know-your-Customer/Anti-Money Laundering (KYC/AML) docs (ie Proof of ID and address) before agreeing to open an account for a potential customer/trader.

How it works is aCEX matches buyers and sellers by collecting their orders in an “order book.” The exchange acts as a trusted intermediary between the buyers and sellers. Users rely on the exchange for the entire transaction process, trusting that the exchange won’t use their privileged place of knowledge to its advantage. The exchange also acts as a custodian for any cash or crypto held in user accounts, hopefully providing a safe place for users to store their funds. This has unfortunately not been true for many exchanges in the past

What’s the difference between a CEX and a DEX?

CEXs and DEXs are both platforms that help buyers and sellers trade. While a CEX is operated by a single entity, a DEX is run permissionlessly through smart contracts on a blockchain. An entity or project may help set up and maintain a DEX, but it can run itself as long as people provide liquidity. Unlike CEXs, to use a DEX only requires a crypto wallet and some cryptoassets. Due to its decentralized nature, there’s typically minimal onboarding requirements.

CEXs can offer customer support and a more user-friendly experience; however, they are susceptible to attack, take higher transaction fees from users and their solvency is often opaque which leads to the last and most important weakness, they require users to relinquish custody of their funds. If the Exchange goes bust (as can happen with a run on a Bank) the clients/depositors can lose their money (as happened with one of the world’s top 5 Centralized Exchanges ie FTX in 2022)

Given the Custodial character of a CEX in 99% of jurisdictions you’ll need to apply for some form of special License when incorporating your Offshore Company.

There are a number of Licenses you could potentially apply for “Offshore” that would enable you to run a Licensed Cryptocurrency Exchange including:

1. A Gibraltar DLT License
2. An Estonian Cryptocurrency Exchange (and/or Crypto Wallet Provider) License
3. A Malta Crypto business license
4. A Mauritius VASP License
5. An Isle of Man ICO License
6. A Swiss ICO license
7. A Lithuanian Cryptocurrency Exchange/Wallet Provider License
8. A Caymans VASP License
9. A BVI VASP License
10. A UAE Crypto business license
11. A Vanuatu Financial License (Class D)

The cost to incorporate and apply for a License for businesses of the kind described above typically ranges from $U15,000 00 to circa $50,00 depending largely on which jurisdiction you choose.

The question of where to set up a Licensed Exchange can be quite a difficult one to answer. OCI can guide you in your choice of Jurisdiction/License. We have a widely experienced Lawyer in house who (for the past 7 years) specializes in assisting Blockchain related startups. If you’d like a free introductory consultation with our In House Lawyer please Contact us:

info@offshorecompaniesinternationalcompanies.com

ocil@protonmail.com

DEX Legal structures – Overview

Unlike a Centralized Cryptocurrency Exchange (“CEX”) a Decentralized Cryptocurrency Exchange (“DEX”) typically does not provide any custodial facility, ie it simply provides a platform where people can meet and trade, sell or swap Cryptocurrency peer to peer. Given the DEX model of exchange never holds customer funds this makes it difficult for law makers to overlay traditional regulatory oversight. Generally speaking where an entity is holding 3^rd party funds in a custodial relationship or assisting 3^rd parties to move or invest funds this is a Licenseable Activity.

That said a lot of the jurisdictions whereat we used to incorporate DEXs have decided that such an enterprise is either a prohibited activity or they require the enterprise to apply for some form of License.

Who Controls a DEX?

Next up you might want to check out a key Organogram entitled “Typical Crypto Exchange Legal Structures DIAGRAM Current” (which can be accessed via this Link: https://www.dropbox.com/scl/fi/v1b7sdfr9oa36p2ungmsm/Typical-Crypto-Exchange-Legal-Structure-DIAGRAM-Current.jpg?rlkey=10yzn0kir068hb6cxaow794gx&st=513xwak8&dl=0 )

In the case of a DEX, the Exchange company Platform provider can’t access the platform user’s assets. Nor can the owners. The token swap protocols of the DEX are, in most cases, ownerless and non-custodial. As such the DEX platform provider (general negligence principles aside) owes no Fiduciary duty to the Users. This is why the typical regulations encapsulating CEXs aren’t applied to DEXs.

