Given we are now living in the Global Village, and as more opportunities exist now than even before for qualified professionals and trades/skilled persons to work as Consultants to (or to take up contracts offered by) non-local Companies, more and more clients are setting up (and hiring out their services via) a nil tax jurisdiction based Recruitment Agency or Labour Hire Company.
Here’s how it can work:
- You would incorporate a new zero tax Offshore Company which might be called something like International Professional Recruitment Services Ltd (hereinafter, “IPRS Ltd” or the “Employment Agent”)
- This business would be characterized as, and appear to the outside world to be, a Professional Recruitment Agency or a (Specialist) Labour Hire Company
- You might tell anyone who wants to hire you eg your existing employers (or contract counterparty if you are on a contract) that, as IPRS Ltd can offer you (a) consistent employment + (b) jobs the world over, and as they are experts in finding contracts for your Profession/Trade/Occupation, you are contracted exclusively to IPRS Ltd and anyone who wants to hire you has to sign an agreement with, and must pay, IPRS Ltd.
- Your existing employers (or contract counterparty if you are on a contract), assuming they wish to keep you employed/engaged, would then have to sign a labour hire agreement with IPRS Ltd.
- Your existing employers (or contract counterparty if you are on a contract) would thereafter pay your wages (or contract fees as applicable) to IPRS Ltd.
- IPRS Ltd would keep a percentage of these payments as Agency commission (the commission could be anywhere from 2.5% to 50%).
- The remainder of monies (ie after the tax free Offshore Company IPRS Ltd has retained its agency commission) would be paid to you by IPRS Ltd
- The monies received by IPRS Ltd should be receipted free of tax and could be held and or invested Offshore potentially tax free.
For the above to work the agreement between your employers (and the agreement between you) and the Tax Haven Company IPRS Ltd would need to be (and be seen to be) commercially realistic.
Local laws can have an impact. Hence you would be wise to seek local legal and or tax advice before committing to create such a company/structure.