Confidentiality
Confidentiality is a cornerstone of the
functioning of offshore centers. Subject to the requirements of the
money laundering and financial regulation laws,
in
International trading
Import and export transactions can be greatly facilitated by the use of offshore companies. The use of an offshore company between a seller and a buyer of products or services in different countries can allow profits on the transaction to be accumulated offshore.
Investment Companies
An offshore company is often used to make investments and accumulate wealth offshore. In most jurisdictions 'withholding tax' is levied on income remitted out of the jurisdiction, but the careful use of double tax treaties can reduce or even eliminate tax on the investment income. The use of an offshore company also protects the identity of the ultimate beneficial owner.
Property Owning Companies
Owning overseas property through an offshore company gives several advantages.
- Possible to avoid inheritance tax, capital gains tax and death duties.
- The process of sale is simplified.
levied by certain countries. Government stamp duties and capital gains
taxes can be avoided. Exchange control delays can be avoided.
- Shields the identity of the ultimate beneficial owner of the property.
Probate
Ownership of a portfolio of investments, properties or other assets though a single offshore holding company can simplify probate procedures upon the owner's death. Probate can be applied for in the offshore jurisdiction rather than in several different countries where the assets are located. Legal fees are reduced and publicity may be avoided.
Consultancy and Services
Consultants and those providing services such as musicians and entertainers often receive much of their income from overseas. This income can be remitted to an offshore company which in turn employs the consultant and pays over a modest amount for expenses whilst retaining the bulk of the money offshore.
Employment overseas is often facilitated by the use of an offshore employment company. This can either employ an individual or a group of individuals working overseas.
Ship and Yacht Ownership
It is often advantageous to own a vessel in
an offshore location. It can also provide an easy registration
procedure for yachts which in certain countries can only register on
the major national register with onerous compliance requirements. A
separate offshore company may be formed to operate or charter the
vessel.
Intellectual Property
Patents, copyrights, trade marks, franchises and other rights such as those in music, computer software and technical know-how can all be transferred into the ownership of a licensing company, which may be offshore or onshore. License or franchise agreements are made by the offshore company, and royalty payments and license fees are received by the company.
Withholding tax will normally be payable on distributions from the licensing company, but the effects can be minimized by the use of double tax treaties.
Inheritance Tax Protection
Ownership of assets through an offshore company can often eliminate liability in the owner's own country to inheritance tax and death duties.
Asset Protection
A Trust can be established whereby the
Settlor, having handed over his assets to the Trustees, no longer owns
these assets so they cannot be seized in cases of insolvency, marital
proceedings or professional negligence. Trusts are excellent asset
protection vehicles and are thus valuable devices in times of
political and economic instability.
Family Wealth Protection
Trusts are often used to protect the
continuity of family wealth by imposing conditions on the use and
distribution of the moneys on present and future generations. Trusts
can be used legitimately to avoid 'forced heirship' provisions
affecting inheritance. Inheritance, capital gains and income taxes can
all be minimized in this way.