In an earlier post, we had explored the complexities relating to tax issues, especially when you own assets in multiple countries. We had also briefly touched upon how an offshore bank account and other services offered by offshore banks can help you manage and mitigate tax outgoes. Here, we will look at some of the more popular tax saving structures used by offshore banks to help you deal with your taxes and to help you with asset protection and growth:
Offshore bank accounts
These form the foundation for all your offshore activities – whether personal and/or relating to your business activities. You will typically get / gain access to:
▪ Full online banking and Internet access
▪ Corporate and personal credit, debit, ATM and prepaid cards
▪ Term and fiduciary deposits
▪ Multi-currency accounts in major currencies
▪ International transfers using SWIFT, SEPA, TARGET, international Banker’s Drafts etc
▪ Brokerage and investment services
▪ International factoring
▪ Trading platforms with access to all major markets worldwide
▪ Savings, escrow and investment accounts
▪ Mutual/investment funds
▪ Gold Certificates / Precious metal purchase
Offshore companies
These include International Business Companies (IBCs), Limited Liability Companies (LLCs) and Limited Liability Partnerships (LLCs). These structures can then be used to register limited partnerships and companies in the countries where you do business. Advantages of such structures are as follows:
▪ Limited liability for shareholders like you
▪ A separate legal identity
▪ Simple transfer of ownership
You can use offshore companies for a number of purposes. Some typical purposes include:
As a holding company
You could use a holding company to own your assets like property and investments. This would help you:
▪ Mitigate income and inheritance taxes that may otherwise be payable if investments were held in your name
▪ Protect held assets from possible seizure in a country in which you are resident
▪ You could also use this company to hold trademarks, patents, royalties and other rights. The company could derive income from them by granting leases, rights or distributorships.
Employment
If you earn income outside your country of residence, you could establish a company and then sell sole rights to your services to this company. Such a company can also be used by onshore resident companies to employ staff engaged in offshore projects. Advantages include:
▪ Saving on social security type deductions
▪ Helping avoid complex employment regulations
▪ Providing tax-free wages and pensions to employees
Off-the-shelf Offshore companies
Some offshore banks / wealth management firms offer clients the option of off-the-shelf companies. These are companies that have already been registered. Buying one of these companies can help you save on incorporation process time, get a company that can be used immediately and get a company with vintage (that has existed for some years).