Category Archives: Company- Management

Irish Prime Minister Enda Kenny has publicly reiterated his commitment to the 12.5 percent corporate tax rate “from a tax certainty point of view.”

In a speech to the American Chamber of Commerce Ireland (Amcham Ireland), Kenny stressed that the rate will not change, and acknowledged that “that is an important element for consideration with American investors coming here to Ireland.”

Bob Savage, President of Amcham Ireland, welcomed Kenny’s statement. He said the Chamber “deeply appreciate[s] the Taoiseach’s unambiguous declaration that his Government will steadfastly defend our hard-earned reputation as a pro-business country that is defined by fairness and certainty of treatment.”

In its pre-Budget submission, Amcham Ireland emphasized the need for Ireland “to evolve its corporate tax regime in response to the post-BEPS landscape to remain competitive.” (Base erosion and profit shifting BEPS is a tax avoidance strategy used by multinational companies, wherein profits are shifted from jurisdictions that have high taxes such as the United States and many Western European countries to jurisdictions that have low or no taxes ie so-called tax havens).

Kenny’s comments were later echoed by his Finance Minister, Michael Noonan. “We could nearly put it on the flag now because everybody knows internationally that the rate is 12.5 percent. Actually, when industrialists think of Ireland, they automatically think of 12.5 percent. But just in case there’s doubt, I’ll confirm it again in this year’s Budget,” Noonan said.

Noonan added that the Government is under no pressure from the European Union (EU) to change the rate in the wake of the Commission’s decision that Ireland had provided selective tax treatment to Apple. “The European Commission acknowledge that the right to set tax rates is a matter for sovereign governments; it’s not for Europe or the European Commission,” he explained.

In the wake of these bold public statements you can expect the low Tax Irish Company to remain a popular choice of tax planning vehicle for discerning International Trading business owners the world over. That said the key to success in using Ireland as your corporate base is to ensure that you are not seen to be exercising management and control over the company from your home country (which would entail, as a minimum the appointment of a Nominee Director + establishment of an Offshore Discretionary Trust or, ideally, a Private Foundation to act as shareholder). For information on how that can work for you please contact us.

When setting up a tax free Offshore Company/IBC (particularly where a Nominee Director and or Shareholder is deployed) one of the most common questions we get asked is “If someone else is the Director what’s my role in the Company?”

The options here are (a) Have yourself appointed as a Consultant/Authorised Representative of the Company and/or (b) Have the Company issue you with a General Power of Attorney.

As option (b) is problematic from a taxation perspective (ie it points to management and control lying in your hands – any company which is seen to be managed and controlled from “onshore” can be taxed onshore) 90% + of clients choose to be appointed as a Consultant/Authorised representative of their International Business Company.

As an Authorised Representative of the Company you can do anything apart from bind the company legally (ie any legal agreements/contracts have to be signed by the Director).

This can also provide you with an income stream.

Here’s how the more intelligent/savvy clients manage their financial/billing affairs:

• The client (or his onshore/local business/company) is appointed via written agreement as a Consultant to the IBC
• The agreement sets out what fees the Consultant is entitled to claim each month/pay period and what expenses the Consultant is entitled to be reimbursed for
• In the month/period prior to billing the Consultant (or his onshore business/company ie whoever has been appointed as Consultant to the IBC) pays all expenses incurred with respect to supplying the Consulting services (ie/eg including rent, travel, internet, phone, IT costs, stationery supplies, license/govt fees etc as applicable)
• At the end of the month/billing period the client (or his onshore business/company as the case may be) invoices the Offshore Company (a) seeking reimbursement for expenses it/he has paid in connection with supplying the Consulting services) + (b) for Consulting fees as agreed.

Yes you could use the IBC’s Debit/Credit card to cover those expenses but that may not be the wisest choice. With current technology you can’t assume that local tax authorities will not notice if you use an Offshore Bank credit card onshore. Most clients usually only use the Offshore Company’s card when they are outside the country of tax residence (though technically even such withdrawals/payments, unless spent on business expenses, would be classified as “income” declarable in the country where you are resident for tax purposes).

