Beyond Origins the Discussion

Offshore Companies, Trusts And Foundations , Helping You Save Tax

August 27th, 2008

The most vital point 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 ensuring 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 employing many thousands of people 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 functions 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 is 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 Low 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 well known celebrities take advantage of offshore structures to reduce their 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 showing their tax affairs and the offshore structures involved). It’s great news for them, but it’s not only the mega rich & famous that can benfit from offshore structures to save tax. There are many opportunities 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.

While it may not be possible 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 you and I 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 confidential yet legal way.

Entry Filed under: Finance