That said, as an owner of a DEX, it’s important that you give considered thought to how you are going to structure the enterprise from a legal/entity perspective. In short, you’ll need to strike a balance as between potentially competing interests viz a viz the various stakeholders. At its core the legal/ownership structure should take into account and cater/provide for:

1. Limiting the Founders’ liability in the event of a law suit against the DEX +
2. Investor sensibilities +
3. Ensuring that the relationships as between the DEX owners are carefully documented/governed +
4. Tax Planning considerations +
5. Insurance against potential allegations of non compliance with “onshore” Managed Investments Laws and/or Securities Industry Regulations

Behind the DEX protocols, we often see a Decentralized Autonomous Organisation (DAO) (like Uniswap DAO and Sushi DAO), the members of which vote for the protocol’s strategy (the principles of its work, commission sizes, etc.) and manage the Treasury (e.g., issue grants/tokens) in a decentralized way.  (For more details of what a DAO is and how a DAO works, see attached “What is a DAO”).

Given at its core the typical/pure DAO is an unincorporated association (like a Club meaning all the members could be made jointly and severally liable if the DAO were to be sued) these days most such DAOs are usually incorporated/registered as ownerless legal entities (eg Private Foundations) or as Limited Liability Companies (eg DAO LLCs). Generically we refer to this as applying or setting up a DAO Legal Wrapper. These legal wrappers aim to protect DAO members from unlimited liability and implement the decentralized governance of the DAO.

The Ideal DEX Legal Structure

There are various ways to Legally structure a DEX but the most common approach we see to the legal structuring of a DEX is to create a collective of legal entities including:

1. A DAO Foundation +
2. A Developer Company +
3. The (Consumer facing) Exchange Company
4. A Token Distribution/Issuance Company (Token Co) ie the Exchange intends to sell it owns native Token
5. A Management Company

In terms of roles the DAO Foundation can potentially do several things ie it can/would/could:

• Engage/pay the Developer Co
• Act as an Incubator fund for collecting seed Capital (eg privately introduced/early stage investors and/or DAO members could make donations to the Foundation and in return receive tokens or a SAFT ie a Simple Agreement for Future Tokens)
• Own the Tokens as developed and or it could own/provide working capital to the Exchange Company (ie act as a/the Treasury)
• It could be used to incentivize sweat equity (ie it can be used to gift and/or air drop tokens to high performing team members or to benefactors)

The Developer Company would be engaged to do the IT/Tech work and would typically be owned by the Tech Members of/Coders for the Collective. This enables the software developers to be remunerated on a commercial basis for the work they do.

The Exchange Company would own and operate the business, in effect, ie, it is the Entity that would engage/contract with the DEX Platform users and receive the fees/commissions generated by their Cryptocurrency sales/swaps.

If you plan to develop/sell your own Coin or Token (ie a Token that could be publicly traded) then ideally (eg to minimise liability exposure to the rest of the Group) this function should be carried out by a stand alone Company. This Company could be owned by the Exchange Co or it could be owned by the DAO Foundation and or by stage 2 Investors.

To ensure that the Founders get paid fairly for running the business ideally the Founders should form their own Management Company. This Company would be engaged via contract by the Exchange Co (and the Token Issuing Co) to manage the day to day affairs of the business.

Sometimes we see the DAO Foundation form an IP Company so that the technology/IP can be sold separately later and/or protected from law suits. Where an IP Company is deployed typically it is owned by the DAO Foundation and it hires/engages the Developer Company.

Occasionally we see a Holding Company deployed to own the Exchange Co and or the Token Issuing Co. Typically post launch Commercial Investors (eg if/when you need to do a 2^nd capital raise to fund expansion) would hold shares in this Company as would the Founders of the Enterprise.

There’s no one perfect way to structure a DEX> Every business is different. Moreover you don’t necessarily need to kick off with a menage of Companies – some can be “bolted on” later as the business grows. That said I/OCI can provide detailed guidance in this regard ie we can assist you to tailor a Legal structure designed to meet your particular goals/needs having regard to your budget, potential for legal exposure, location, growth aspirations and time frames.

Decentralized Autonomous Organizations (DAOs)

A DAO is a Blockchain structure (like a secure database), that any member can leverage to self-govern through participation; A DAO sets rules – baked into code – and permits voting through digital tokens (a form of cryptocurrency) — all while leveraging smart contracts. Only that DAO’s Token holders have the power to vote.

