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