Offshore Company Formation

If properly structured, offshore company formation is an excellent way to legitimately minimise international taxation. Offshore tax planning is a key offshore company registration service provided by Healy Consultants. While incorporating offshore is a legitimate strategy to minimise international tax, concealing information about international assets and income is illegal in most reputable business countries.

One of the major benefits of offshore companies is minimizing international tax exposure through effective tax planning that legally minimises international tax liabilities. Healy Consultants provide advice to entrepreneurs on offshore tax planning. An effective use of offshore company formation is for transfer pricing, also known as ‘profit up-streaming’. It is the strategy of moving profits from a high-tax jurisdiction to a low, or zero-tax, offshore jurisdiction. What is required to achieve substantial tax saving is to interpose a low- or zero-tax offshore jurisdiction company in between a transaction that would otherwise take place directly between two high-tax jurisdictions. Transfer pricing is not illegal if correctly structured and implemented. For example, an offshore corporation may act as a distributor or sales company accepting orders directly from the customer and arranging delivery of the goods direct to the customer from the manufacturer or place of purchase. The surplus arising on the difference between purchase and sales price may be accumulated free of tax. This can be of particular interest where goods are purchased in one country and sold in another, yet the businessman is located in a third country. Goods may be shipped directly from the supplier to the purchaser with the supplier invoicing the offshore company, which then invoices the purchaser at a higher price, retaining the profit offshore.

Several large corporations in economically and politically unstable countries often diminish the perception of risk by moving ownership of assets and the base of their operations to offshore companies. High net worth individuals gain privacy and save on professional fees by using an offshore corporation as a personal holding company. These entities may be suitable for inheritance planning and reducing the costs and time delays in probate. Where a person is domiciled outside a territory and owns assets located in that territory (e.g. property), then such assets may be protected against inheritance tax and higher rates of taxation by holding the assets through an offshore company.

Many of the challenges and expenses associated with investment in overseas property, such as holiday villas, may be avoided through registration of an offshore company to hold the title of the property. For more information, visit our Asia Property page. An offshore company can be used for investment purposes in property, stocks and shares, commodities and other assets, while providing anonymity and tax savings. Funds accumulated can be invested or deposited throughout the world, although the funds may be subject to the tax regimes of the countries in which the investments are located. There are countries with tax-exempt bonds or bank deposits where interest is paid gross.

Using a coherent offshore tax planning strategy, a person working overseas is able to limit his tax burden by receiving, into the country in which he is working, a fixed level of remuneration and accumulate the balance in an offshore company. Similarly, designers, authors, consultants and entertainers may assign or contract with an offshore corporation the right to receive fees due under a contract for services. Payroll costs and travel expenses may be reduced by paying employees working overseas from an offshore corporation. This may also provide tax relief and social security saving benefits for the employees.

To own trade licenses and royalty rights for which the IBC pays no tax itself on royalty receipts in the offshore jurisdiction. Our firm frequently advises companies on the sale of patents, technical know-how and license and franchise agreements for offshore companies, which is then owned by an offshore trust. Upon acquisition of the rights, the offshore company enters into agreements with licensees wishing to utilize the patents, technical know-how, licenses or franchises around the world. The income, subject to applicable withholding tax, is accumulated tax-free. By careful selection of the jurisdiction, withholding taxes can be substantially reduced by the commercial application of double taxation treaties. Yachts or ships may also be owned by offshore companies and registered in an offshore jurisdiction which can prove a cheaper and more tax-efficient method of ownership. Ship Registration in Singapore is a popular choice.