Local laws can have an impact. Hence you should seek local legal/financial/taxation advice prior to forming, and or prior to signing a Consulting contract with, an IBC/Offshore Company

A lot of people these days offer products for sale on Amazon.

Such a business lends itself well to “Offshore” Corporate Structuring.

Let’s look at atypical example…

In this example the client sells Jewelry online via Amazon

How it works Is:

• Any jewelry you want to manufacture/sell should be manufactured by/purchased by the tax free Offshore Company (“IBC”)
• The company would be incorporated in a nil tax jurisdiction and would be managed/controlled from an Offshore (ie nil tax) jurisdiction (which would entail the appointment of an Offshore/Tax Haven based Nominee Director – which is a service OCI would provide)
• Any contracts to buy or sell or market the jewelry would be signed/concluded offshore (eg signed or ratified by the Nominee Director in a nil tax environment)
• In effect any/all profits generated have been generated online
• In the case of an online business typically tax liability lies only in the country from which the Company is managed and controlled
• As the Company has been structured with a (tax haven based) Nominee Director/Shareholder (ie management and control would be “Offshore” ie in a nil tax environment) any profits generated have been earned (and ideally banked) Offshore ie in a nil tax environment

How To Utilize Money Banked by Your IBC 

There are 6 ways to utilize money banked by your IBC:

1. Set yourself up as an arms’ length consultant and have the IBC pay you consulting fees periodically. This means you would only have to pay tax on what you bring into your home country (and even that tax you should be able to minimise as a lot of what otherwise-might-be personal expenses could be written off as business costs, eg home office, utilities, car, phone, electrical/office equipment, stationery, computers travel etc etc etc). The rest of the IBC’s income can remain offshore and be (re)invested offshore potentially tax free. Say your target capital base is 3 million Euro and every year you leave at least half the IBC’s income offshore. Because you’re not paying tax yearly on all the IBCs income instead of taking 20 years to accumulate 3 million Euro, with the power of compounding, you could accumulate 3 million within 5 to 7 years. This is what my/our smarter clients do ie they pay a little bit of tax at home each year on their overseas earnings but most of their income is kept offshore and reinvested offshore.

2. Bring back the money as a loan. Yes this can be done but great attention to detail will be required particularly with respect to lending parties, loan terms and documentation.

3. Use an anonymous debit card and withdraw cash from automated teller machines. This can still work in some places though it should be noted that some of the bigger countries now have the ability to trace and connect one to such withdrawals.

4. Have your IBC buy Bitcoins and then make a transfer of bitcoins to you (you would need to firstly set up a bitcoin account). You can then buy valuable goods and services using bitcoin and none of these purchases would be seen by your local authorities.

5. Have your IBC form and fund a subsidiary ie 2^nd tax free Offshore Company and then have that 2^nd Offshore Company buy any substantial assets you’d like to have onshore (eg cars, real estate, shares, general investments etc). Yes in theory you could have your IBC buy these things but, given most likely there will be a Consultancy Agreement in place between you and the IBC (and payments going from the IBC to you which will be visible to your local tax authorities) the smarter thing to do would be to have a 2^nd (seemingly unrelated) IBC buy these items for you.

6. Another option is to take the long hold view. What this entails is letting your capital base build over a period of years; Then, when you get to the stage where you are ready to close down your Offshore business, (or you are ready to retire) you can do one of two things: Either

(a)   Expatriate your home country and become “non-resident for tax purposes”, shift to a country which has no income tax and/or CGT (eg Panama, Seychelles, Monaco, etc etc etc) and draw down the capital from your offshore entity (and bank the money tax free); or

(b)   Expatriate your home country, become “non-resident for tax purposes”, and become a PT ie a Perpetual Traveller. How this can work is you spend say 4-5 months a years in one country, 4-5 months a year in another country and the rest of your time travelling. This way, assuming you are not seen to have substantial ties with any one country, you should not be considered as tax resident in any one country. Then you simply draw down the capital from your offshore entity (and bank the money tax free).

