Offshore Companies, Trusts And Foundations For Tax Saving Purposes
The most important thing for you to remember about benefiting from offshore tax havens is that the control and management of the tax generating entity (be it a Company, a Trust or a Foundation) itself should be in the low or zero-tax jurisdiction. There are many corporate service providers that can provide this service. Many large companies use offshore structures to maximise their profits whilst making sure their prices are rock bottom for the end consumer. In the UK a number of supermarket stores have been frowned upon and heavily criticised for their methods of tax effective savings – no matter that they supply their goods at affordable costs for shoppers as well as providing employment within the country of sales.
Several jurisdictions considered to be “high-tax” such as the United Kingdom and Germany have tried to attract headquarters’ offices and functions using a concept called the ‘coordination centre’. What was originally used in Belgium is now seen in many countries throughout the world. Essentially, the high tax country will allow a resident corporation to continue its operations outside the normal tax laws. It is then able to use functions such as cross border intra-group trading or “re-invoicing” to by-pass any withholding tax or other taxes. The taxation of coordination centres is ‘by agreement’ between the corporation and the host country and is widely minimal. This shows just one of the ways in which high-tax jurisdictions, which are against low-tax areas, play the same game themselves.
Who Else Benefits From Offshore Zero Tax Jurisdictions?
I bet you didn’t know that some of the most famous names in entertainment, music and film have benefited greatly from the use of offshore Companies and Trusts? Many of our best known celebrities use offshore structures to save tax and protect their assets. For example, members of the Rolling Stones (Mick Jagger, Keith Richards and Charlie Watts) use offshore Trusts to make sure that they pay only 1.6 percent of all income earned, that’s amazing! They retain 98.4 percent of all their income! (This is according to the Dutch documents that were recently published detailing their tax affairs and the offshore structures involved). It’s brilliant news for them, but it’s not only the ultra rich & famous that can utilise offshore structures to save tax. There are many ways for up-and-coming businesses or moderately well off individuals to minimise their tax requirements and legally protect their assets from litigation or economic instability.
Whilst you may never be able to reduce your tax bill down as low as the Rolling Stones 1.6 per cent (unless of course you decide to become a tax nomad and exile yourself from your home country) it is entirely possible for normal people like me and you to have an offshore Company or Trust within a financial management strategy that can reduce taxes, protect your estate and protect your assets in a completely legal and confidential manner.