Who can benefit from setting up an offshore company? E-commerce or web-based businesses: International businesses: Holders of wills and inheritance:

Transcription

1

2 INTRODUCTION With taxation laws and regulations becoming more and more strict in an increasing number of countries, individuals and companies are always on the look out for new options to save taxes and protect their assets in the best way possible. There are many advantages to setting up an Offshore Company for both individuals and companies. One of the greatest advantages is that it can help you to protect and increase your wealth while simultaneously diversifying your assets internationally, giving you more flexibility in times of crisis. Who can benefit from setting up an offshore company? E-commerce or web-based businesses: People who work online and live in different places are natural candidates for wanting an offshore company. You can choose to register your company where you will pay the fewest amount of taxes, and at the same time choose a respectable jurisdiction with little reporting requirements. International businesses: If your company has already extended to global markets, finding the best location to protect your interests is only natural. The owners of an international business can set themselves up through an offshore company, allowing them to make their purchases and sales through the laws of the offshore jurisdiction that will treat them best. The result is always better taxation. Holders of wills and inheritance: An offshore company can often be combined with an offshore trust to create an entity which optimizes your taxation related to inheritance. Stock brokers and forex traders: Commonly, the biggest fear of people who trade stocks is that their activity will somehow be used against them by government goons. An offshore company is a great way to anonymously trade stocks and shares, while also doing foreign exchange transactions (FOREX). Individuals: There are times when it is advantageous to set up an offshore company for individuals for example, to hold property or to increase your net income when you re self-employed. Intellectual property rights: If you own a patent or trade mark, registering it in the name of an offshore company can allow you to buy and sell these rights. Having patents or trade marks registered by an offshore company also makes it easier to grant these rights to third parties.

3 Saving Money through incorporating offshore Everyone knows that some of the most important companies in the world have a huge amount of capital, and potentially taxable income, in offshore accounts. Indeed, it is estimated that more than $63 billion of US corporate profits are being held offshore and are not subject to US Taxes. And it s all legal and within the law. As taxation of profits is an expense that can be reduced, corporations and individuals look for legitimate ways to reduce it. It is neither unethical nor illegal to seek relief from taxation. Tax law is an important tool that countries use to pursue funding for governmental services. Each nation has different policies and budget requirements, which leads to diverse tax laws. Offshore companies are simply entities that people create to legally take advantage of this global tax market. While it s possible to save your money by keeping it offshore in one or more bank accounts, the setting up of a so-called offshore company can also help you maximize your savings, increase your net income and protect your assets and all this in a legal way. For most countries, profits from offshore activities only become taxable in the home country of a person or company when the money is repatriated. If taxes are not paid on repatriated funds, then it becomes money laundering. The unspoken philosophy is: Tax law is complicated and confusing for a reason. If a citizen or corporation wants to reduce their tax liabilities, they will have to work for it. Indeed, the path has been paved for all to take advantage of the government designed loopholes. It just takes some knowledge.

4 THE BEST COUNTRIES FOR AN OFFSHORE COMPANY What types of offshore companies are there? There are five basic types of offshore companies that you can set up: IBC International Business Company PLC Private Limited Company LLC Limited Liability Company GBC Global Business Company SÀRL Société à responsabilité limitée (French) or Sociedade anónima de responsabilidade limitada (Portuguese) Each company type has its own unique strengths and appropriate uses. In order to find out what type of offshore company is the right set up for you, you need to take into account many factors, such as the countries in which you plan to conduct business and bank, how much turnover you expect, the characteristics of your money flow in general, the amount of time you are willing to spend with audits and reporting requirements, and much more. What are the best countries for an offshore company? The best place for setting up an offshore company entirely depends on your goals. One company might benefit from setting up in a country with no accounting or audit requirements and zero tax. A slightly larger, more diverse company might be better off going to Hong Kong or Singapore and paying a small amount of tax to gain access to more world-class banking, financial opportunities, and merchant services. And a company seeking to raise capital might choose a completely different location. Common traditional offshore jurisdictions include Nevis, Seychelles, Mauritius, the British Virgin Islands, the Cayman Islands, Antigua, Anguilla, and even the Gambia in Africa. Other low-tax jurisdictions that are popular for offshore business include territories like Gibraltar, as well as low-tax European countries like Ireland, Malta, and even zero tax Estonia.