Generally speaking, provided you have successfully become a non-resident for tax purposes of your home country, there’s nothing stopping you from changing your mind a year or 2 later about the expat life and returning to your home country with a bunch of tax free dollars in your back pocket.

Note unless you (have expatriated or) live in a country that does not have CFC laws (and/or unless or are structured in a tax effective/compliant manner) you may still be required to declare and pay tax at home on your IBC’s earnings.

Local laws can have an impact. Hence you should seek local legal, financial and tax advice before committing to set up an Offshore Company for the purposes as described above.

If you want to change Administrator/Manager of your IBC what must happen is the Director (or Board of Directors as the case may be) must pass a resolution formally authorizing a change of Company Manager + a Change of Director and Shareholder (eg if you wish to change the Nominee Director/Shareholder).

If you wish to change shareholder a share transfer must also be drafted and signed by the outgoing shareholder.

If you are the Director of the Company then it is easy. If your current Manager is providing a Nominee Director but is (or becomes) uncooperative what you may have to do is use documents in your possession to force a change of Director temporarily to yourself just so that the above resolution can be passed.

OCI can do all the work required and or manage the process for you. First you will need to hire us.  The procedures that we must undertake in order to move forward would be as follows:

1.      You will need to email us:

• a fully completed and signed order form
• certified copies of an ID doc (copy passport) and proof of residential address (eg bank/card statement or recent utility/tax bill) for each of the underlying beneficial owners of the company
•  written/dated instructions to change Registered Agent/Corporate Service Provider (“CSP”).

2. Once we have the above we will draft the necessary resolution/s authorizing the change of Registered Agent//Memo and Articles etc and forward that to you/the Company Director for signature and then to the outgoing Registered Agent/Corporate Service Provider.

3. Once we have received the signed meeting resolution we will then email the existing Agent/CSP to advise that we have instructions to change Registered Agent/CSP attaching an undertaking to meet fees, file transfer Resolution/s and provide copies (NOTE: We will file only an extract of the resolution so the Director’s etc name does not appear anywhere on the registry’s records)

4. The outgoing Agents (assuming their fees have been met to date) should then fax us and/or the registry a letter consenting to a change of Registered Agent

5. We will then have our people on the ground attend the registry with meeting extracts (& amended Memo and Articles if required) to settle the change of Registered Agent/Office

6.  The registry will usually fax us within 48 hours to confirm that the change of Agent/Office has been recorded

7. We will then have our people attend the registry within 24 hours to collect the filed change of Registered Agent/Office extract Resolution. Once we have those docs we will email you a letter to advise that change of Agent etc has been formally recorded/finalized

8. We will then airfreight (or courier if you require, please advise) a copy of the filed/sealed Extract and filed/sealed amended Memorandum and Articles (as/if required)

9. We will then contact the outgoing Agent to request the original file and then collect same

10. We will start and keep registers for Directors/Secretary/Shareholders.

The fee we charge for attending to all this is circa $US450 (payable in advance).

Fee/s as quoted includes all of the above + provision of registered agent/office services until the company’s next annual renewal date. If an amended Memo and Articles is required (ie updated by showing the new Registered Agent address/Office address) you would need to advise us.

Kindly note if you require us to supply Nominee Director or Shareholder (or other) services Nominee’s appointment and or etc fees will be additional to the above. (If you’re interested in changing offshore service providers) if you can confirm what you require exactly by way of nominee or other services we will happily forward you a firm quote.

A Nevis LLC allows you to shield your assets from lawsuits, agencies, and financial creditors – owners are shielded from legal liability and can manage the company without becoming liable for company financial obligations or legal liabilities.

One major benefit is that a Nevis LLC has members rather than shareholders. Therefore, there are not any shares that can be seized by a court of law. Moreover, members are not legally responsible for company obligations.

