Offshore Business Management

Equity Stripping and Taxes

2009-05-04T15:55:23Z

Of course, where there is interest – even deferred interest and balloon payments – taxes are an issue. Taxes must be paid on interest payments (and on accrued but unpaid interest too in most cases), and the interest, may not be deductible to the payor. So, even in the case of a husband and wife who are lender and borrower, the lending spouse will have interest income, and the borrower spouse may not get an interest deduction. This is an issue whether or not the spouses file a joint return. If the interest payments are not deductible, then a tax liability that did not exist previously may have been created.

Certainly, if the interest income is being reported correctly to the IRS, it may help establish the validity of the loan. Conversely, if there is no such reporting, the arrangement will appear to be a sham. Indeed, many equity stripping arrangements are unwound because of the tax treatment of the interest on the loan.

To avoid the tax problems, equity stripping arrangements might be implemented using a grantor trust as the counter-party, so for tax purposes, it is a nullity. Of course, this gives a later creditor the chance to come in and argue, “Well, if it is a nullity from a tax standpoint, then it should be a nullity from a civil standpoint too.” Though logically suspect, this sort of rationalization may appeal to judges.

With a personal residence, keep in mind that for a home equity line of credit, only the interest on the first $100,000 is deductible. This may substantially impair the economics of many programs that are designed to equity strip personal residences. At any rate, you should never equity strip a primary residence unless there are funds immediately available somewhere with which to make mortgage payments.

Offshore and U.S. Brokerage account services by Jonathan Curshen

2009-04-28T15:47:12Z

Indeed, clients often ask us, “Is it true. Is it really possible to invest tax free with an offshore account”?
Yes, It is true. But there are some things you need to be aware of when contemplating your investment strategy.

For example, most people do not know that US brokerage accounts titled in the name of a foreign person or entity are exempt from capital gains. As a result, there is no “Tefra” or back-up with- holding on profitable stock trades. Clients of course are required to complete a W-8 form, stating it is a foreign account in order to take advantage of this (if the account is titled directly in the name of offshore structure or foreign client).

In these cases, many countries would with-hold income tax payments directly “at source” for their own residents or citizens, but allow foreigners (or a foreign entity such as a Foundation or Company) to enjoy bank account interest 100% tax-free. If an account is coded as “foreign”, it does not even get included in the reporting information the bank would send to the local government. So in essence, you have a tax-free bank account in a country not even considered to be a tax haven, (but for you as a foreigner, it is).

In reality, your offshore bank is really performing what is called “sub-accounting”, which means that they are “breaking down” the master-account and are issuing a monthly statement to you with your holdings and activities.

The only down side to some offshore banks or offshore brokers are the fees involved. In the past, anyone that has dealt with some of banks in the Bahamas or Europe can tell you that full service brokerage fees look like a good deal after getting a rate schedule from some of the offshore banks offering similar brokerage services. The good news is, that is starting to change, and there are some very good banks in both Panama and The Dominican Republic offering very very competitive fee schedules.

An Introduction to Offshore Incorporation – by Jonathan Curshen

2009-04-21T14:49:57Z

It’s true but as regards to the second part: taxes may vary. Mind Your P’s and Q’s and you will be playing with a full deck.
Some time ago, only superwealthy knew about all the advantages of incorporating offshore. By this you can plan your business tax burden, protect yourself in case of personal problems or national catastrophe. Going offshore is the best way to protect your personal and financial privacy, and your future well-being. Please note also that offshore banking industry and asset protection strategies are completely under the law.

If you need to open bank account with debit/credit card, wish to involve in the global investment project or to start your international business, going offshore is the best decision for you.

It has become almost impossible for today’s businesses to remain in complete privacy, free from excessive taxation and not vulnerable to lawsuits. Placing your assets offshore, you can protect yourself from illegitimate creditors.

By incorporating offshore you can become judgment-proof, as the world-wide courts are not recognized in the offshore jurisdictions, and tax-free, as there are no taxes assessed on in offshore trusts or International Business Companies formed in offshore jurisdictions.