In essence, a DAO allows groups of participants to create organizational forms beyond the hierarchical, top-down corporate firm (which must be responsive to the needs of a board and shareholders). DAOs essentially eliminate or minimize the roles of executives and managers in the organization, relying instead on transparent rules that apply to all members and participants.

The primary aim behind the creation of a DAO is to create a virtual entity to replace the central management of previous forms of organization. A decentralized autonomous organization (DAO), is an organization, particularized by rules encoded as a computer program, that is transparent, and controlled by the organization members. In terms of decision making a DAO is, in effect, unable to be influenced by any outside party including any central government.

DAOs are particularly prevalent in the Ethereum blockchain ecosystem, combining ideas about organizational forms, coordination, network effects, blockchain, and smart contract technology. A DAO allows a group to organize around a mission or goal and to coordinate the mission via smart contracts, enforced immutably and autonomously on the blockchain. DAOs represent an evolution in how people coordinate with one another, as the organization itself is autonomous from any third party intermediary’s influence and goals.

The main reason a DAO is formed is to decentralize and automate the governance of an organization. The rules by which a DAO operates are encoded as a computer program that is accessible via the blockchain, and controlled by all of the organizing members, rather than by a central governing board. Since the blockchain is essentially a public record, the DAO seeks to provide total transparency, requiring that all of its financial transaction records be recorded by a public facing blockchain. There is no top-down hierarchal structure to a DAO; A DAO depends almost entirely on the operation of autonomous smart contracts to enliven the rules and carry out the decisions made by/within the organization. In terms of where you might incorporate a DAO in a low or nil tax environment:

1. You could set up a Marshall Islands DAO LLC (Check this link for details: https://offshoreincorporate.com/marshall-islands-dao-llcs/ )
2. You could set up a Wyoming DAO LLC (Check this link for details): https://offshoreincorporate.com/products-services/offshore-companies/wyoming-dao-llcs/
3. You could set up a Panama Foundation DAO (Check this link for details: https://offshoreincorporate.com/panama-foundation-daos/ )

You could also potentially set up a Caymans Foundation Company to act as a DAO (Check this link for details: https://offshoreincorporate.com/dao-structures-the-caymans-foundation-company-option/ ).  However, you’d need to be able to satisfy the Compliance people in the Caymans that what you’re proposing is a not a licenseable under the Caymans VASP Legislation.

Where to Incorporate a Licenseless DEX?

There are several jurisdictions where you could incorporate an Exchange Company (DEX) without needing to apply for an Exchange License or some other form of Special License.

The first such option to consider would be to incorporate as an IBC or as an LLC Company in St Vincent & the Grenadines (“SVG”), a small but well regarded Caribbean Island Tax/Privacy Haven Jurisdiction.

Notwithstanding that SVG has passed VASP (Virtual Asset Service Provider) Licensing Legislation it is possible to set up a Company in SVG presently and conduct cryptocurrency activity without having to apply for a VASP License as the SVG Government is yet to pass regulations governing the License application process.

That said,  once the SVG Government passes the Regulations you will need to either redomicile the Company to another jurisdiction (that does not require a license eg Panama or Samoa, see below) or you’ll need to shut the Company down, or you’ll need to apply for a VASP license in SVG.

To set up such a Company in SVG would cost around $US1,500.

For detailed information in regards to St Vincent check this Link: https://offshoreincorporate.com/saint-vincent-and-the-grenadines-svg-companies/

Samoa

If you’re wanting to incorporate a Crypt Token issuing business without having to apply for a special License the second option would be to incorporate as an IBC in Samoa.

Samoa is a small self-governed (former British colony) island nation in the South Pacific region. It has offered a nil tax IBC Company regime since around 1994 and, whilst not a wealthy country, it does have a history of political stability + the comfort of a British style legal system.

Samoa has not passed VASP Legislation and has not yet publicly expressed any intention to do so.

To set up such a Company in Samoa would cost around $1,500. For detailed information in regards to Samoa check this Link: https://offshoreincorporate.com/samoa-international-business-companies/

Panama

The third option to consider if you want to avoid having to apply for a VASP style license would be the Central American Economic powerhouse of Panama.

Panama is an interesting case study …

You see, the Panama authorities favored the implementation of VASP regulation and the Legislature passed the required Bill.