ADDITIONAL NEVIS LLC ADVANTAGES:

• A manager can have 100% control of the company.
• The manager of the LLC does not need to have any ownership and yet can control the entire company and all of its assets.
• The company can have as many members (ie shareholders) as one desires.
• Any person or company can own the entity.
• Nevis does not impose corporate tax, income tax, withholding tax, stamp tax, asset tax, exchange controls or other fees or taxes on assets or income originating outside of Nevis.
• Members of Nevis LLCs may be individuals or business entities of any nationality or domicile.
• Members of Nevis LLCs may amend the Company’s Articles of Organization, merge, or consolidate with other domestic or foreign LLCs or other business entities.
• Members may assign their interests to other parties unless restricted otherwise. Nevis permits single member LLCs.
• Management of a Nevis LLC may be by the members or by managers designated by the members.
• There are no stock limitations – a Nevis LLC can issue preferred interests analogous to preferred stock of corporations.
• A Nevis LLC is an excellent vehicle if used by a group of investors for a joint venture investment. In this respect it functions as if it was a Limited Partnership, but with all the added liability protection features and advantages of a corporation.
• A Nevis LLC can be set up within 24 hours and has low initial cost and low annual fees.
• Any law suit attacking the transfer of assets to a Nevis LLC must be brought within 2 years otherwise it is statute barred
• If you are a member of  Nevis LLC and somebody (ie a Creditor) is wanting to attack your membership units, before the Vulture can proceed with a law suit, he/she/it must first post a security bond of $100,000 with a Financial Institution in Nevis.

LLC vs. Corporation:

The primary distinction between an LLC and a “normal” company such as a “C” corporation (USA) or a PLC (United Kingdom), is that an LLC is a tax-neutral vehicle because it is taxed as a partnership, rather than as a corporation. Thus, using an LLC can eliminate tax at the corporate level. In this regard, it is somewhat like a U.S. “S” corporation or a German GmbH but without all the restrictions and disadvantages. So if the LLC itself has no tax payment obligation – then who does? The obligation for any taxes that would otherwise be owed by the company bypasses the company itself and attaches directly to the members. Members are to LLCs what shareholders are to corporations. Other companies, as well as individuals and trusts, can be members of an LLC. There are no limits on the number of members or the classes of members that an LLC may have and  each member is responsible for his, her or its own pro-rata share of any overall tax obligation, if any:- The LLC itself has no tax obligations.

An LLC as an alternative to or in addition to a Trust

Because of the flexibility available in LLC management structuring, and because of the favorable way in which the laws of Nevis are drafted, this type of entity can also be used as alternatives to or in addition to an asset protection trust. The manager of an LLC is somewhat akin to the trustee of a trust and the members are akin to the beneficiaries of a trust. OffshoreCorporation.com can act as a nominee manager of an LLC on behalf of a client who desires to take advantage of our corporate management services.

Substituting an LLC for a trust can change the reporting requirements of taxpayers in onshore jurisdictions. The income or capital gain of an LLC is not reportable as trust income or gain or as corporate income or gain but is treated as personal income (as in the US or UK) or gain or is non-taxable, depending upon the jurisdiction in which the owners reside.

Multi-National Joint Ventures:

LLCs are excellent vehicles for structuring joint venture arrangements between project participants from different countries. This is so because the venture can enjoy all of the benefits of incorporation, but each member is liable for his own taxation in his own country. Moreover, the membership flexibility allows different joint ventures to have different levels of ownership and reward based upon the value that each constituent member brings to the project.

Tax Free:

All Nevis LLCs are free from all forms of Nevisian taxation. There are no Nevisian taxes on dividends, income, capital distribution, or wages whatsoever. Moreover, unlike many onshore jurisdictions, Nevis does not tax an LLC for accumulated (but undistributed) earnings.

Privacy:

All of the affairs of a Nevis LLC are private and cannot be disclosed except under truly exceptional circumstances such as links to international terrorism. The only document that needs to be filed with the government is the annual corporate license and this contains minimal information. There is no annual report or annual financial return that needs to be made to the government. There is no public inspection of your LLCs’ records. Confidentiality is further enhanced if the LLC appoints a Nominee as manager (in which case we, as Nominee, perform the minimal corporate duties required under Nevisian law).

