Using Offshore Finance Companies To Reduce UK Tax

The main benefits are as follows: Confidentiality Tax although the benefits have been diluted by recent legislative changes Potential benefits when selling See below for details. Potential disadvantages of using an offshore company Set up and running costs of the company. There will be annual fees and transactional fees. The level will depend on matters such as the jurisdiction of the company and the level of service required and varies between different companies offering the services. More sophisticated structures have an offshore trust behind the company which comes with an additional layer of cost which is justified if the value of the property is high and the tax and other benefits outweigh the cost.

You have to trust the administrators of the company to deal honestly with you and the property and to follow your instructions particularly where the director s of the company are nominees or similar or otherwise not directly under your control. Most corporate services companies offer a professional service but due diligence should be undertaken on any company agent you are planning to engage. There are certain exemptions, for example buy to let properties and the charge does not apply where the company is a nominee for an individual or a trust.

This is again subject to the same exemptions as the annual charge. The financing and associated security arrangements are likely to be more complex and hence costly. Confidentiality The ownership and other details relating to the title of the property are recorded at HM Land Registry. Tax The main potential tax advantages in buying an offshore company are: A buyer acquiring a property by purchasing the shares in a company should note that they could be acquiring a liability to pay CGT on the latent gain in the company built up during the seller's ownership and which will be triggered on a subsequent sale of the property.

If the property is in the name of an individual then on their death inheritance tax IHT is potentially payable on the net value of the property. Use of a trust can be helpful here but requires careful thought including the use of debt in the structure. Regardless of who owns the property any rental income will remain taxable in the UK.

In all cases, the default position is that the basic rate tax should be deducted at source by an agent or the tenant. It is possible though for the owner to apply to HMRC for a clearance which allows them to receive the income gross.

Panama’s Tax system

No stamp duty land tax is payable by a buyer of the shares in the company. Advantages on selling the property Particularly if the owning company is a single purpose one, i. Minimising fraud One potential issue for ownership of a property in the name of an offshore company, particularly where it is an investment property to be rented to tenants, is the risk of fraud. Meet the Property Team. Countries with less sophisticated tax codes will allow you to set up a business or investment activity in another country under a foreign entity and not require you to report its activities - taxing you only once the income is repatriated.

Until about thirty or forty years ago this was the general modus operandi in every high tax country. However, little by little tax bureaucrats started to close loopholes, requiring you to report income earned even if it was earned by a foreign entity using foreign accounts, no matter if any income was repatriated.

The only exceptions are for certain types of business activities and through double-taxation agreements.

However, if there is no real physical operation going on in the country where it is located i. Contact us for assistance in deciding the best strategy for you with regards to starting a new business offshore, relocating an existing business or starting an international subsidiary.

1. New York City Charter 2013.
2. Song-waves.
3. Start a company.

If you would like more information in regards to starting an e-commerce business offshore please go to our Offshore Merchant Account and E-Commerce section. If your business or investment is located in no-tax jurisdiction then it is important to make sure that your corporate structure complies with company tax laws in your country of residence. Businesses have more options and loopholes available to them than individuals looking to invest in foreign markets through international structures.

• Using an offshore company to buy and sell UK residential property;
• Reduce Taxes.
• Barcarolle no. 11 in G minor - Op. 105, no. 1.

In general the question is one of ownership. If legal ownership and control of the structure that holds the funds are held by a different corporate vehicle, even the most draconian reporting laws can be bypassed. There are a number of Asset Protection is a term used to describe the concept of legally transferring your assets into a legal entity which will protect them from attack by frivolous litigation, seizure from government, attack from an estranged spouse - in fact anything which may threaten your hard earned wealth.

At some point you are going to want to repatriate income back to your home country. You can then receive the funds and declare them in your regular tax returns as earned income. However, it is possible to use a correctly established foundation to grant tax-free gifts to relatives and family members other than your spouse. This income shifting allows your family members to receive foreign gifts tax-free.

There was no real business and transactions were done simply to create losses, which investors could use to reduce their tax liability. This is one of the strategies the government is planning to crack down on, although its plans have attracted controversy and could be watered down as a result. Currently, if you give assets to charity you can claim income tax relief up to their entire value. In this case you are obviously losing the asset, but you are reducing your taxable income.

Give enough away and you could reduce your taxable income to zero. There is a way to keep hold of the asset and reduce your income. If you have a freehold property you could grant a lease on it and give that to the charity.

Tax evader crackdown could reduce offshore banking options for expats

For example, if you grant an eight-year lease the charity holds the property for the term of that lease and benefits from any rental income during that period, but at the end of the lease the property reverts to your ownership. This isn't as easy as it was, as you will need to be out of the country for at least five years before you can escape capital gains tax on assets held in the UK. If you work for a complete tax year outside the UK you will no longer be liable for most UK taxes, but will be taxed on some income arising in the UK such as rental income.

Investment schemes exist that let you hold money in an offshore fund and roll-up the interest you earn on it. You can choose when you realise your investment, so you can plan it to fall when you are a basic rate rather than a high rate taxpayer. This has been corrected.