If you wish you can be completely anonymous while maintaining complete control over your offshore Trust or International Business Company. Your offshore company may own an overseas property or just hold a bank account maintaining your anonymity.

To summarize the reasons why you should consider going offshore, these are the main benefits of it:

Asset Protection

To secure against future claims such as judgment, divorce proceedings, bankruptcy, creditors and litigation

Reducing Tax Liability

a foreign jurisdiction can offer unparalleled opportunities for reduction of your tax liabilities.

Confidentiality

From competitors, claimants, ex-spouses, and other parties from whom you wish to keep your business interests private; and

Estate Planning

Private Foundations, and Offshore Protective Trusts for accumulation of investment income and long-term benefits for beneficiaries on a favorable tax basis (without inheritance, income, or capital gains taxes);

E-Commerce

Shifting business to an Offshore Haven removes restrictions, regulations and taxation. What can you do with 50% more time and money?

Offshore Immediate and Temporary Annuities

2009-04-16T15:19:59Z

Our annuity product providers can offer investors a choice of offshore annuities.Income from these annuities is paid gross as no deduction of tax is made. Investors can opt for a temporary annuity whereby income is paid for a pre-determined number of years, or an immediate annuity whereby income is paid for life.

FEATURES AND BENEFITS

* Income is paid free of UK and Guernsey tax (however, Annuitants may be liable to income tax in their country of residence depending on their personal circumstances).

* Investors can choose between an Annuity paid for a specific term or for life.

* A guarantee period can be added to life annuities whereby the income is guaranteed for a specific period (maximum 10 years).

* As annuities are transacted through the offshore centre of Guernsey, annuitants benefit from favourable tax treatment.

* Annuitants can select between monthly, quarterly, half-yearly, and annual annuity payments.

OTHER KEY POINTS

* Available on a single life or joint life second death basis.

* Minimum investment £8,000.

* Age limits 18-74.

* Minimum term for temporary annuities 7 years, maximum term 15 years.

Offshore Trust Benefits

2009-04-02T16:13:10Z

Quite simply, Offshore Trusts provide complete and absolute confidentiality. Assets and title to property, for example, are put into the trust for the trustee to manage. This affords total privacy as it is not possible to discover the owner of the assets and the subsequent benefit of this is that there is the additional benefit of absolute protection from liability. This is how offshore asset protection can be cast in stone. Whilst the legal title passes to the trustee, the intent of the trust is to provide for the beneficiaries, of which the settlor may be a named person. These beneficiaries, hold very strong rights with respect to the interests in the trust and most jurisdictions recognise that the intent is to provide the defined benefits for the these beneficiaries and, in court cases, rule favorably in their direction when questions as to the management of the trust arise.

Because these Offshore Trusts are almost always found in offshore tax havens or in low-regulation offshore jurisdictions with reputations for offshore asset protection and superb confidentiality, the Offshore Trust also benefits from these features. Assets managed by Overseas Trusts are, in the main, free from tax which is applicable in a settlor’s home country or jurisdiction, such as the UK. If the trust is formed to provide for the benefit of the children or heirs of the settlor, for instance, the Offshore Trust may provide a vehicle to protect against intense inheritance scrutiny and taxation. Moreover, Offshore Trusts offer unparalleled confidentiality when formed in low regulation offshore financial centres plus increased protection from the threats of civil litigation and liability, and even from divorce or business dissolutions. It is extremely difficult, except in situations of accusations of a severe criminal offense, for an outside entity to pierce the confidentiality shield surrounding an Offshore Trust in most offshore jurisdictions.

About Offshore Retirement Planning

2009-03-27T17:10:09Z

Retirement planning is a part of the financial planning, including the offshore pension savings plan. The purpose of retirement planning is for the expat to achieve the determined retirement objectives. This starts with an analysis of all the assets an expatriate already has and leads to a tailor-made retirement plan.

How does retirement planning work for expats?

To reach the most optimal retirement plan several steps have to be taken.