Enhanced Confidentiality:

Nevisian LLC laws contain many requirements related to confidentiality including financial secrecy laws. Strict legal requirements, known as fiduciary duties, also govern the behaviour of offshoreincorporate.com as a manager of an LLC. These fiduciary duties are imposed on managers by both the equivalent of the LLCs bylaws and by the proper law of the LLC (usually the law of the country where the manager is located).

Many of these fiduciary requirements relate to secrecy and accounting obligations by which the manager must abide. Nevisian LLC law prevents us from discussing your business with anyone to which you have not instructed us to speak.

Others cannot force us to discuss your business with anyone unless they obtain a court order in Nevis against you or us or both ordering a disclosure to be made. But a court order from their respective jurisdiction is useless in Nevis. In accordance with strong Nevisian law, a judgement from outside of Nevis will not be recognized by Nevisian courts. This means an onshore judgement creditor who won a lawsuit against you or your LLC onshore (eg in the U.S, UK, Canada or EU etc) cannot take that foreign judgement and require a Nevisian court to enforce it.

In addition to not recognizing the judgements of other countries, Nevisian law and Nevisian courts do not favor the granting of court orders against LLCs except under truly exceptional circumstances: Nevisian law favors upholding the independence and application of its own law over the enforcement of foreign, onshore laws.

For clients (in particular JVs involving partners from different countries) the Nevis LLC offers outstanding asset protection and tax planning possibilities. Hopefully the above summary explains how and why.

The term holding company is usually used to describe a company which is set up (not to own/operate a business but to) passively hold an asset eg the shares of another company or a piece of real property.

Usually all a holding company does is receive passive income eg dividends if it owns shares in other companies or rent eg if it owns real property. The advantage of setting up a Holding Company “Offshore” is, if you incorporate it in the right place and structure it properly, (a) you might minimize Withholding taxes when dividends etc are paid to the Holding Company (see below) and (b) you can potentially receive (and reinvest) your passive income free from tax.

The other advantage of setting up a Holding Company “Offshore” is privacy. If you don’t want certain persons to know that you own a particular asset or assets you might choose to set up your holding company in a privacy haven ie somewhere which does not have a public register of directors or shareholders or beneficial owners.

A Holding Company is often placed between a Trading company and the Ultimate Holding Entity (which might be a Company or Trust or a Foundation) as a means by which to access a favorable DTAT (ie Double Taxation Avoidance Treaty – see below) such as would enable you to reduce the Withholding tax (“WHT”) that would otherwise apply on dividends, interest or royalties paid by a Trading Company to your Ultimate Holding Entity.

Commonly when dividends, interest or royalties are paid by a local company to a non-local (foreign) shareholder Withholding Tax (WHT) of around 20% is payable in the country from where the payments are being made.

However deals are often brokered between countries and written in to a DTAT which afford WHT discounts if the shareholder is a resident of, or incorporated in, a particular country.

For example Mauritius Companies are commonly used to hold shares in Indian Companies as Mauritius has a favourable DTAT with India that affords WHT discounts to Mauritius persons or companies.

Likewise Seychelles Holding Companies (CSLs) are commonly used to hold shares in Chinese Companies as China has a favourable DTAT with Seychelles that affords WHT discounts to Seychelles persons or companies.

The Netherlands is another popular place for the incorporation of Holding Companies as it has an extremely wide network of WHT friendly DTATs.

What is Withholding Tax (WHT)?

Withholding tax (“WHT”) is tax levied:

(a)   When a company incorporated in one country pays dividends to a shareholder of that Company who is resident in a 2nd country

(b)   When interest is paid by a company incorporated in one country to a lender resident in a 2^nd country

(c)    When a royalty is paid by a company incorporated in one country to a party resident in a 2^nd country

The applicable rate of WHT is usually somewhere between 15 and 25%.

The rate of WHT applicable may be reduced if the person (or entity) receiving the interest/dividend/royalty payment is tax resident in a country which has a favourable Double Taxation Avoidance Treaty (ie one allowing for a reduced WHT percentage) with the country from which the payment is coming.

