How To Run a Tax Effective Consulting Business From Offshore

If you’re providing Consulting Services (in particular to a non-local/International clientele) then you’ll be pleased to know that such a business lends itself well to an “Offshore” Corporate Structuring Plan.


Essentially how it works is:


  • A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated with a nil tax jurisdiction resident “Nominee” Director
  • The IBC owns/operates the consulting business
  • An Offshore account is set up in a nil tax banking centre
  • Customers/clients contract with and pay the IBC.
  • Every contract should provide that (a) the bargain was concluded Offshore (ie in a /the nil tax environment) and (b) that services will be provided from Offshore
  • The IBC Invoices the clients from offshore.
  • Payment for invoices rendered will be banked free of tax in the first instance
  • You or your local company would be sub-contracted by the IBC to actually perform the services
  • You would invoice the IBC periodically (eg monthly) for this work which income would be assessable income in your home country – 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.
  • The rest of the income earned by the IBC can held (and potentially invested) offshore tax free.


Management/Ownership Structure


As hinted at above, if you want to minimise the chances of the IBC being taxed onshore, ideally, the IBC should/would be (and be seen to be) managed and controlled from Offshore. How this can be achieved is by including a Nominee Director as part of the Corporate structure. For details of how that can work click on these links:


Ideally – so you can swear on oath in the event of a tax investigation, law suit or regulatory inquiry – I am not the beneficial owner of this Company, (which could get you around what might otherwise be a substantial tax or legal liability eg imprisonment for tax evasion) you will want to set up a Private Foundation to act as the shareholder of your IBC. (This should also assist you to get around CFC rules ie if you live in a country which has such a law).


With a bespoke legal/admin structure in place you should only be liable to declare and pay tax on income paid to you by your Offshore Company (and/or on any distributions paid to you by the Foundation); The rest of your Consulting Revenue you should be able to bank, and/or invest, Offshore in a nil tax environment.


Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an IBC for such purposes.


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