With the rise of the digital/global economy – and the greater job choices now on offer as a result of that rise – many businesses are finding it increasingly difficult to find and retain good staff, particularly in specialist or highly skilled fields. Consequently, more and more savvy business owners (in particular internationally focused enterprises) are turning to Specialist Staff Recruitment Agents to help locate & hire key staff.
Such a business model, particularly in the International field, lends itself well to an Offshore Corporate Structuring Plan. Often you’ll see a specialist Staff Recruitment Agency engaged where you have a business located in Company A which needs high skill, or unusual, work done in Country B by a person whose skills transcend and are recognized in (or transferable across) multiple jurisdictions (eg Engineers, CFOs, Lawyers, Geologists, etc) ie the target staff member could potentially come from any country.
Typically, such businesses operate Online. That is The Staff Recruitment Agent has a website, prospective clients and suppliers find the Agent online and contact/communicate with the Agent via email or via the website.
Usually, the Agent is paid a sign on fee once the employee is hired + a percentage of the employee’s earnings during the lifetime of the contract.
To summarize how such a business usually works from “Offshore” is:
- You (ie The Recruitment Agent) set up a zero tax Offshore Company eg an International Business Company (“IBC”) with a nil tax jurisdiction based “Nominee” Director
- Ideally your website will be hosted in a nil tax jurisdiction
- You are appointed as the IBC’s Authorised Representative/CEO/GM (ie as a senior staff member)
- On behalf of the IBC you negotiate terms with each client to pay your IBC a lump sum fee and or a Commission or Commissions if/when the Client/Employer and Employee sign a contract
- The Agency agreement/contract is signed Offshore by the Nominee Director (ie the “situs” of the contract is a nil tax jurisdiction)
- The source of the income is the contract
- Because the contract was signed offshore, ie in a nil tax environment, there should be no tax payable on income generated by the contract (a) where the Company is incorporated and (b) where you live (assuming you structure and administer the Company in a certain way).
- When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of sales made)
- That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home). More sizeable amounts could be accessed by way of loan (or a 2nd Offshore Company could be formed to buy your onshore investments)
- If you don’t want the authorities to know how much money you are earning eg by way of wages you could convert your hard currency into Bitcoin and/or you could potentially use an anonymous ATM or Debit/VISA card to withdraw $ from an Auto Tele Machine (though technically that receipt would be assessable income for local tax purposes)
- The majority of trading profits would be banked and or reinvested Offshore potentially tax free
- To minimize the chances of local Controlled Foreign Company laws being applied to your Offshore Company, ideally, you would not want to be seen to be the beneficial owner of the Company. This can be achieved by deploying a Private Foundation to act as the shareholder of your nil tax Offshore Company.
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