Offshore Tax Planning
What is An Offshore Tax Plan?
Offshore tax planning can be defined as hiring a tax attorney or an accountant to design a strategy to lower your income taxes by using legal entities located “offshore” outside of your home country.
Finding the Correct Country for Offshore Tax Planning
country for offshore tax planning has a variety of legal strategies to lower or eliminate paying income taxes. The first strategy is to locate a country which does not tax legal entities registered in that country earning income from other countries. In the offshore industry this type of country is often called an “offshore tax haven”. Why incorporate in a country with high income taxes or corporation taxes on worldwide income? That would be poor tax planning. There are many tax haven jurisdictions in this world. Not all tax haven countries are alike. Some have low income taxes on worldwide income and others do not tax global income. Which one would you choose for your global tax planning purposes?
Legal Entities for Offshore Tax Planning
Once you have chosen the right tax haven country, you need to consider what type of legal entity to use. Tax haven nations offer a variety of legal entities like offshore corporations, offshore trusts, and offshore private foundations. What is the purpose for your offshore entity? Will it just be used to hold funds in an offshore bank account? Will it engage in real estate investments or own a second home on a beach? Will it engage in securities or forex trades? Will it sell products or services worldwide? The answer to these questions will shape the type worldwide tax planning you will need.
The next consideration for your offshore tax planning is what do you want to happen to this legal entity when you are disabled or pass away? Will it be used for estate planning by avoiding a will and probate to pass ownership of your assets to your heirs? Will your strategy be to use this entity as an ongoing offshore business which will be managed by a continuous staff or experts while your heirs become inactive owners? Answers to these questions will again determine the type of legal entity and how it is structured for your needs.
Offshore Tax Planning for Tax Optimization
Offshore Tax Planning One of the most important aspects for what an offshore environment is known is represented by tax optimization opportunities, but it absolutely does not mean that there are no taxes in the whole offshore zone. Each offshore jurisdiction has its own laws and rules, that are necessary to research, study and understand in order to take advantage of the opportunities that particular jurisdiction offers.
In so called tax heavens non-residents often are not liable to direct taxes, which are however applicable to residents. Even various onshore jurisdictions such as UK, Canada, Netherlands are used for the offshore purposes. It is always a question of the knowledge and deep understanding of the characteristic features of each particular country and its legislation that can be used for major benefits for personal affairs or business objectives.
There are diverse procedures to be conducted in different jurisdictions in order to achieve and perform efficient tax avoidance actions, therefore it is strongly suggested to address an international financial consultancy company that will be able to work out the right solution for the needs of every client individually.
Onshore jurisdictions are concerned not only about tax evasion, but even about tax avoidance procedures, as significant capitals are directed towards offshore zones. That is why they join in the international organizations in order to cooperate against this tendency.
It has been agreed that every tax avoidance plan undertaken by an individual or a company should be understood and evaluated as only a part of a more complex business scenario containing other significant elements. Pure tax avoidance procedure might require a special investigation and, if necessary, the onshore authority can make additional laws in order to make some assets and transactions taxable in that particular case.
Tax optimizations procedures made with the lack of knowledge, care or attention may lead to undesired consequences. It is important to be experts in all the jurisdiction’s laws details, to know local habits, traditions, lifestyle and practices in order to undertake and implement a right action plan for a non-resident entity. An experienced financial consultancy company with good international reputation and solid values is the clue in helping you structure the business in the most efficient way.
Offshore Tax Planning Advice
offshore tax planning advice As you can see, offshore tax planning involves more than filling out simple income tax returns. Choosing the best tax law firm or accountant along with the right offshore jurisdiction and best legal entity to fit your needs are all important for fulfilling your income tax savings goals.
Finding a competent lawyer or law firm which can provide offshore tax planning advice takes a little research. The internet has law firms claiming they can do “asset protection” or other forms of offshore tax planning. Just go to Google and type in the words “offshore tax advice” and you will see that Google has indexed almost 10 million web pages using that keyword phrase. Which one of these lawyers, accountants, or consultancy companies will you choose to do your offshore tax planning?
First of all, using a lawyer or law firm in one’s home country to create and implement an offshore tax plan is not advisable because there could be conflicts of interest and lack of knowledge of the different international laws involved. Every country has different laws. Since offshore tax planning can involve several countries it is best to hire someone who knows those countries laws.
Second, knowledge and expertise for implementing an offshore tax strategy is based on the experience with being involved in different countries laws and banking practices.
Third, it is better to hire a law firm or consulting company with offices in many different countries to consult with and implement an offshore tax plan. That is because such a law firm or consulting company has branches with the knowledge of local tax laws, corporate structures and banking laws which are all needed for a proper international tax strategy. A law firm or company with many contacts in the countries you will use to implement your global tax plan will know the laws of each country.
The professionals of Carlo Scevola & Partners, an international law firm with offices in over 80 countries, have specialized knowledge about each offshore jurisdiction. CS&P can provide vital guidance, offshore tax planning advice and assistance in handling complex transactions and managing cross-border taxation issues successfully. For more information about offshore tax planning please contact our offices.