Offshore & UK company formations, banking, mortgages, secured credit cards 

Navigation

Other pages

Why go Offshore?

The term “offshore” came into being when islands off the coasts of the USA and Europe were described as “offshore financial centres”.  Their common characteristics were low or no taxes and they tended to have less rigorous compliance requirements than their “onshore” neighbours.    The word became a generic term that included such mainland financial centres as Andorra, Monaco, Liechtenstein and Luxembourg.  But every country is offshore to the rest of the world and having a "tax free" regime is not always the primary consideration as there may be other fiscal, legal and administrative reasons for going "offshore".  Surprisingly the United Kingdom (which has some of the lowest tax rates in the European Community and the highest number of double taxation treaties in the world) and some States in the USA are among the largest offshore financial centres in the world. 

Offshore Companies and Trusts have a variety of uses and several advantages most of which can be summarised by the words

• liability
• privacy
• asset protection  

All incorporation and banking matters are handled personally by one of our directors to ensure absolute confidentiality,  and we offer guidance and assistance with every part of the procedure and completion of documents and application forms.

Jayga Ltd itself does not give tax or legal advice, but where such advice is required we will be pleased to refer clients to professional advisers in these fields.  We work closely with a firm that will provide high quality UK and international tax advice, including structuring investments or businesses abroad, inward investment into the UK, expatriate issues for employers and employees, contracting abroad and property holding companies, etc. They provide "BIG 5" quality advice, but at a substantially discounted price and with a high quality, personal service.  Each case is considered individually and a tax efficient structure will be designed to complement your commercial requirements.

To skip straight to examples of uses of Offshore Companies, click here.

To skip straight to Offshore Trusts, click here.

Liability

A limited liability company is a legal entity separate from its shareholders and directors and thus any loss incurred by the company is restricted to the share capital of the company, not the personal assets of the owners.   Conversely, any personal losses incurred by an owner/shareholder for whatever reason are not the responsibility of any company of which they may be a shareholder.  

Profits generated by a company will generally be taxed at the rate of the jurisdiction in which it is registered, not the rates applicable to shareholders in their countries of residence.  Shareholders in high tax countries may therefore establish companies in low or zero rated tax jurisdictions.  Profits made by the company will be subject to low or no tax and there are particular benefits where profits are allowed to roll up, so that there are tax advantages not only on the original profits, but also on any investment income generated on those profits.   The profits are therefore cumulative and can be substantial.   

Payments received by a shareholder or director from the offshore company will still be taxable at the rates of the shareholder’s/director’s country of residence.   Anti-avoidance legislation in their country of residence may also need to be considered in the careful planning and structuring of an offshore corporation.  We advise all clients to consult with their professional advisers in their country of residence/domicile on such matters. 

Privacy

Many offshore jurisdictions do not have public disclosure requirements for directors or shareholders of companies and also permit bearer shares.    Also, there is not usually a register of trusts. 

High net worth individuals may, for example, wish to use an offshore vehicle to hold properties and assets abroad, possibly using a personal holding company, which would afford anonymity and a single jurisdiction for probate. They are thus ensured privacy and savings on legal expenses.   They may also choose to settle the ownership of such a company into a trust  - see below. 

Asset Protection

The individual referenced above may wish to establish a trust to hold the shares of his company, so that upon his death the benefits of his assets may seamlessly devolve to his heirs with no inheritance tax (depending on the jurisdiction). 

Simply put, assets that are transferred to a trust cease to be part of any property owned by the Settlor and are thus protected from any creditors or litigious action.   This is, of course, a simplification of the law, though the premise is correct.   However there are some circumstances in which the assets in a trust may not be immune from attack. For instance, a relevant debt may have arisen during the specified time after transfer of assets to the trust, or transfer of assets may have taken place in the knowledge that litigation was imminent.      However, in those jurisdictions that have asset protection legislation, provided the assets are transferred into a trust at a time when no notice of claim against the assets has been received by the Settlor, the assets will be protected. 

Back to Top

Offshore Companies 

There follows a few examples of the uses for offshore companies:

• Property Ownership
• Investment Company
• Employment Company -Professional Services
• Trading
• Holding Company
• Personal Holding Company
• Holding Company for Intellectual Property/Patents/Copyright and Royalties
• Shipping

Property Ownership

An offshore company may own property anywhere in the world.   Such ownership may avoid income tax, capital gains tax and inheritance tax.  Furthermore, selling the property is achieved simply by the transfer of shares in the company rather than transferring the property itself, thereby reducing the usual property purchase costs for the buyer and seller.  (Also see our page Offshore Ownership of UK Property.)

Investment Company

Funds held by the company may be invested anywhere in the world.  In many jurisdictions there is no capital gains tax and it is possible to purchase tax free bonds or benefits from bank deposits where gross interest is paid.   Concessionary tax treaties with high tax countries may also allow for tax efficient investments.    Where the company collects and pools investor funds for the purpose of collective investment and the company issues shares, or similar interests that entitle the holder to receive or demand a proportionate interest in the whole or part of the net assets of the company, the activities of the company may well need to be licensed in several jurisdictions. 

Employment Company  -  Professional Services

Individuals who receive substantial fees in respect of their professional services in capacities, for example, such as engineers, IT consultants, designers, authors, musicians or entertainers, etc., may wish to establish an offshore employment company to which they may assign the right, or contract with an offshore company the right, to receive those fees.  In a tax-free jurisdiction the offshore employment company may not be required to pay tax on its profits that can be reinvested in a tax-free climate to generate further income from the offshore company.  Payments to the individuals concerned will of course be taxed according to the laws of their country of residence but payments can be structured in such a way as to minimise their tax liabilities.  For instance it may be possible to increase subsistence expenses as against fees that would be paid to the individual.   Profits made by the company will be subject to low or no tax and there are particular benefits where profits are allowed to roll up, so that there are tax advantages not only on the original profits, but also on any investment income generated on those profits.   The profits are therefore cumulative and can be substantial.   

Trading

Companies engaged in international trade (import or export, for example) may well use an offshore company to take orders but arrange for delivery to be made from the point of manufacture or purchase.   Profits on the transactions may thus be accumulated in the offshore company incurring low or no tax. 

www.jaygaltd.co.uk