What is a DTA?

A DTA (Double Taxation Avoidance Treaty) is a bilateral treaty (ie a legal agreement signed by two countries) which is designed to avoid persons being taxed twice ie in 2 countries on the same income. DTA’s usually also set out the taxing rights of each country where there would otherwise be a dispute about who has the taxing rights over certain income/gains.

DTAs tend to reduce taxes of one treaty country for residents of the other treaty country in order to reduce double taxation of the same income. The provisions and goals vary highly; very few tax treaties are alike. Most treaties:

• Define which taxes are covered and who is a resident and eligible for benefits
• Reduce the amounts of tax withheld from interest, dividends, and royalties paid by a resident of one country to residents of the other country
• Limit tax of one country on business income of a resident of the other country to that income from a permanent establishment in the first country
• Define circumstances in which income of individuals resident in one country will be taxed in the other country, including salary, self-employment, pension, and other income
• Provide for exemption of certain types of organizations or individuals; &
• Provide procedural frameworks for enforcement and dispute resolution.

In summary, if you are looking to buy or otherwise acquire shares in a foreign Company (before committing to the purchase) it would be wise to engage an International Tax/Corporate Structuring Specialist to provide advice on whether a Holding Company regime might be available to facilitate savings on Withholding Tax.

A lot of people these days are making money on the side renting out properties (or rooms) via Air BnB.

Interestingly, Air BnB has given entrepreneurial types access to a whole new model of business!

Briefly what these clever business persons are doing is they are locating properties which are likely to be of interest to short terms renters eg inner city apartments in much visited European/Asian/American city locales, beachside holiday apartments, unit accommodation near hospitals etc.

Once located they contact the owners of the properties seeking the right to either (a) lease the property for a fixed term or (b) manage the renting of the property/s for a percentage of rent received.

In the case of (a) typically the lease will contain a clause allowing the entrepreneur to sublease the property.

In the case of (b) the entrepreneur typically enters into a property management agreement with the owner agreeing to manage the process of finding renters for and renting the property in return for a percentage of rent received.

Once the lease/agreement has been signed the entrepreneur lists the property/s for rent on air BnB.

Let’s look at a very practical example of how that should (tax effectively) work using a tax free International Business Company (” IBC”).

Say you contact a bunch of property owners in London and you either (a) convince them to let you rent the property/s out to others for a fee or percentage or (b) lease the properties yourself and sublease them to holiday makers.

Either way how it would work using a tax free Offshore Company (“IBC”) is:

• The IBC would sign any contracts to manage or lease the properties in question
• Any add online to rent the properties would be placed in the name of the IBC
• The IBC would enter in to the agreement/contract with Air BnB
• The client would pay Air BnB
• Air BnB would keep their percentage and pay the balance to your IBC.
• Any/all profits generated have been generated online
• In the case of an online business typically tax liability lies only in the country from which the Company is managed and controlled
• The Company would be structured with a (tax haven based) Nominee Director/Shareholder (ie management and control would be “Offshore” ie in a nil tax environment)
• Thus  any profits earned have been earned (and ideally banked) Offshore ie in a nil tax environment

Local laws can have an impact. So be sure to seek local legal/tax/financial advice before committing to set up an Offshore Company for such purposes.

A cryptocurrency is a digital medium of exchange that uses encrypted software to operate a market for transactions. That market is overseen by those using the network, based on rules coded into algorithms. It’s a transparent, peer-to-peer operation, similar to the file-sharing protocol BitTorrent which is widely used for the illegal sharing of movies, TV shows and music.

How are cryptocurrencies propagated?

Crytocurrencies are created, or mined, based on a mathematical formula. In the mining process, computers are tasked to solve complex mathematical problems and rewarded with virtual coinage. Over time, the equations become progressively more difficult to solve, slowing down the supply of new cryptocurrency units.

Can anyone become a miner?

Theoretically it is possible to start mining at home. But as the mathematical challenge becomes harder, more computational grunt is required. For this reason, miners often pool resources to buy access to supercomputers or server farms (networked arrays of smaller computers).