5 Meanwhile, the Middle East is growing as an offshore hub, with Dubai and Bahrain offering their services to those interested in that region. In Asia, places like Hong Kong and Singapore offer the potential for zero or single digit tax rates for foreign businesses, as well as a network of global tax treaties. Hong Kong, for example, uses its territorial status to allow trading companies to operate and pay no tax. To accomplish that, you simply use Hong Kong as your trading hub between two other countries for instance, purchasing goods from China and selling them to Europe. Set up your invoices the right way and Hong Kong is essentially cancelled out. While a Singapore corporation does offer a similar option, it s a bit more tricky. And, after a certain amount of profit, taxation in Singapore gets complicated. Wherever you choose to go, the reality is that it s often a good idea to pay a little bit of tax if doing so keeps your home country off your back. As the global war on tax havens heats up, setting up your business in a respected jurisdiction may be the best strategy for you. After all, going offshore is about saving money and protecting assets legally, not hiding away or evading taxes.?

6 REQUIREMENTS FOR US CITIZENS The US government has some tight restrictions on offshore companies. The biggest advantage for an offshore company is the concept of tax deferment. This essentially means that you can defer the taxes that are to be imposed upon your company indefinitely. With your taxes deferred you can take that money and reinvest it in your company. When you combine this tax deferment with compounding interest, you re talking about significant capital accumulation over the years. You ll only have to pay these taxes off once you sell the company. As a US citizen, however, you will be required to disclose any offshore business you are involved in, and any bank account you own. Failure to comply with these rules in the US or any other western country that requires them can lead to steep penalties. Because of this, we highly recommend that you work with tax lawyers in order to ensure that you re doing everything the legal way. It can be difficult finding a tax lawyer you trust. Through working with us, you will have access to our extensive rolodex of experts and highly trusted lawyers in countries across the globe.

7 GETTING STARTED While the process of offshore incorporation itself is straightforward and can be done in a matter of minutes in some countries, laying the proper groundwork before and after the official process is important. This also means consulting with a provider who understands the rules and regulations in your home country. The best thing you can do is choose the right representative. How much does it cost to start an offshore company? Start-up costs for your offshore company will vary depending on a number of factors, including: Which jurisdiction you choose What add-on services you require Who you choose to incorporate Who you choose to maintain the company annually The truth of the matter is that the cost of starting an offshore company is as variable as the cost of having dental work done and both can have painful and expensive consequences if you choose the cheapest option. For example, when you need dental work, you have quite a few options to get the job done: you could go to the free clinic in the ghetto with rats running around and a doctor whose license expired years ago, or you could choose the dentist who treats the stars in Beverly Hills or anywhere in the middle. Most of the offshore company service providers you'll find advertising online are closer to the rats than the stars. Some do a good job, but the main concern is that low-cost providers WILL NOT know your tax consequences at home. For instance, the law in St. Kitts and Nevis may be 0% tax, but if you're a US resident you re obliged to pay income tax in the United States. Low-rent providers will not be able to help you in those crucial situations. In fact, they ll probably try and steer you away from doing things legally, either through shadiness or their simple lack of knowledge. Don't let a cheap $1,000 company become a $100K nightmare. What about nominee shareholders, directors and bearer shares? If you are new to the offshore world, you ve likely run into a lot of different ideas like having a nominee shareholder or director or issuing bearer shares. But what are they and will they be of value to your offshore company?

8 The general purpose of nominee shareholders and directors is to involve an unrelated third party often required to be a resident of the tax haven as the registered shareholder or director of your company so as to keep the identity of the actual owner private. In most cases, we rule against having nominee shareholders or directors. If you live in a high-tax country, chances are you're required to report your interest and pay tax on any earnings from an offshore company. We believe in disclosure. Nominee directors add expense, can potentially cause problems, and don't add much value in this day and age of transparency. Bearer shares have been used in the past for similar purposes of privacy, but they have largely been eliminated from every country on earth. Consequently, whether or not you should use bearer shares is more an issue of availability rather than legality. Don't believe anyone who tells you that you can use bearer shares for "total anonymity and privacy. It's a scam. Even if you could, setting things up this way will make it almost impossible to get a bank account, register property or complete other, more important steps involved in setting up your offshore company. The final steps to start your offshore company Once your company is approved and set up, the next step is to open a bank account, and possibly an offshore merchant account. Depending on where your company is incorporated, your nationality, and where you want to bank, you may or may not need to travel to the bank in person. Typical offshore banking countries like Singapore and Hong Kong have been making it much more difficult lately for non-residents to open an account. Many banks decline US citizens as their customers, while others demand that you provide excessive documentation. Therefore, it is necessary to know whether the country where you choose to set up your offshore company can also help you in regard to banking. Of course, the most important step of all is to simply take action. The sooner you get your business set up, the sooner you can enjoy the benefits. If you have read this far, you know that there are many different options for you to choose from and you will soon notice that deciding on a jurisdiction for your company is not as straightforward as it seems. We are here to help you with the set up of your Offshore Company from A to Z. Andrew Henderson, CEO and founder of Nomad Capitalist helps a couple of people each month to put together their own Nomad Strategy. If you are at a point at which you re ready to move forward, but don t know exactly where to start, click here to apply for a Strategy Call with Andrew.