Offshore Investment Strategies
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Written by tolumi
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Friday, 05 December 2008 15:15 |
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Offshore Investment StrategiesLook through legislation Here come the catches. Most of them apply to all uses of offshore companies, rather than just to the tax-efficient ownership of UK property. The first and biggest is look-through. Many jurisdictions have enacted so-called ‘look-through’ legislation, whereby they can look through company (and trust, and other) structures to identify the chain of benefit linking the underlying asset (the property, in this case) with the beneficial owner (you, as shareholder). Offshore Investment Strategies - Spanish Tax The best-known example of look-through is the Spanish tax status of Spanish property. To cut a long story short, UK expatriates living in Spain used to own their beach-front apartments through offshore companies, and thus did not pay any tax on them. But the Spanish tax authorities looked through such arrangements, found beneficial owners living in underlying assets, and taxed accordingly. It is more tax-efficient, these days, to own your Spanish property directly. With UK-sited assets, and not just property, similar look-through legislation is available, although it has not been used to the same dramatic effect as in Spain. That, sadly, might soon change. From 1 January 2001, there will be a new statutory offence in the UK of tax evasion. The cunning point is that it will be tried before magistrates. Now, magistrates are fine, upstanding people, but (to generalise unfairly) some of them might not have the same ability to enjoy listening to tax lawyers that high-court judges tend to display. After 1 January 2001, the risk is that your tax-efficient offshore structure will be taken before a magistrate, who will apply common sense to deciding whether or not it constitutes tax evasion. Offshore Investment Strategies - A fine LineThere’s a fine line here, and if you’ve done something legal, you can expect not to be treated as a criminal; but the key point is not to set out with the specific intention of not paying a tax bill that you know you should pay. Most offshore-company professionals will tell you that the best reason to set up an offshore company is to ease the administration of your affairs. If you have built up assets in a range of jurisdictions, you might find it useful to have them owned by one or more companies in a single jurisdiction. Get that organised and, for example, you can sell them simply, or your company can be administered by an offshore professional while you’re busy working to earn more assets. 
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Last Updated on Tuesday, 06 January 2009 14:14 |
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