How many cryptocurrencies are there?

The market for such payment instruments is dominated by Bitcoin, but there are scores of other currencies including Blackcoin, Litecoin, Dogecoin, Megacoin, Onecoin, Namecoin  etc and there is even a sexcoin.

What are they worth?

Values fluctuate based on supply and demand (and market sentiment). At the time of writing, one Bitcoin is worth $US651. But the price has gone as high as $US1145.  On the other hand, one Litecoin is worth just over $US4.30.

How do you buy and sell it?

A transaction is similar to a direct transfer between bank accounts. Algorithmic verification ensures that the same unit of currency can’t be owned by more than one person at the same time. In most cryptocurrencies, accounts known as wallets are stored either on hard drives or remotely in the cloud. Every transaction is recorded in a ledger called the blockchain that is accessible by every currency owner.

What can you buy with it?

Because of its widespread adoption, Bitcoin is the most liquid of the alternative currencies and can be readily exchanged into US dollars. In addition to being used to pay for goods and services on a person-to-person level, a number of larger enterprises have begun accepting Bitcoin as payment.

What are the benefits of Cryptocurrencies?

A Cryptocurrency is a digital or virtual currency that uses cryptography for security. It is a medium of exchange like normal currencies such as USD, but designed for the purpose of exchanging digital information through a process made possible by certain principles of cryptography.

Cryptography is used to secure the transactions and to control the creation of new coins. A cryptocurrency is difficult to counterfeit because of this security feature.

A defining feature of a cryptocurrency is that it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation. Encryption techniques are used to regulate the generation of units of currency and to verify the transfer of funds, operating independently of a central bank.

Moreover decentralized cryptocurrencies such as bitcoin provide an outlet for personal wealth that is presently beyond restriction and confiscation. Interestingly an Offshore Corporate Structure be can used to hold cryptocurrency so that any capital gain occurrs or is realized in a nil tax environment. Check our Blog Article of 18 July for details of how that can work.

OFFSHORE COMPANIES INTERNATIONAL LTD.

14 August 2016

To change the Trustee of an International tax free Trust (Offshore Trust) a certain procedure needs to be followed.

To begin with the existing Trustee of the Offshore Trust must resign or be removed.

The resignation can be verbal or in writing (in writing is preferable) however the Trust Deed usually dictates the required method.  If there is more than one Trustee, the notice, whether verbal or in writing, is given to the other Trustees.  If there is only one Trustee then the notice is given to the Nominated Beneficiaries.

A Trustee can be removed by the Appointor/Settlor. Depending upon the wording of the Trust Deed, either the retiring Trustee appoints a new Trustee or the Appointor/Settlor appoints a new Trustee.  The appointment should be in writing, preferably by Deed and should be signed by the new Trustee and incorporate an undertaking by the new Trustee to act as Trustee and discharge the duties of a Trustee set out in the Deed and at law.

Most Discretionary Trust Deeds provide that it is the Appointor/Settlor that has the power to remove an existing Trustee and appoint a new Trustee however:

• If there is no Appointor/Settlor then a Trustee (either the retiring Trustee or a continuing Trustee) has the power to appoint a new Trustee.
• If the Trustee has died then the deceased Trustee’s Executor (Legal Personal Representative) has the power to appoint.
• If the Trustee or Legal Personal Representative fail or refuse to appoint then the Nominated Beneficiaries can appoint.

It is important for Trustees to be mindful that if there is a change of Trustee then the Trust Deed must provide or be amended to provide (before the new appointment is made) that neither the retiring Trustee or the new Trustee can ever be beneficiaries of the Trust.

How is a new Trustee added?

Depending upon the wording of the Trust Deed, it is either the Trustee or the Appointor/Settlor who has the authority to add a new Trustee.  The appointment can be verbal or in writing (in writing is preferable). Generally the appointment is in the form of a Deed.  The new Trustee must, when accepting the appointment, undertake to carry out the duties of Trustee and discharge the obligations contained in the Trust Deed and at law.

