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Offshore
Company Formations |
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With correct advice an Offshore Company Formation Tax
Exempt company can afford many significant and legal tax savings throughout
the world, providing you and your company with a competitive advantage,
whilst affording confidentiality and security, perhaps even saving on
future inheritance taxes.
However,
the exact benefits available to you and your company will depend greatly
on nationality, location and other similar factors. We therefore strongly
recommend that you seek appropriate professional advice before
Forming a Company.
Like
their domestic cousins Offshore/Tax Exempt companies are totally separate
legal entities. This very simple fact allows an offshore company to be
subject to the laws and taxes of the place where Online Company
Registration has taken place, despite the fact that its owners may
live thousands of miles away. Therefore, if the jurisdiction of your choice
has no corporate taxes then your company will have no tax obligations
although your personal tax position might be different.
Our
Nominee & Management Services for Offshore Companies
We can provide a full range of domiciliation, company and trust management
services including:
The
provision of a registered office address,
acceptance of service of process and official mail,
the appointment of a company secretary together with notification of annual
government duty payments, annual board meeting preparation etc.
The provision of Nominee Director and Management Services:
For the convenience of our clients we have created 3 levels of management
service specifically tailored to meet the legal and business requirements
of most offshore companies.
Basic
Company Management:
This service has primarily been designed for non-actively trading companies
holding intellectual or real property assets. As with all management options
it includes the provision of nominee directors together the use of limited
secretarial and administrative services due to the "passive"
nature of the activities involved together with the fact that management
and control functions does not have to be proved.
Trading
Company Management:
This includes the services listed for Basic Company Management but is
supported by a proper management agreement outlining what, how and when
various administrative and management functions should be carried out
by the nominee directors. This format has been created to cater for the
needs of international computer consultancy firms, small to medium sized
general firms or other such entities that need (due to various anti-avoidance
provisions) to prove genuine external management and control.
Full
Company Management:
This is the next step up from the Trading Company Management Service and
includes the full maintenance of company bank accounts, legal, accountancy,
management and administrative functions. This level of service is recommended
for medium to large activity companies specifically relying on double
taxation treaty provisions and/or where such companies are located in
jurisdictions that have well developed anti-avoidance provisions such
as the United Kingdom and the Republic of Ireland.
Virtual
& Serviced Office Facilities:
Apart from offering company management, we can also provide your Offshore
or UK Company with a sophisticated range of serviced, virtual office and
telecommunication facilities. For more information please speak to one
of our offshore company and tax planning consultants.
Common reasons to form an offshore company
| International
Trading
If
a firm has significant business in a third party jurisdiction it
is often possible to reduce the overall tax position by transferring
management and control to a more tax efficient area. For example,
if a British firm purchased a given type of good in Italy for resale
to the Middle East it would seem inappropriate to say that such
a transaction should be subject to UK corporation tax.
A
potential solution would be to Form a Limited Company in a low tax
area such as Cyprus to specifically control these transactions.
If this is done correctly and does not offend the anti-avoidance
provisions of the Taxes Act, 1988, it should be possible to benefit
from the Cypriot corporate tax rate of 10.00 %.
Obviously,
any remittances back to the UK may be subject to full UK taxes,
however, funds not so required would be available for investment
elsewhere. In respect to Cyprus, the fact that it has an extensive
double taxation treaty network, demands the submission of annual
audited accounts. In the above example Cyrpus is also strategically
placed which goes to prove the commercial veracity of the establishment
of the Cypriot company/office.
Even
better, in certain circumstances it may be possible to reduce the
flat 10.00% tax rate by inserting an offshore limited partnership
(this being tax free) with taxes only being paid on that ascribed
proportion of profits earned by the Cypriot company in its capacity
as the "general partner". The 'limited' and passive
partners having no direct tax consequences.
This
therefore prevents direct fiscal remittance
to the appropriate high tax 'mother' country, as all profits earned
by the passive partner will be totally tax free.
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| Investments
Offshore/Tax
Exempt companies are often used as an investment conduit in order
to allow money /assets to grow in a tax friendly environment without
giving it to the taxman.
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| International
Consultancy
With
the growing demand for professional consultants to work outside
their usual country of residence there is often the possibility
of greatly reducing or even eliminating individual and corporate
tax consequences by using offshore companies. This is possible as
you can often legally extricate yourself from the tax system of
your home country for a fiscal year or more.
During
this expatriate period it may then be possible to avoid the tax
system(s) of the chosen host jurisdictions by limiting ones period
of residency in any given country to between 4 and 6 months. These
being the normal European 'breathing' periods before full local
tax obligations exist. The purpose of the offshore company would
be to provide a fiscally beneficial entity to issue necessary invoices,
register for VAT and/or act as a controlling vehicle for future
home country remittances.
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| Confidentiality
As
competition becomes more intense, the ability to restrict competitor's
access to your company's true financial position could mean the
difference between success and failure. In certain circumstances
it could also be necessary to 'mask' the true ownership of a company.
Unfortunately, such confidentiality is not available directly in
the UK or in most other West European countries, however, it can
often be guaranteed by using offshore/tax exempt companies.
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| Property
Companies
In
certain circumstances there are significant tax advantages in having
properties held by appropriate domestic and/or offshore mechanisms.
For example, for non-domiciled individuals in the UK, a local company
owned in turn by a tax-free company can legally avoid all capital
gains taxes. The reason for this is that "shares"
are considered "moveable" property under British
law and capital gains realised by a non-domiciled individual through
his or her interest in the offshore 'tax free' company is not a
British taxable event unless the gains are directly remitted.
Further,
by using appropriate tax treaties it may also be possible to arrange
"back-to-back" loans to virtually eliminate domestic
tax liability on rental payments. In respect to Continental property
acquisitions, even in jurisdictions such as France, Spain and Portugal
is also possible - with correct planning - to avoid CGT or equivalent
taxes and various property acquisition duties (which are extremely
high in the case of France) by using double taxation treaties/companies.
However, whilst Britain and Portugal have very favourable tax laws
especially for non-domiciled individuals, the French fiscal system
always demands local professional advice.
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| Family
Protection One
of the major objectives of tax mitigation clients is to ensure that
wealth established during their lifetime is not fettered away by
future generations or circumstances. To avoid this tax planning
firms can often provide a whole range of 'tailor-made' companies,
trusts, foundations and establishments which can be used together
with many of the other tax mitigation mechanisms already outlined.
In particular, they can often be formulated to allow, for initial
investment flexibility whilst the original "settlor"
is alive, followed by a "fixed" structure upon
his or her demise. In addition, with the correct advice, "asset
protection schemes" can also legally avoid the almost universal
"forced heirship" provisions of civil law jurisdictions.
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| Intellectual
Property In
many cases offshore/tax exempt companies can be very successful
in exploiting the various international withholding tax rates for
dividends, royalties and interest. For example, it is very common,
for a nominal consideration, to transfer patent, copyright or trademarks
in favour of an appropriate offshore/tax exempt company before significant
appreciation. Once acquired it then being possible to issue intellectual
property (IP) sub-licenses or exploitation rights to appropriate
third party structures.
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