* Determine the personal retirement objectives – The expat has to decide when one wants to retire and what level of income is needed to enjoy retirement in the lifestyle he/she wants/ is used to.
* Check the current situation – Based on the set objectives a check will be made to see if the current situation is sufficient and, more importantly, if this is the most optimal solution to achieve the set objectives.
* Optimize the retirement plan – After the current retirement plan has been checked, the investment funds will be selected and the retirement plan will be optimised to make sure the set objectives will be achieved.
* Arrange (offshore) pension savings plan – The (offshore) pension savings plan has to be arranged to start regular and lump sum savings for retirement.
* Evaluate the retirement plan – When the personal situation of an expat changes, e.g. by marriage or childbirth, this might effect the retirement objectives. By evaluating and adjusting the retirement planning, the expat keeps investing in a tailor-made solution based on these changed objectives.

What do expatriates have to take into account?

There are several issues expats have to be aware of while planning their retirement.

* The costs of delay – The sooner the expat starts with retirement planning, the lower the total costs to achieve the determined fund. Each delay will lead to an increase of the total costs. As the investment has less time to gain returns and the regular savings have to be higher to achieve the same fund.
* State pension – Expats cannot solely rely on state pension. As it is not sure state pensions will still exist when the expat retires. And if it/they still exist, it might not be certain this/these state pensions are sufficient because the expat has moved from country to country and therefore might have state pensions in several countries.
* Offshore pension – Expats have a more privileged position than most because they have more freedom in making investment decisions. Therefore they can choose to invest in tax-friendly offshore funds.

Offshore and Mutual Funds

2009-03-20T13:31:50Z

Before starting this article about Offshore and Mutual Funds, let’s find out what are mutual funds and which are the benefits of these. So, what really are mutual funds and which is the difference between them and a tax-free?

A mutual fund that is based in an offshore jurisdiction, which is generally considered to be outside the United States. The term is often used, perhaps incorrectly, to describe a fund that is not in a high-tax country.
Well, the explanation for this is quite simple. Just like some jurisdictions permit interest from bank accounts to be tax exempt, the same is true for mutual funds. Some of the more popular offshore mutual fund jurisdictions, such as the Cayman Islands, Bahamas, Bermuda, Channel Islands or the Isle of Man permit mutual funds to be exempt from local taxation as long as the investors are not residents of these locations. Mutual fund companies use this to their advantage. All of the well-known American mutual fund companies mentioned earlier have their funds registered and based in one of these locations. As a result, there is no tax on capital gains or dividends for the shareholder.

Now continuing with the benefits, for an investment professional, a mutual fund is a vehicle that enables more efficient use of existing research and investment expertise and resources. As an additional product to market to one’s client base, the properly structured offshore fund offers a number of features that distinguish it from a traditional mutual fund:

A lower level of regulation makes it easier to establish and administer the funds. Consequently, formation and operating costs are significantly reduced. Lower costs means funds can be offered at zero or low load and with competitive management fees from the investor’s point of view. Furthermore, greater flexibility is generally available, in terms of both fund structure and the investment portfolio.

Tax exempt status in the offshore jurisdiction enables the fund to reinvest the approximately 30% taxes on profits and gains that would otherwise be payable in high tax jurisdictions, without the need to obtain investment company or similar status. Therefore, taxes may be deferred until the investor receives a return on his investment. (Tax advice should be sought in the jurisdictions of the sponsor/manager and each investor to determine any potential tax liability.)

The World of Investments: Offshore Investments

2009-03-13T11:05:18Z

Investing in offshore funds, or keeping your assets offshore is not essential if you are an expatriate, but it is likely to be the most tax efficient way of managing your money. This is our guide to the most cost effective way of taking full advantage of offshore funds and investment opportunities for the expatriate and other international investors. about offshore funds

Offshore funds work on the same principle as onshore investment funds or mutual funds, pooling investors’ money to provide the benefits of a well diversified and professionally managed portfolio of investments.