Resignation: A Trustee may resign as Trustee of an Offshore Trust by giving the Appointor/Settlor(s), or Trustee(s) as relevant, notice. However, unless there is a remaining Trustee, the resignation is only effective when a new Trustee has been appointed;

Removal: If the Trust has an Appointor/Settlor(s), then, depending on the wording of the Trust Deed, the Appointor/Settlor(s) may remove a Trustee at any time by signing a statement to that effect.

Appointor/Settlor’s and Trustee’s powers: If the Trust has an Appointor/Settlor (and if the Trust Deed provides for it)  then the Appointor/Settlor, or otherwise the Trustee, may appoint an additional or replacement Trustee at any time by a written statement to that effect.

First named Beneficiary’s powers: If the Trust has no Appointor and no Trustee, then (if the Trust Deed provides for it) the first named Beneficiary who is still alive may appoint an additional or replacement Trustee at any time by a written statement to that effect.

Automatic termination of Trustee’s appointment: Also, a Trustee’s appointment terminates automatically if any of the following occurs:

(a)   the Trustee is found to be of unsound mind, or the Trustee or his or her estate becomes liable to be dealt with in any way under a law dealing with mental health;

(b)   the Trustee becomes bankrupt or makes an arrangement or composition with his or her creditors; or

(c)    the Trustee enters into compulsory or voluntary liquidation (except for the purposes of amalgamation or reconstruction), or has an administrator, receiver, official manager, or receiver and manager appointed to any part of its assets.

The documents that would have to generated to effect a change of Trustee usually include:

• Trustee consent forms;
• Appointor minutes (if applicable);
• Current Trustee minutes;
• New Trustee minutes;
• First Named Beneficiary minutes (if applicable);
• Draw and Settle a Deed of Amendment

Local laws can have an impact. Hence you should seek the advice of a Trust Law expert in the jurisdiction where the Trust is registered or domiciled before committing to try and change Trustee/s.

A lot of time, money and energy is spent around the world each year by people looking to reduce their taxable income to the lowest possible figure. Some employ high level tax advisers, some set up Tax Free Offshore Companies, some try and disguise their income by engaging in all manner of questionable local tax schemes.

But there is another way…

Have you ever heard of a PT?

PT stands for Perpetual Traveller.

A Perpetual Traveller is a person who has no home, or, in legal speak, is not resident anywhere for tax purposes.

So how do you become a PT? By creating a situation where you are not resident for tax purposes anywhere.

To explain…

Most countries have a multifaceted tax residency test:

(a)   Generally speaking if you are inside a particular country for more than 6 months you would be classified as tax resident in that country and liable to declare income in, and pay tax in, that country

(b)   That said you can be resident somewhere for less than 6 months a year and still be classified as a local resident for tax purposes if you have a “substantial connection” to the country.

In determining whether you have a “substantial connection” the tax authorities would look at a range of factors including do you have a spouse from or living in that country? Do you own a residence there? Do you have children there? Do you own a car there? Do you have a bank account there? Do you own assets there? Do you have a driver’s license there? Do you have insurances there? Are you a member of a club there (eg golf club, tennis club, social club) etc etc etc.

If you want to become a PT the starting point is to create a situation where you are no longer tax resident in your home country.

How might you go about that?

To maximise the chances of being able to escape your home country’s tax system probably what you will need to do is:

• Sell your current business (or quit your local job)
• Sell your local home
• Sell all your locally located assets
• Close down your local bank accounts

Then what you do is you jump on a plane and head abroad. Once you’ve reached your next destination what you do is you send a letter to the tax office/IRS of the country you just left advising them that you’ve departed the country permanently and filed your last tax return.

In the perfect world what you then might do is spend 5 months in one country, 5 months in another country & spend a couple of months travelling.

Then you set up a tax free “Offshore” Company as your business ownership or income receiving vehicle.

It takes courage, time and effort to become non tax resident. But the rewards could be massive; (as well as living a more adventurous/exciting life) you might (LEGALLY) never have to pay income or business tax again!