BUT the Panamanian President (as is/was his right) challenged the validity of the proposed legislation by issuing a legal challenge in the Panama Supreme Court.

To many observers surprise, the Court found in the President’s favour ie the proposed Panama VASP was found to be unconstitutional by the Panama Supreme Court and hence struck down ie it never made it past the Bill stage. Hence there is very little (if any) risk, if you incorporate in Panama, of a law being passed subsequent to your incorporation requiring you to either migrate/redomicile out of the jurisdiction or apply for a VASP license.

To set up such a Company in Panama would cost around $1,500. For detailed information in regards to Panama check this Link: https://offshoreincorporate.com/panama-offshore-companies/

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

Hong Kong Chief Executive Carrie Lam has promised lower taxes on profits, tax deductions for businesses that invest in research and development (R&D) and the expansion of conference space in a prime area of Hong Kong in her initial policy declaration delivered last Wednesday, her first such announcement since coming to power earlier this year.

The new strategies seeks to diversify the economy and are likely to attract  increased foreign investment (see below).

Most interestingly Hong Kong Companies will soon pay tax of just 8.25 per cent on the first HK$2 million of domestic profits, reduced from the existing flat rate of 16.5 per cent. Profits above HK$2 million will still be subject to the 16.5 per cent tax rate. Non Hong Kong sourced income will still be bankable in Hong Kong (or elsewhere) free from tax.

Lam also announced tax breaks for companies that invest in Research & Development (“R&D”), to be implemented from 2018. For the first HK$2 million, companies will be able to claim a 300 per cent tax deduction. For expenditure beyond the HK$2 million benchmark, a 200 per cent tax deduction will be claimable.

Currently, companies receive only a 100 per cent deduction for R&D expenses. This means that a company with HK$10 million in profit but HK$5 million in R&D expenses would be deemed to have an assessable profit of HK$5 million and would need to pay HK$825,000 in tax. Under the new policy, the same company would be considered as having spent an amount greater than its earnings on R&D and would not have to pay any tax on its profits.

With the increased international pressure on Companies to show some substance on the ground in the country where the Company is incorporated (and with Hong Kong’s liberal approach to issuing residency permits for foreign owners of HK Companies) such a policy is likely to attract entrepreuneurs currently looking for tax free Offshore Incorporation Solutions… Simply put if you can show you have an office in, and or employ staff in, and pay some tax in the country of incorporation (ie if you can show some substance on the ground in the country where your Offshore Company is incorporated) it’s far less likely that your “Offshore” Company is going to come under scrutiny from tax officials in your home state.

Put another way if you want to minimize the risk of your Offshore Company being taxed where you live it’s prudent to show your Company pays a little bit of tax somewhere.

No doubt a generous tax rate of just 8.25% is going to incentivize current and would be nil tax Company owners/users to Incorporate in and set up something on the ground in Hong Kong as the years progress….

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

If you’re looking at second residency options (and are tired of living in a cold climate!) you might want to consider taking a close look at Panama.

Panama Offers what’s known as a “Friendly Nations Visa”.

With this VISA there is nothing to invest midterm or long term, you just need to:

(a) create a company in Panama where you will be the President and Shareholder and claim that it will be used for professional services in Panama; and

(b) open a bank account in your name in Panama. (This bank account would have to be funded with a minimum of $5,000.00. If there are dependents to be included with the main applicant, then $2,000.00 per dependent needs to be added).

Most of the bank account opening process can be done without you needing to visit Panama, so we can advance 90% with that and, once you arrive in Panama, finalize everything so that the account is opened in approximately 2 weeks.

You will need to travel to Panama at least twice.

On the first trip you will need to meet the bank and finalize the account opening, sign the power of attorney empowering us to file the application and have your passport registered with the Immigration Service.

Once the bank account is open you will need to send funds to activate the account and obtain from the bank a letter of reference and/or a statement of account stamped by the bank. Once you have that we can then start the process of incorporating the company (it takes roughly 5 days to incorporate a company in Panama). The account would need to be funded with $5,000.00 and $2,000.00 extra per dependent if such is the case.

If you’re able to stay in Panama for an extended period, we can file the application right away and obtain the provisional residence permit and multiple entry and exit permit (this last one is necessary to leave the country while the visa is being processed as otherwise upon the return of you can be penalized with a fine of $2,000.00).

