ANONYMITY

Besides tax aspects and advantages, a number of clients prefer offshore locations thanks to the anonymity and confidentiality on the part of local authorities, which is guaranteed by legislation of those countries. This anonymity and confidentiality can be exported even to the onshore locations as an offshore firm entry into a onshore company when the offshore firm purchases ownership interests of the onshore company.

A majority of offshore jurisdictions guarantee full confidentiality of ownership of offshore companies, which is based on the legal standards of the offshore jurisdiction in question, where it is a criminal offence to cause disclosures of information concerning the beneficiary owners of the companies, and a number of jurisdictions punishes such a conduct not only by imposing significant financial penalties but also through imprisonment for up to several years without suspension, if this confidential information is disclosed. In some jurisdictions, a number of acts are made in the presence of a video camera in order to have clear evidence about the persons who have been made familiar with the document in question.

This legal regulation applies also to possible questions on the part of third country governments, authorities or tax inspectors, concerning the beneficiary owners of the company in question. In general terms it is possible to state that no beneficiary of an offshore company will be disclosed to third parties by the authorities of the country where the offshore company is registered and where a similar code of confidentiality is recognised, as long as the company is doing business in a legitimate field of business activities, which of course includes also international tax planning and optimising the existing tax burden or asset protection.

There is also a possibility of issuing bearer shares, which enables a maximum flexibility if there is a need to transfer or assign ownership rights concerning the offshore company in question. We at SloGold are convinced that it is necessary to take a confidential approach to all information and to protect it properly. One piece of unimportant information does usually not mean anything but one hundred pieces of unimportant information about a person or company can already provide you with quite a good profile of an individual with which you can continue to work. It is also one of the reasons for which dozens of offshore jurisdictions have adopted laws protecting personal and corporate privacy, known as Confidence Protection Laws, under which it is a criminal offence to disclose any information about a company, founders, shareholders or other information concerning the entity in the country in question.

LONG TIME INVESTMENT

Depositing free financial means in various currencies in foreign banks on term deposit or current accounts can protect the depositors from envying neighbours, competitors, executions, but it also sharply reduces the risk of economic bankruptcy connected with the economy of one country through diversification of assets into foreign jurisdictions. Another advantage is represented by the fact that the yields of term deposit accounts are not subject to taxation in offshore banks.

If we take into consideration that the average annual yield on a dollar term deposit account at a serious foreign bank established in a tax heaven is from 4.5 per cent to 8.5 per cent p.a., then it surely pays to consider an investment in an offshore jurisdiction. It is good to remind you that at present more than 2/3 of the liquid capital is concentrated in offshore financial centres or comes from these centres. The requirements on the registered capital of the bank are in a majority of offshore jurisdictions lower than in the onshore countries. Why should one consider the administration of offshore funds through an offshore company? Mainly for the fact that the assets are not owned by you as a natural person, but as a legal entity. Thus you can separate the ownership relation which will help you protect your assets and bank accounts in the case of a stress situation (execution, divorce, asset forfeiture through a judicial decision, etc.).

CONSULTING

Consulting and advisory services are the most frequently used manner of tax planning. An advisory company of the offshore type can enter into the structure of your business activities, such as contractual advisory and consulting company, which provides your home company with qualified advice of how to proceed in individual business cases. It will search for new commercial markets for you, suggest and prepare commercial contracts, etc. Since it is a commercial company, it will charge appropriate remuneration for its services, which will be sent to your company in a form of invoices.

Your home company will respond to the invoices obtained by releasing a corresponding financial amount serving for the settlement of the invoice in question, which thus becomes a tax-deductible item, as any other legitimate service for which it is normally necessary to pay.

REAL ESTATE PLANNING

A very popular practice is that a real property item is purchased by an offshore company which is registered as the proprietor in the Land Registry, and if the proprietor of this company (i.e. The beneficiary owner of the real property in question) wants to sell the real property, it is sufficient to sell the shares of his or her offshore company and thus avoid the real property transfer tax. (the proprietor - the offshore company is the same). The above mentioned structure is only possible in those jurisdictions where it is possible that a foreign entity owns the real property in question. In the jurisdictions where this is not possible, the real property can be owned in such a way that it is purchased by a company there which is owned by a foreign offshore company.

This way it is possible to achieve:
- Asset protection (nowhere are you listed as proprietor)
- You can avoid tax inheritance (after the death of the proprietor the bearer of the shares becomes a new proprietor)
- real property transfer tax, etc. (the proprietor is the person who owns assets of the offshore company)
- protection from forced inheritance or from heirs at law.

PATENT, ROYALTY + COPYRIGHT HOLDING

Offshore companies are an ideal tool for administration and management of licenses. For example, a majority of software companies license their users through companies which are established in an offshore jurisdiction, or through a firm, which is not established in a classical offshore jurisdiction, but is controlled by such a firm.

Typical examples of such users include without limitation:
- software companies
- companies doing business in information technologies
- license and copyrights to books, articles, music, films, etc.
- certification authority, publishers of professional certificates, etc.

INTERNATIONAL TRADE

International business activities are another one of the most often uses of an offshore company, which thus can use for:

- exports
- imports
- re-exports
- mediation of business and contracts

A business company basically acts in the role of business mediation company, in the most ideal case it is doing business by itself. By its being registered in a liberal tax jurisdiction it taxes its profits at an acceptable tax rate or it does not tax them at all if it is subject to such a fiscal system which enables it to do so.

As an example it is possible to use the onshore company which exports goods to Ukraine. The profit achieved this way must be taxed according to the current conditions at an unacceptable tax rate, which impedes the development of entrepreneurial activities of onshore company.

After a qualified restructuring, the sugar will start to be exported to Russia e.g. by a company registered in offshroe jurisdiction situated in for example the Caribbean. The tax achieved by the company this way is taxed at a zero rate, which is really a more acceptable taxation in comparison with the existing tax.
The company established in Nevis is in a good business relationship with onshore company, and that is why nobody will be surprised that it likes to fund the projects of onshore company in all countries of the world. Onshore company thus has a partner with sufficient liquid capital for further development of its activities.

E-COMMERCE

Shifting business to an Offshore Haven removes restrictions, regulations and taxation. What can you do with 50% more time and money?

SHIP MANAGEMENT + YACHT OWNERSHIP

Many important offshore jurisdictions (Panama, Liberia, the Isle of Man, Madeira, Jersey, Gibraltar, Cyprus, the Bahamas, Belize and Mauritius) have modern ship and pleasure craft registration facilities for the purpose of providing low cost registration fees and exemption from tax on income derived from shipping and chartering activities. The owners of pleasure craft operating within EU waters for extended periods require specialist advice with regard to VAT.

HOLDING COMPANIES

Offshore corporations often hold investments in subsidiaries and/or associated companies, publicly quoted and private companies, as well as joint venture projects. Capital gains arising from the disposal of particular investments can be made without taxation. In the case of dividend payments, reduced levels of tax on income can be achieved by utilising a company incorporated in a zero or low tax jurisdiction that has double tax agreements with the contracting state.

Many large corporations are interested in investing in countries where no double tax agreement exists between the country of the investor and the country in which they are investing. In this case, an intermediary company is established in a jurisdiction with a suitable treaty. For example, the Madeira SGPS Company has been used for investments in the European Union, since corporate entities registered there can avail themselves of the EU Parent/Subsidiary Directive. Cyprus has an extensive double tax treaty network with many Eastern European countries and countries of the former Soviet Union, and the use of Cypriot companies for inward investment into these countries provides a tax efficient conduit.