Offshore Structure Strategies: Offshore IBC / Bank Account uses in Asset...

Over the past 30 years, more and more firms and individuals have been using international structures in multiple countries for business purposes.  When considering an offshore structure, there are many strategies to consider.  Each of these strategies is far to complex to fully cover here.  Don't hesitate to call us if you have any questions or if you would like us to help you plan your offshore structure.

• Owning/Assignment of Copyrights  -- Intellectual property rights are recognized world wide.  These intangibles can serve as a solid foundation to transfer income to an offshore jurisdiction.  If an offshore company holds rights, it is proper and within transfer pricing guidelines for an onshore company to pay the offshore company for use of intellectual property.  To utilize such a strategy, there should be a legal contract between the entities explicitly detailing the royalty payments.  Call for details. 
• Production / Re-manufacturing
• International Sales Broker
• Factoring
• Import / Exporting
• Treasury management
• Patents & trademarks
• Royalties
• Leasing and rentals
• Tax concessions / exemptions
• Mergers & acquisitions
• Technology development
• Web commerce
• Asset or Employee Leasing
• International Service Consulting

Not only being designed and used for business purposes but also for and with additional benefits including: enhanced asset protection, operational and ownership privacy, and tax minimization.

We have worked with clients to set-up various structures and operations and we have summarized below a few of these strategic uses:

Offshore Holding Company:  the ownership of foreign activities where investments or business operations can be centralized in an offshore holding company. With the added benefit of using low tax jurisdictions for tax deferral in high tax jurisdictions. Solutions include forming a subsidiary to be located in a jurisdiction which has favorable double tax treaty arrangements to using third party "arms-length" corporation.

Offshore Finance Company: as a method of transacting loans onshore or to a foreign subsidiary. The Finance Company would not usually be subject to some of the debt/equity ratio requirements, separate license or minimum capitalization requirements. The use of a financing corporation that is structured under legally separate beneficial ownership from the trading or investment company concerned makes it possible to substantially increase the interest deduction permitted. An alternative method applicable is the use of "back to back" financing. If this is processed through an offshore territory, it is be possible to have a deposit in a low or no tax area matched with a corresponding borrowing from a bank in a high tax jurisdiction country. This creates tax relief for the interest paid. The net effect is to legally transfer profits into a low tax jurisdiction from a high tax. The bank makes money but your structure compensates for this and provides a positive net return.

Factoring: with an offshore factoring company for clients engaged in both the manufacturing and service industries. Factoring trade debts of a company resident in a high tax jurisdiction through a factoring company established in a low tax jurisdiction could achieve a re-distribution of some profits from a high tax jurisdiction to a low tax jurisdiction. It should be possible to ensure that the factoring charge is treated as a deductible expense in the high tax jurisdiction concerned.

Offshore Licensing Company: to own trade licenses and royalty rights for which an IBC pays no tax itself on royalty receipts in the offshore jurisdiction. Upon acquisition of the rights, the offshore company enters into agreements with licensees wishing to utilize the patents, technical know-how, licenses or franchises around the world. The income, (subject to applicable withholding tax), is accumulated tax -free in the offshore company. By careful selection of the jurisdiction, withholding taxes can be substantially reduced by the commercial application of double taxation treaties.

Offshore Trading Company: triangular trading where the offshore trading company purchases goods from a non-related distributor and then on-sells the goods at a profit to a foreign subsidiary or non-related importer, thereby having a profit margin in the low tax jurisdiction. This can also be called Transfer Pricing; a method of moving profits from a high tax jurisdiction to a low tax jurisdiction. What is required to achieve substantial tax saving is to interpose a low tax jurisdiction company in between a transaction which would otherwise take place directly between two high tax jurisdictions. Transfer pricing is legal if correctly structured and implemented. Not only for manufacturing or distribution firms but also for consultants, engineers, entertainers, professional athletes, and various professionals on entering into contracts with independent employment companies, incorporated in appropriate jurisdictions, which sell their services outside the individual's country of residence.

Offshore Company For Securities Dealing: to achieve nominee investor status and can also be used to allow securities holdings to be held under a family succession plan without recourse to probate.

Offshore Mutual Fund Company: for a public or private investor to act as an asset accumulating investment vehicle.

Offshore Shipping Company: commercial craft or private yachts to shield personal liability, for ease of chartering and as part of estate planning.

Captive Insurance Company: for certain types of coverage such as product warranty. The creation of the captive can generate tax deductible premium and tax savings through the offshore insurance company.

 Investment Holding Company: corporations can with certain share structures operate as substitutes in order to pass investment holdings to future named successors without recourse to probate.

Internet Business: with the estimated 17,000 web sites being registered every week and many of which being Internet business sites, the IBC site can be used for anonymity and protection of personal liability.

We are happy to discuss various strategies and options for your business requirements so call at your convenience and one of our associates will be happy to assist.