Offshore Company Tax Advatages
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Friday, 05 December 2008 14:34 |
Offshore Company Tax AdvatagesSo what are the advantages of offshore companies? Well, like offshore trusts, they are a way of distancing yourself from your assets and the more significant and widespread your assets are then the more useful an offshore company may prove to be. Given what we have said about look- through legislation, this one-stop shop administration service is arguably more of an advantage than any tax-saving opportunity. But McKellar at Close argues there are still advantages in both areas. “Because the cost of setting them up is not that great there are advantages of having a company, rather than something in your own name,” he says. “You can have signatories and there is administrative convenience. But there are also fiscal advantages. Owning a property through a company is a protection against inheritance tax at the very least. It doesn’t automatically trigger an inheritance-tax liability.” Offshore Company Tax Advantages & PropertiesHe stresses, though, that only properties worth about £500,000 are worth considering in this regard. In terms of the other benefits of offshore companies, an obvious one is that they distance you from your assets. The benefits of doing this are obvious if you are working in a high-risk country, where kidnapping of western workers is a genuine concern - or even one where violent crime is endemic. On the day of writing this article, a British engineer was due back in the UK after a terrifying ordeal in Bangladesh. He was seized at gunpoint and held hostage for more than a month. In this sort of situation, not having the trappings of wealth around you could be a definite plus, to put it mildly.
There are also other reasons for distancing yourself from your assets. In forced heirship regimes, for example, the law of the country decides who should inherit your wealth when you die, even if you have drawn up a will (see panel). Offshore Company Tax Advantages - mcKellarSo does it matter where you establish your offshore company? McKellar of Close says: “Offshore companies differ greatly on the administration side from jurisdiction to jurisdiction, so there is a cost implication. In the British Virgin Islands you don’t have to have annual general meetings of shareholders, for example. In Guernsey, before you even start, there is a £600 exempt company tax fee and a £100 filing fee. “It really depends on what you are using them for. If you are forming a BVI company, you don’t normally have to give information to the agent but you do in Guernsey. But some people prefer a jurisdiction such as Guernsey because the perception is that it is better regulated.
If McKellar is right, location is going to become increasingly less important. “I think there has to be a recognition that all jurisdictions are going down the same route and will end up with similar regulations,” he concludes. For more relevant news items and magazine articles please click the links below:
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