Can I Cut My Tax Rate to Zero With an Offshore Company?
I first started using Offshore Companies back in the early 1990s.
Even then I was paranoid about someone stealing what I had worked for. Whether that be the taxman. A lawsuit. Anyone in business has those fears.
Many have been wiped when a few simple precautions could have saved them. But that’s not what we’re talking about here.
The question I want to explore is how to legally save tax with an Offshore Company in the 2020s.
Nowadays it’s a bit more tricky, depending on your country of residence and the ownership of the Offshore Company.
Many countries have rules requiring disclosure of controlled corporations, which means you have to disclose the Offshore Company on your tax return and you may be taxed on the income of the Offshore Company as if it were personal income.
There are many solutions to this problem such as trusts and nominees. Every situation is different.
The bottom line is , yes , you can cut your tax rate to zero with an Offshore Company but it requires careful planning.
Decide on the jurisdiction for your Company.
There are multiple choices here.
You will want a Country with minimal filing requirements and a zero tax rate.
Belize, Hong Kong, Antigua or the BVI might fit the bill.
You will want your Company to have a bank account in a jurisdiction outside your home country.
There are fewer and fewer banks accepting clients remotely nowadays.
If you want to bank in Hong Kong, for example, you will have to travel there. There are a few jurisdictions, such as Belize, where with the right bank contacts you can do it remotely.
Many vendors sell Offshore Companies but are completely inept at helping with opening bank accounts.
This is an important point. Your offshore vehicle is pretty useless without a functioning bank account.
Now that you have your Offshore Company and your bank account set up you’ll want to structure your affairs so that you have income coming into your Company.
That depends on your business. Can you move your whole operation to a tax friendly jurisdiction?
Otherwise you will look at other strategies such as having the Offshore entity owning trademarks or brands and charging royalties to your onshore vehicle.
This, again requires careful planning to be effective but at the end of the process you will have a structure that will save you thousands annually.
How do I spend money accumulated in the Offshore Company?
You might want your overseas Company to invest the accumulated profits tax free.
For example you can buy real estate overseas or open a brokerage account in the name of the Company and make investments either in your home country or overseas.
You will also have a debit card from your overseas bank that you can use in the same way you use any other card. You might even want to travel to exotic locations for your board meetings or to investigate investment opportunities.
Ultimately an Offshore Company, structured correctly, will open up a world of opportunities, save significant taxes and give you more privacy.
If you'd like help with your offshore asset protection and tax elimination strategy email us on firstname.lastname@example.org