On the second trip, ie once the Visa is approved, you will need to travel to Panama to obtain your permanent resident card.

Our legal fees are $4,500.00 + 7% service tax for the main applicant, plus $400.00 + 7% service tax per dependent. The fee includes the company formation.

The approximate expenses are:

$1,690.00 for main applicant and $1,300.00 per dependent. (Children under 12 years of age are exempt from the repatriation deposit of $800.00).

Our legal fees for the attainment of the Multiple Entry and Exit Permit is $200.00 + 7% service tax (per applicant) + $100.00 (per applicant) in costs payable to the Immigration Service.

To open the account, you will need to travel to Panama and meet the bank, and bring with you the following documents:

- Reference letter from a bank

- Reference letter from a lawyer, accountant or other professional

- Reference letter from a business partner

- Copy of your entire passport (the bank will make a copy)

- Copy of a secondary ID such as a driver’s license

- Proof of income, which can be provided in the form of payment stubs from your current employment or by submitting the last three tax returns you have filed.

These documents can all be submitted in English.

For the Visa, it is imperative that you have the bank account, so after the bank account has been opened we can move forward with the Visa application.

The documents each applicant needs to bring with him/her for submission as part of the Visa application are:

- Valid passport

- Police record issued by the FBI, RCMP or equivalent authority in your country (except children under 18)

- Marriage certificate (applicable if legally married and spouse is applying as dependent of main

applicant)

- Birth certificate (applicable if children of the applicant under 18 years of age are applying as dependents of the main applicant).

The rest of the documents can be obtained in Panama, including the Declaration form of personal background information.

Any and all documents issued abroad have to be legalized by means of a Panama Consulate or via Apostille and duly translated into Spanish.

Translations prepared abroad would also need to be legalized via Consulate or be Apostilled.

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

A Registered Agent is a responsible third-party who is physically located in the same jurisdiction in which a business entity was established and who is designated to receive service of legal process notices (eg law suits), correspondence from the Registrar of Companies, and other official government notifications, on behalf of the Company/Entity.

Why Do I Need a Registered Agent?

Every Offshore Company must have a Registered Agent AND a Registered Office on the ground in the country of incorporation. The Registered agent will accept documents on your behalf. The jurisdiction in which your business is registered needs to know it has a contact person for your business within the jurisdiction at all times; accordingly, PO boxes are not acceptable addresses for registered agents.

These days it may not be enough to have a “brass plate” office in the country of incorporation. If you want to show some substance on the ground – and thereby minimize the chances of your Company being classified as resident or controlled from onshore – what you might want or need as part of your Corporate structure is:

• A Nominee Director resident Offshore and/or in the country of incorporation
• A local phone number in the country of incorporation
• A serviced (or, ideally, stand-alone) office in the country of incorporation
• A stand-alone PO Box in the country of incorporation
• A local tax number issued in the country of incorporation

OCI can supply all these things as part of your Company Formation package.

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

Investing in a Company or Fund that trades online is an activity that lends itself well to an Offshore Corporate Structuring plan. By way of intro check this link: https://offshoreincorporate.com/common-offshore-corporate-strategies/#5

How it 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)

(c)   Your OC either signs a general investment agreement with the Fund Company or subscribes for shares in the Fund Company

(d)  You advance funds to your OC

(e)  The OC then advances funds to the Fund Company (see below “How to move money offshore” which explains your options in that regard)

(f)    The Fund Company invests/trades your money

(g)  The Fund Company pays a return periodically to your OC (eg monthly or quarterly or 6 monthly or yearly).

(h)  Returns paid to your OC can be banked and or reinvested Offshore potentially free from tax

HOW TO MOVE MONEY OFFSHORE

Depending on your individual situation there are several ways you might achieve this aim:

• You could set up a dual structure (ie an Offshore Company the shares of which are held by an Offshore Private Foundation). You would set up the Foundation in such a way so that appears to be a Charitable Foundation and then make regular donations to the Foundation (which would then transfer that money to the IBC eg as share capital).

• Set up 2 International Business Companies Offshore (ie “IBCs”). The first IBC you would enter into a speculative (eg high risk/potentially high return) general (long term) investment with. This IBC would then invest money with your trading IBC. The investment with the first IBC could be structured in such a way as to ensure that you won’t be paid a return on that investment for quite a while. If the IRS ever asks meantime whatever happened to the money you would just tell them I’m not yet entitled to a return.

