GoFuckYourself.com - Adult Webmaster Forum - View Single Post

Jayson · 07-20-2007, 11:06 PM

Offshore structuring when done right is not about not paying tax.

It’s about DEFERING & MINIMISING the tax, legally. And where you know you are going to pay tax, its about turning whatever source of income you have into the lowest tax form of income.

If you can defer tax today for 10 years not only can you earn interest on the money you would have paid during those 10 years, but perhaps the tax rate you have to pay will have dropped by then (tax rates are generally trending down in most countries).

More importantly when done right it’s also about asset protection. (And yes i read that panama story, the person involved is an idiot, you never put all your assets in one country, ever. And you generally don’t live in the country you use to hold your assets).

Every country in the world pretty much taxes its Residents (normally 183 days a year in country or a test based on things like owning property).

Many countries also have controlled foreign corporation legislation so if you own or manage (can be very loosely defined) a foreign company (in any country) it might be considered local for tax purposes.

USA is particularly brutal in its tax laws. It’s one of only 4 countries in the world that tax its citizens on their world wide income (less the $80000 a year allowance mentioned above) even if you are nonresident. USA also has pretty much the strictest non residence test, and some very tough CFC laws. You could certainly find yourself having profits of a foreign company you owned shares in added to your personal taxable income if you structured things wrongly - even if it is a legitimate business with staff and management in another country.

There is no benefit in setting up an offshore structure if you think you can dump money into a bank account in another country, get an ATM card, and withdraw money in your home country and not pay tax on it. You will get caught, and the governments are tracking more people doing this than ever before through tracking atm card usage.

However if you have income sources from a number of countries, staff, contractors or suppliers in a number of countries then its potentially beneficial to look at going "offshore" depending on your turnover and profitability, and how much of the profit you want to spend personally, or how much you want to leave for investments. You can buy investments through an offshore company with most of the major stockbrokers, investment funds etc.

If you do have a multi country operation and have companies in different jurisdictions then there is generally a lot of tax saving potential through careful choice of ownership countries and the use of double tax treaties.

Some of the most common "off shore" countries used are not what you would expect. UK, USA, Netherlands are all offshore countries in right circumstances (for example a USA LLC pays no USA tax if it is owned and managed outside the USA and has no USA source income).

Low tax countries like Cyprus are also very useful as they exempt many forms of income which can bring the tax down to close to 0%, while still having your company in an EU country.

Getting the right structure isn’t as expensive as a lot make out but it isn’t cheap either. If you run off and just buy a company in another country and open a bank account and think you’re done then you are almost certainly asking for trouble.

Most people rely on nominee services to ensure they aren’t breaking controlled foreign corporation laws. The few hundred dollar a year nominee services you see from most offshore company providers are for non trading companies - i.e. companies holding investments etc. They normally charge a lot more if it has any commercial activity and most won’t go near adult. If you don’t disclose what the company is doing they will find out and you may find yourself with a company or bank accounts they have arranged etc.

And if you run around operating the company through a power of attnorney as well you are going to break CFC regs too and shift the companies management to your place of business. Its fine for the occassional thing or to operate a bank account with (within reason) but you are better served paying your nominee to execute any major contracts on your behalf.

You need to allow for at least the same amount as the setup costs of the companies (and you will need more than 1 to do it right) in initial advice fees unless you know exactly what you are doing.

07-20-2007, 11:06 PM
Jayson Confirmed User Join Date: Oct 2001 Location: CZ Posts: 554	Offshore structuring when done right is not about not paying tax. It’s about DEFERING & MINIMISING the tax, legally. And where you know you are going to pay tax, its about turning whatever source of income you have into the lowest tax form of income. If you can defer tax today for 10 years not only can you earn interest on the money you would have paid during those 10 years, but perhaps the tax rate you have to pay will have dropped by then (tax rates are generally trending down in most countries). More importantly when done right it’s also about asset protection. (And yes i read that panama story, the person involved is an idiot, you never put all your assets in one country, ever. And you generally don’t live in the country you use to hold your assets). Every country in the world pretty much taxes its Residents (normally 183 days a year in country or a test based on things like owning property). Many countries also have controlled foreign corporation legislation so if you own or manage (can be very loosely defined) a foreign company (in any country) it might be considered local for tax purposes. USA is particularly brutal in its tax laws. It’s one of only 4 countries in the world that tax its citizens on their world wide income (less the $80000 a year allowance mentioned above) even if you are nonresident. USA also has pretty much the strictest non residence test, and some very tough CFC laws. You could certainly find yourself having profits of a foreign company you owned shares in added to your personal taxable income if you structured things wrongly - even if it is a legitimate business with staff and management in another country. There is no benefit in setting up an offshore structure if you think you can dump money into a bank account in another country, get an ATM card, and withdraw money in your home country and not pay tax on it. You will get caught, and the governments are tracking more people doing this than ever before through tracking atm card usage. However if you have income sources from a number of countries, staff, contractors or suppliers in a number of countries then its potentially beneficial to look at going "offshore" depending on your turnover and profitability, and how much of the profit you want to spend personally, or how much you want to leave for investments. You can buy investments through an offshore company with most of the major stockbrokers, investment funds etc. If you do have a multi country operation and have companies in different jurisdictions then there is generally a lot of tax saving potential through careful choice of ownership countries and the use of double tax treaties. Some of the most common "off shore" countries used are not what you would expect. UK, USA, Netherlands are all offshore countries in right circumstances (for example a USA LLC pays no USA tax if it is owned and managed outside the USA and has no USA source income). Low tax countries like Cyprus are also very useful as they exempt many forms of income which can bring the tax down to close to 0%, while still having your company in an EU country. Getting the right structure isn’t as expensive as a lot make out but it isn’t cheap either. If you run off and just buy a company in another country and open a bank account and think you’re done then you are almost certainly asking for trouble. Most people rely on nominee services to ensure they aren’t breaking controlled foreign corporation laws. The few hundred dollar a year nominee services you see from most offshore company providers are for non trading companies - i.e. companies holding investments etc. They normally charge a lot more if it has any commercial activity and most won’t go near adult. If you don’t disclose what the company is doing they will find out and you may find yourself with a company or bank accounts they have arranged etc. And if you run around operating the company through a power of attnorney as well you are going to break CFC regs too and shift the companies management to your place of business. Its fine for the occassional thing or to operate a bank account with (within reason) but you are better served paying your nominee to execute any major contracts on your behalf. You need to allow for at least the same amount as the setup costs of the companies (and you will need more than 1 to do it right) in initial advice fees unless you know exactly what you are doing. __________________ Sapphic Cash - We Do It Right Last edited by Jayson; 07-20-2007 at 11:08 PM..