The Onshore Alternative for
International Trade and Tax Planning

The Offshore, the Developed countries and Tax Authorities

New Offshore Solutions

A properly configured and managed business structure can provide substantial tax benefits, protect assets, improve business efficiency, reduce costs and maintain confidentiality.

An improperly configured business structure is a recipe for disaster for the owner and his business.

The Offshore, the Developed countries and
Tax Authorities
New Offshore Solutions

Should I avoid the Offshore now?
Will it be illegal using the offshore?
Can I trade through an Offshore Company?
If I can use the Offshore, which cautions should I take?
And which other or New Offshore Options do I have?

The Offshore, the Developed countries and
Tax Authorities

Trading through an offshore company can cut your tax bill but, will all your business partners trade with is?

Confidentiality is a primary concern of many offshore practices, particularly asset protection.

When it comes to utilising an offshore company for trading however, a whole new category of priorities must be considered. These are the priorities of your trading partners and the attitude of onshore authorities.

Today legality and appearance are the essential requisites for the offshore entrepreneur.

In many circumstances, it is not desirable to raise invoices in the name of an exotic offshore company, nor is it possible to ask your offshore company’s clients or trading partners to make payments to a bank in an obvious offshore tax haven.

Remember that the books of your customers or trading partners are open to scrutiny by their local tax authorities and dealings with offshore havens (even if legal) are viewed with scepticism, if not suspicion.

Tax authorities of high-tax nations are aware that offshore companies can be used for illegal tax evasion by businesses that need to “reduce” their taxable profits before year-end. After all, the ownership of an offshore company is difficult and often impossible to establish. This allows dishonest business owners to incorporate a company in an offshore haven and use it to siphon money offshore, usually by having the offshore company raise invoices payable by the onshore business.

Consequently, trading directly in the name of a tax haven company can cause loss of business as many prospective customers feel uneasy about being wrongly suspected of participating in such invoicing.

In many developed countries, tax authorities do not even allow or recognise payments remitted to companies based in offshore tax havens. This reflects the opinion that anyone entering into a transaction with an offshore company is not doing so out of genuine commercial need, but solely for reasons of tax mitigation, if not tax evasion.

Of course, there are times when an offshore company can be used to close a one-off deal if both your trading partners and the relevant tax office feel happy about the arrangement, or they are not located, most usually, within Europe, North American and other sensitive countries.

But entering new markets or marketing products or services to unknown customers under the name of Tropical Island Trading Corp., incorporated in the Seychelles or Belize, which is perfectly workable, unless, of course, you really are exporting current consumer goods.

Even though the image of an offshore company has taken such a battering over the years, this does not mean that an offshore company is all but useless for the international entrepreneur.

Near-zero tax trading is still possible through an offshore company, but keeping a low profile is essential.

Not at all; whilst the minute legal details call for specialist knowledge, the underlying idea is usually simplicity itself – it involves the use of a respectable onshore company to front transactions.

Staying within the law!

Any tax mitigation structure must ensure compliance with the law. If mistakes are made, not only can any tax-saving benefits be lost, but heavy penalties can be incurred.

New “Offshore” Options

Not all offshore companies are treated equally by partners and tax authorities. Quite often more sophisticated low tax structures are demanded for trading and holding, rather than companies registered in tax havens (as Panama, Belize or BVI).

A properly configured and managed business structure can provide substantial tax benefits, protect assets, improve business efficiency, reduce costs and maintain confidentiality.

An improperly configured business structure is a recipe for disaster for the owner and his business.

The necessity for some or all of the optional services will always depend on the actual circumstances of each individual client, and his business. These options should best be considered before placing an order for incorporation, although their integration at a later stage is also possible.

Let us review a few prestige, yet low tax solutions that can substitute a simple offshore.

SCOTTISH LP

As long as your Scottish Limited Partnership consists of 2 offshore members and does not trade in the UK, such LP is considered a tax transparent entity. Another reason of Scottish LP popularity is that it is an EU structure. Moreover, there is no requirement to submit financial statements to the UK tax office.

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UK LLP

As long as your UK Limited Liability Partnership consists of 2 offshore members and does not trade in the UK, such LLP, just like the Scottish LP, is also considered a tax transparent entity. Another reason of UK LLP popularity is that it is an EU structure. Moreover, there is no requirement to submit financial statements to the UK tax office.

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DUTCH LIMITED PARTNERSHIPS (CV)

The most common type of Dutch partnership used in international tax planning is the limited partnership (commanditaire vennootschap – “CV”). CVs generally have at least one general partner with unlimited liability and one limited partner with limited liability. There is no minimum contribution requirement. There are closed CVs and open CVs: partnership interests are not freely transferrable in closed partnerships (transfer requires the consent of all the partners); partnership interests are freely transferrable in open partnerships. For Dutch tax purposes, closed CVs are tax transparent and, therefore, not liable to Dutch corporate income tax. This means that the income of CV is not taxed by the Netherlands at the level of CV.

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DENMARK LIMITED PARTNERSHIP (K/S)

Denmark is a highly developed member state of the EU, and a jurisdiction with a standard level of taxation, which can in no way be described as a “tax haven”. At the same time, Danish legislation provides the opportunity of registering and using Danish companies K/S) with a zero rate of tax. The K/S is a limited partnership, having no less than two partners. One of the partners is a general partner, while the other partner(s) has/have the status of limited partners. A Danish K/S with foreign partners and which does not carry on business in Denmark is not liable for tax in Denmark. Under Danish tax law, a K/S is not regarded as a taxable entity in its own right (and accordingly, is not required to obtain a taxpayer registration number in Denmark), but the profits derived by a K/S are taxable in the hands of its partners (i.e. the general partner and the limited partner(s)) on a pro rata basis, in accordance with their interest in the K/S, at the place of their residence.

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CANADIAN LP

A Canadian LP is designed similarly to the Scottish LP. It is as well a white-listed structure. Moreover, there will be no need to deal with VAT, as the LP is registered outside the EU.

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HONG KONG

This prestige offshore has long been acknowledged for international trading, especially if you trade with China or other Asian countries. Hong Kong has concluded a vast number of Double Tax Treaties, thus it can suite for concluding contracts better than a classic tax haven company. Hong Kong companies must submit annual financial statements.

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SINGAPORE

Singapore is probably the most prestigious low tax jurisdiction, where one can use either territorial tax regime benefits (Singapore Company is tax transparent if its income is not received on the Singapore bank account and does not trade with Singapore companies) or one can use a tax resident structure and still enjoy numerous tax allowances. Singapore company is a bit more complicated for structuring (for example, it must have a Singapore resident Director) and tax planning. But the advantages of this prestige jurisdiction cannot be underestimated. Your TBA tax consultant will discuss with you all the details of structuring and tax planning.

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UNITED ARAB EMIRATES – RAK

It is a very interesting jurisdiction, where you can register a simple offshore company (RAK Offshore). A UAE company is completely non-taxed. Moreover, you can open a corporate bank account at one of the Dubai banks, which have become quite popular lately.

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GIBRALTAR

If you choose Gibraltar Company, than its income is entirely not taxed, given the Company’s bank account is not held in Gibraltar and your partners are not based in Gibraltar. Gibraltar is located in the European Union; however, it is not included into EU VAT zone. Gibraltar companies must submit annual financial statements.

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When you choose TBA Company Package, you have the option to build your own company registration services, as per your specific needs, with all those services you require to properly carry out your own business;

The possibility of offering you TAILORED MADE SOLUTIONS has allowed us to offer you 4 exclusive packages:

BASIC
BUSINESS
PRESTIGE
PREMIUM