• Convert your local money into bitcoins. Transfer ownership of the bitcoins to the IBC. Have the IBC convert the bitcoins into hard currency which the IBC would then use to invest in whatever.

• Engage a lawyer to DD on the Offshore Company or Foundation you intend to send money to. Whilst he’s making inquiries to confirm that the entity exists etc, (as you might do prior to a real estate purchase) you park the money you intend to invest in the Lawyer’s Trust/Client/Escrow Account. Once he’s completed his inquiries you instruct the Lawyer to send the funds from his Trust/Client/Escrow account to the Offshore Company or Foundation’s Bank Account

• “Gift” the money to a family member (or close friend) overseas and then have that family member transfer the money to your Offshore Company

• If you are holding funds in your own name you could set up a personal account Offshore and then transfer the money from your Onshore bank account to your Offshore Bank Account. Same could be done in the case of funds being held in a Company account onshore (ie you set up an Offshore Privacy Haven Account in the name of your local Company and have funds transferred from the Company’s Onshore account to your Company’s Offshore account). If you open the account in the right place onshore predators will really struggle to find out where the money went once it landed offshore.

• You could set up your IBC as an Investment Company and enter into an arms’ length general investment agreement (or loan agreement) with the IBC on commercial terms. Provided the IBC is incorporated in a Privacy Haven (and in a country which does not have a TIEA with your home country) no one should ever know that you actually own the IBC.

• You could withdraw your money from the bank in cash, use that cash to buy something of great value which is easily transportable (eg jewelry, gemstones, watches, an artwork/s, collectibles etc) fly overseas with these items (ideally to the country where your Offshore Company has its bank account), sell them to a broker or privately whilst abroad and then deposit that money into your Offshore Company’s Bank Account.

• If you are an online trader (eg Forex/Commodities/Derivatives/Share Trader) you could open a Brokerage Account in your own name, transfer funds to your personal brokerage account, then open a Brokerage Account (with the same broker) in the name of your Offshore Company and move monies (as an internal transfer, ie beyond the view of “onshore” authorities) from your personal Brokerage account to the Company’s Brokerage account.

Local laws can have an impact. Hence it would be wise to seek local tax/legal advice before committing to embark on such an endeavour.

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

We are often asked “How can I hold a patent or brand using a tax free Offshore Company?”.

A patent or Brand is a piece of Intellectual Property (“IP”).

In the case of a Patent, whilst you might save on tax by having the brand owned by a tax free Offshore IP Holding Company, you’ll want to firstly make sure that your Patent is recognized and capable of enforcement world-wide. The starting point therefore should be to ensure that your IP Holding Company is incorporated in a country which is a member of the World Intellectual Property Organization.  The full list of member states can be viewed here: http://www.wipo.int/members/en/

Zero or low tax countries in that list where we can incorporate a Company for you include:

Belize

Cook Islands

Costa Rica

Cyprus

Dominica

Ireland

Nevis

Malta

Mauritius

Panama

St Vincent

Samoa

Seychelles

Singapore

UAE

USA

Practicalities

Say you’ve developed and applied for a Patent for a breakthrough eyewear related product.

What you could/should do is:

(a)          Set up a zero tax Company to own the Patent/IP (‘the IP Company”)

(b)          Incorporate a 2nd (nil tax or low tax) Trading Company.

How it would work is:

1.            You would transfer ownership of the patent now (ie whilst its almost valueless) to the IP Company. See below which explains the process

2.            The IP Company would grant the Trading Company an exclusive license to market the IP

3.            The Trading Company would pay the IP Company licensing fees (eg a percentage of the sale every time a product containing the brandname/patent is sold)

The advantages of the twin Company structure are in essence:

(a)          The Trading Company is the one in the market place. It will incur the debts and pay staff/suppliers etc. Any law suits (or potential liability) will fall on its head thus protecting the key asset at the core of the business

(b)          It enables you to later on sell the business (ie The Trading Company) but retain a passive income stream (ie royalties or license fees paid to the IP Company)

How 2 Transfer Ownership of IP 2 an Offshore Company

Intellectual property (“IP”) is a creation of the mind and includes things like inventions, literary and artistic works, designs and symbols, software code, names and images used in business.

