How To Use a Tax Free Offshore Company To Invest in Alternative Investments

The advent of the global village has broadened the scope of potential investment activities considerably.


These days it’s not uncommon for an investment portfolio to include exposure to left of field “alternative” investments.


Investments that come under this category include long hold capital focused assets such as venture capital, private equity, hedge funds, real estate investment trusts, commodities, precious metals, rare coins, fine wine/whisky, artworks, antique furniture, aged/quality name brand musical instruments (eg guitars, violins etc), vintage cars and etc. (Prime/unique real estate could also form part of such a portfolio)


Investing in alternative investments is an activity that lends itself well to an Offshore Corporate Structuring plan.


How it works is:

(a)  You incorporate a tax-free Offshore Company (“OC”)


(b)  You structure the Company in such a way as to ensure that the Company is seen to be managed and controlled from Offshore; This can/will be achieved by via deployment of a tax haven based Nominee Director (which is a service that OCI can/will provide).


(c)   You open a bank account in a country that does not tax interest paid on bank deposits


(d)  You advance funds to your OC


(e)  The OC then purchases the investment. Any purchase contract is concluded/signed “Offshore” by the Nominee director


(f)    The asset is held by your OC for some time, commonly for the long haul.  Eventually one day you may decide to sell the investment having (hopefully) made a substantial capital gain. Sale proceeds are paid into your OC’s tax free bank account


(g)  Capital Gains tax is typically paid by the/an investor to the taxman of the country wherein the investor is domiciled. If you are smart you will have set up/domiciled your Offshore Company in a jurisdiction that does not levy Capital Gains Tax


(h)  Provided (a) your OC is seen to be managed and controlled from offshore (which can be achieved via deployment of a nil tax jurisdiction based “Nominee” director) & provided (b) you are not, at law, the beneficial owner of the Company (which can be achieved by setting up a Private Foundation to own/hold the shares of your OC) returns paid to your OC can be banked and/or reinvested Offshore potentially free from tax (ie without you needing to declare/pay tax on this income at home)


Note if you need to draw on these returns at home there are at least 6 different ways to (discreetly) access money banked abroad by your Offshore Company.


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