Global citizens interested in privacy will have, or should have, noticed the rise of Euro Pacific Bank (“EPB”) over the course of the past 10 years.
The brainchild of ex Lehman Brothers Exec Peter Schiff (who was smart enough to leave Lehmann Brothers before, and in fact predicted, the GFC), Euro Pacific Bank was originally based in St Vincent & The Grenadines but shifted its base circa 2 years ago to Puerto Rico.
This was an extremely savvy move because Puerto Rico is an offshore territory of the US and, as such, is subject to and caught by America’s International treat network. With the US having cleverly refused to sign up to the MCAA (ie the head treaty which gives rise to AEOI ie Automatic Exchange of Information requirements and the CRS ie Common Reporting Standards) this means that one can open a bank account in Puerto Rico (which does not tax interest paid on bank deposits) and avoid the risk of the existence of said bank account coming to the attention of one’s local Revenue Authorities via AEOI/CRS.
Many OCI Clients are professional online traders (see below which explains how/why Online Trading lends itself well to an “Offshore” Corporate structuring plan). By far the most popular Brokerage Platform with OCI clientele to date has been Interactive Brokers.
Since its launch EPB, as part of its product range, has offered in house Brokerage Account Service known as Euro Pacific Trader. Until August this year this facility was delivered via Saxo Bank’s trading platform; But as of August 2019, Euro Pacific Bank customers can now open in house Brokerage Accounts utilizing Interactive Broker’s platform.
Euro Pacific Trader is offered by its subsidiary Euro Pacific Securities Inc. as an Introducing Broker to Interactive Brokers LLC. Interactive Brokers LLC is the custodian, technology provider, and clearing broker to all transactions executed through Euro Pacific Trader and thus the rates & trading conditions are as per those offered by Interactive Securities.
How To Trade Online Using a Tax Free Offshore Company
Online Trading (eg forex trading, share trading, options trading, derivatives trading etc) is an activity which lends itself well to an Offshore Corporate Structuring Plan. To summarise how it would work is:
- You set up a zero tax Offshore Company eg an International Business Company (“IBC”)
- The Company is seen to be managed and controlled from Offshore (ie ideally it will have a nil tax jurisdiction resident “Nominee” Director (which is a service that OCI can provide).
- The IBC opens an account with a Broker
- You are appointed as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
- For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC is structured/administered in a particular way)
- When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
- That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are ordinarily resident for tax purposes – 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).
- Lump sums could potentially be drawn down tax free from the IBC (eg by way of an interest only loan – though normal commercial terms would/should apply to such a loan)
- The majority of trading profits could be reinvested Offshore potentially tax free.
To minimize the chances of your Company being taxed at home (especially if you live in a country which has Controlled Foreign Corporation laws) ideally you won’t want to be seen to be the beneficial owner of the Company. This can best be achieved by including a Private Foundation as part of your Corporate Structure.
Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up a Corporate/Brokerage structure such as that described above.
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