IP is commonly protected in law by way of patents, copyright and trademarks which enable the person who came up with the idea to securely earn recognition or financial benefit from whatever it is he/she has invented or created.

An Offshore IP company is an ideal vehicle for the administration and management of licenses and intellectual properties including computer software, technical know-how, patents, copyrights and trademarks.

The first step is to transfer ownership of the IP rights to the Offshore Company/Entity.

Once that’s done the Trading Business then enters into a legal agreement (contract) with the IP Company whereby, in return for being allowed to use the IP, the Trading Company agrees to pay the Company royalties or license fees. The income arising from these agreements can then be accumulated offshore in a nil or low tax environment.

Timing is of critical importance – It is clearly preferable to acquire the IP (for example, a patent) at the earliest possible time (e.g. at the patent pending stage) before the IP becomes highly valuable. That way the capital payment for the acquisition of the IP (e.g. patent) can be set at a lower amount i.e. before its true worth has been determined in/by the market. (These capital payments may even be deferred and or staggered by way of an instalment contract such as would enable the IP Company to use subsequent royalty payments to fund the cost of the IP).

If a deal is struck for the Offshore IP Company to buy the IP before the IP gives rise to a product or service which is offered/advertised in the market the IP might even be transferred for nominal consideration enabling the IP inventor/creator to transfer patent, copyright or trademarks in favour of the low/nil tax company before the IP suffers significant appreciation in value.

Alternatively you might transfer ownership of IP to a tax free Offshore Company (“OC”) for an agreed price but subject to a deferred or gradual payment basis. How that would work is you would transfer ownership of the IP up front and agree for the OC to pay you in stages in consideration of a price premium and/or in consideration of the OC engaging you in an ongoing/consultancy capacity.

However you transfer ownership of IP to an OC the transaction should be seen to be on commercial terms for fair market value. If you are unsure of market value you could either brief a licensed Valuer for an opinion or advertise the IP for sale publicly. The highest bid would be fair market value. At the end of the day in the market place a piece of property is only worth what someone else is prepared to pay for it!

Local law can have an impact. Hence you should seek local legal and financial advice before committing to incorporate an Offshore 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

We are often asked “How do I shut down my Seychelles trust”?

The Seychelles IBC Legislation provides a procedure for striking off IBCs.

Under the provisions of the Seychelles International Trusts Act 1994 however, there are no provisions for “striking off” Trusts.

Commonly, a standard Offshore Discretionary Trust is established on an irrevocable basis. Usually such a Trust will only come to an end once the Trust assets have been distributed absolutely to the beneficiaries or to a different Trust with common beneficiaries (and the Trustees cease to hold any Trust property), either at the end of the Trust period or on an earlier final distribution of Trust property.

To bring the Trust to an end a supplemental Trust Deed needs to be drafted an executed. There are two formats of Deed that could be used: Option 1 relates to where the trust is terminated after a final distribution of Trust property; Option 2 assumes that the Trust has ceased to hold assets (including any initial trust property, e.g. US$100 to establish the Trust) – you can use whichever one is appropriate and have your Lawyer or Trust Service Provider tailor it to your circumstances.

Finally once the Trust has been terminated and is no longer an International Trust within the meaning of the Seychelles International Trusts Act 1994 Act, your Trustee must notify The Seychelles Financial Services Authority under section 4(5).

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

In essence affiliate marketing involves a Product/Service Seller paying a commission to other online entities, known as affiliates, for referring new business to the Seller’s website. Affiliate marketing is performance-based, which means affiliates only get paid when their promotional work actually results in a sale.

Affiliates can be any kind of site, but usually they tend to be bloggers or other content sites related to the merchant’s industry. Affiliates work to introduce their visitors to the Seller’s brand. They might write/blog a post about a new product or promotion on the Seller’s site, feature banner ads on their site that drive people to the Seller’s site, or offer visitors a special coupon code. If buyers come from that affiliate’s site and make a purchase, the affiliate gets paid.

Traditionally many affiliate programs were comprised of coupon and loyalty sites. As the industry has matured, content bloggers have come to play a more prominent role in many programs. Innovative programs are stretching the definition of an affiliate even more, partnering with schools, nonprofits, and individual professionals.