A fund qualifies as an offshore investment if it is incorporated in an offshore centre and intended for use by non-residents of that jurisdiction. Such funds generally pay little or nothing in the way of local taxes, although they may receive dividends or interest net of withholding tax depending on where and in which assets they invest. The same is true of offshore banking since the offshore banking institutions do not automatically deduct tax from the interest as their UK counterparts would have to do although you should read the section on the new EU Savings directive as this may now apply to you if you are a citizen of a European country living in a different country within the scope of the directive.

If tax is not the deciding factor in using offshore funds or an offshore trust, the scales may be tipped in their favour by other considerations. The type of investment may simply not be on offer onshore, due to regulatory prohibition or a lack of demand. Hedge funds are an example of the former and currency funds the latter.

Offshore Safe Deposit Boxes

2009-03-05T13:48:35Z

You might well, sooner or later, end up in possession of sensitive papers or other portable assets of great value that should be kept in a safe place – like an offshore safety deposit facility.
A safety deposit box is also recommended for estate-planning purposes. To pass the contents of a safe deposit box without any formalities all that is necessary is that another person have access and a key. This is accomplished by having the inheritor be a signer on the box. If you don’t want them to have access during your lifetime, you keep the key and arrange for it to be delivered to them in a sealed envelope with instructions, upon your death or disablement.

SHOULD YOU USE A BANK OR AN INDEPENDENT BOX COMPANY?

Generally, the best solution is to rent a safety deposit box in a reliable major, first class bank – not just a box company. Many banks will require that you also have an account with them and that withdrawals to pay the box rent be authorized in advance.

Why should you use a bank rather than an independent safe deposit company? Because independent companies seem to fold or get robbed with great regularity. Like public storage facilities, they are also frequently used by less-desirable characters. As a result, the client lists of independents tend to be under a higher degree of Big Brother surveillance than regular bank safe deposit facilities.

On the other hand, a private storage outfit may not require any identification to open a box. They may accept any nom de plume you care to give them. Customers may be admitted on the basis of a plastic card without any need to sign in. As such a box is not linked to any account or payment facility, it behoves the user to pay several years in advance. This will avoid the box being opened and the contents sold for non-payment of rent.

Offshore Trust Formation is The Key!

2009-02-26T14:50:36Z

Offshore trusts can offer major benefits to many investors and other individuals with substantial capital assets. For example, a carefully established offshore trust can transfer a person’s investments to a vehicle which may permit the deferral or minimization of income taxes on investment income without contravening the tax laws of the person’s home country. There are other important benefits that may be derived from offshore trusts. Our local trust office will acts as a liaison between yourself and the offshore trustee, and we have experienced professionals located in tax havens and low tax regions. For offshore trustees, the distinction between capital and income is generally only important for tax purposes. Offshore trustees seldom need to balance the conflicting interests of income and capital beneficiaries, as in a trust where income is payable to A for life and capital is then to be distributed to B and C. Offshore trusts tend to be fully discretionary. Similarly, for investment purposes, offshore trustees seldom need to balance income and capital objectives.

An offshore trust is very much like a traditional trust in that it comprises a relationship or arrangement entered into by a person or group designated to be the “Trustee,” and a distinct person or group of people designated the “Settlor,” by which provisions are made in a binding, written legal form known as the “Trust Deed,” in order to hold title to assets and property, to manage said assets in accordance with the trust deed, in order to provide a series of benefits and distributions to a person or group of persons designated the “Beneficiaries.”

Where to form an Offshore Trust
Offshore trusts are often formed in low-taxation or low-regulation havens that have a proven reputation for the successful management and execution of trusts and trust funds. However, it is not absolutely necessary for a suitable location to be a tax haven or have lax regulations–many of the successful trust formation jurisdictions and countries simply offer renown, experienced trust companies coupled with superb confidentiality and with substantial asset shields. One common denominator is that these jurisdictions base their trust regulations and statutes on the English common law–this because the very idea of trust formation is an old English idea dating back to the time of the Crusades. Other European jurisdictions that offer successful trust administration, such as Luxembourg, Malta, Switzerland, etc., have adapter their statutes and regulations to conform with the proper trust administration models set forth by those based on the English common law.