Acting as an Introducing Broker (“IB”) 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”) with a tax haven based Nominee Director
- You are appointed as the IBC’s Authorised Representative via a Consultancy Contract
- You negotiate terms with the Broker that you will introduce to
- The IB agreement/contract is signed Offshore by the Nominee Director
- The source of the income is the contract
- Because the contract was concluded offshore, in a nil tax environment, there should be no tax payable on income generated by the contract where the Company is incorporated and potentially where you live (ie 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 IB commissions generated)
- 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)
- The majority of trading profits could be reinvested Offshore potentially tax free
Note there are other ways to access monies banked Offshore by your tax free International Business Company. Please contact us for details.