An Affiliate Marketing Business is but one example of an Online Business.

Online Businesses are difficult to tax.

Why?

Often an order is placed with one business, product is manufactured by a 2^nd business and fulfillment (ie product delivery/dispatch) is provided by a 3^rd business. This is completely different to a traditional point of sale (ie retail) business where typically the business is managed/controlled from and, the product is handed over/payment made in, a defined physical location. Clearly in the retail situation offer and acceptance are concluded (and consideration is tendered) in the one place leading to a taxable event in that locale.

Generally speaking as a matter of contract law when you have offer and acceptance (& assuming you have legal capacity to contract + intention to create legal relations + consideration) a contract is formed.

Under general tax law principles a taxable sale is made where the contract is concluded. It follows therefore if the seller concludes the contract (ie accepts the buyer’s offer) and is based in a zero tax country and the product or service is supplied digitally (ie on or via the Internet) no tax will be applicable (either in the buyer’s or the seller’s jurisdiction) to/re profit made on the sale .

An online businesses requires no physical presence: the Seller becomes entitled to a payment once certain events conclude electronically. The sale is effectively concluded in cyberpace. This affords the Seller an opportunity to determine as a matter of contract where the sale is concluded. Hence expertly drafted terms and conditions can provide that no contract is formed until the seller Company communicates acceptance of the buyer’s offer, meaning that the contract is concluded where the Seller Company/Business is domiciled and/or managed from.

More specifically, in the case of an Affiliate Marketing business an Agreement is entered into between the Seller and the Affiliate whereby the Affiliate becomes entitled to payment once certain events occur in Cyperspace. The source of the income is in effect the contract. Thus if the contract is effectively concluded, and the Affiliate Marketing Business is domiciled in, (and seen to be managed and controlled from) a nil tax jurisdiction (and provided the Company is structured/administered a certain way) it is possible to bank profits made from such ventures free from tax.

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

Bitcoin mining is a process that anyone can participate in by running a computer program. Although Bitcoin can be mined using a traditional computer, some businesses have designed specialized Bitcoin mining hardware that can process transactions and build blocks much faster (and more efficiently) than regular computers. The process of validating transactions and committing them to the blockchain involves solving a series of specialized math problems.

Each Bitcoin miner is competing with all the other miners on the network to be the first miner to correctly assemble the outstanding transactions into a block by solving those specialized math problems. In exchange for validating the transactions and solving these problems, Bitcoin miners are rewarded for all of the transactions they process. They receive fees attached to all of the transactions that they successfully validate and include in a block. In addition to transaction fees, miners also receive an additional award for each block they mine.

This block reward is also the process by which new bitcoins are created, as specified by the Bitcoin protocol.  Currently, that reward is 12.5 new bitcoins (worth over $US51,000 at time of writing) for each block mined.

Because the reward for mining blocks is so high, the competition to win that reward is also high. At any moment, hundreds of thousands of supercomputers all around the world are competing to mine the next block and win that reward. In fact, the total power of all the computers mining Bitcoin is over 1000 times more powerful than the world’s top 500 supercomputers combined. And the competition doesn’t stop—the Bitcoin network has gotten stronger and stronger over the past several years, growing by as much as 10 percent per month.

The block reward if received by you personally would of course be classified as assessable income where you live (taxable income = assessable income less allowable deductions). If you want to minimize the tax that would otherwise be payable on those rewards what you can do is:

1. Set up a tax free Offshore Company eg an International Business Company (“IBC”)
2. Include a (tax haven based) Nominee Director and Nominee Shareholder as part of the Corporate structure so that the Company is seen to be managed and controlled from Offshore
3. Have the IBC buy the Computer and operating software
4. You lease the computer and the software
5. All such lease payments would be received Offshore and banked tax free
6. You could/would/should claim a tax deduction at home for those lease payments

Alternatively you could establish the IBC as a Bitcoin mining Company and have it employ/engage you as an authorized miner. You could be paid a percentage of fees generated or a fixed rate or a combination of the 2. The income you generate from this would of course be assessable income where you live, but the remainder of Bitcoin mining profits could be banked and or reinvested Offshore potentially tax free.

Domestic laws can effect the viability of such a structure. Hence you should seek local legal and financial advice before committing to incorporate an IBC for such purposes.