Use Offshore Investing To Save Your Wealth

When we talk about offshore financial companies, the term conjures up an image of huge, shadowy, financial monoliths, investing funds without any transparency.

These types of companies also exist. e.g. many mutual funds and hedge funds whose investors prefer ' off shore country' investments.

There are various uses:

* Professional Services Companies

* Trading Companies

* Investment Companies

* Holding Companies

* Dot Com Companies

* Property Owning Companies

* Shipping Companies

* Employment Companies

* Intellectual Property & Royalty Companies

* Asset Protection Companies

Individuals, e.g. Consultants, IT professionals, engineers, designers, authors and entertainers operating outside their resident country can benefitsignificantly from using an off shore company. The offshore company shows the individual as a company employee and gets a fee for the services rendered by the 'employee' [owner]. This fee is received and saved tax free. The individual can then take the payment as he or she wishes to minimize their taxes.

Import/Export and general trading companies activities are also well suited for the structure of off shore companies. The offshore company takes orders from the supplier and has the goods delivered directly to the customer.

It does the invoicing to the customer and saves the difference in a tax free country. e.g. Products from China to Kenya could be invoiced by a Seychelles or RAK offshore

incorporation and the profits retained there.

Individuals use off shore investment companies to then buy mutual funds, shares, bonds, property, jewelry and precious metals. Sometimes they will also use these companies to trade in currency, equities and or bonds either via the internet or through managed funds run by banks and financial institutions. The rich will also have different offshore investing companies for different class of assets; for different countries or by different types of investments.

The diversification hedges the risk. But also in cases where capital gains taxes are levied, e.g. in property or equity, sometimes it is cheaper to sell the company rather than the individual asset itself.

Off shore companies can also be used to own and fund operating companies in different countries. The could also be joint venture partners or the 'promoter' of publicly quoted companies. Mauritius is well suited as a country for investing companies because of its favorable double tax treaties.

The internet has made thecost of business entry very low and consequently the legal protection of the company's assets, both physical and intellectual, that much easier. Dot com companies now use this flexibility to develop different software projects in different off shore companies to invite different investors and to keep the flexibility of raising funds separately for different projects depending on the project's success. Both Mauritius and Seychelles have Protected Cell Company [PCC] structures available for just this kind of need.

Then there is the possibility of receiving your funds earned on the web into an offshore company's bank account. Would that be of interest to you?

Owning property in an off shore company saves you the capital gains taxes that may be levied at the time of the property's sale, which are avoided by selling the company instead of the property. Other important advantages are the legal avoidance of inheritance and other transfer taxes.

Importantly, in some countries, e.g. Islamic ones, inheritance is via Shariah Law and not your will. So an offshore ownership will ensure that the assets owned outside the country need not be distributed according to Shariah Law.

The use of offshore investing companies to own or charter merchant ships and pleasure craft is very common worldwide. Shipping companies accumulate profits in tax free offshore jurisdictions and, if each ship is placed in a separate off shore company, it can obtain significant asset protection by isolating liabilities of each individual ship.

Multinational companies use offshore investing companies to employ expatriate staff who are deployed in different tax jurisdictions around the world. To facilitate transfers, reduce the employee's taxes and administer benefits easily an off shore company employment is preferred. working on assignments throughout the world.

Offshore investing companies are being seen as vehicles to own Intellectual Property and royalties received for software, technology rights, music, literature, patents, trademarks and copyrights, franchising, and brands. These companies are in the form of trusts or foundations.

It is estimated that a professional in the US can be expected to be sued every 3 years! And that more than 90% of the worlds lawsuits are filed in the US.

If you have an income or assets of more than US$ 100,000, you should seriously consider offshore investing companies!

Most offshore jurisdictions require that for a law suit, a lawyer must be hired and paid up front before a suit can be filed, thus keeping frivolous law suits away. Often a substantial bank bond has to be placed with the government, to even implement a lawsuit. It can also (take years of waiting) to get into court in some offshore jurisdictions.

If you have substantial liquid assets you should consider a Trust which would own the offshore company. This will provide a greater degree of protection, at the least expense.

However, we should remember that this structure is for asset protection, not for tax savings and so that focus should be maintained.

What Is Offshore?

Simply put, any country other than the one where you live could be considered "offshore". Providing you are from outside the jurisdiction that you choose, both as a citizen or a resident, you can obtain some special financial or asset protection considerations.

If you live in the US, other countries are offshore. If you live in the UK, other countries and the US are offshore.

More often than not however, "offshore" is used to describe a nation where there are either no taxes or low taxes for foreigners either personal or corporate.

For anyone except Americans, the US can be an offshore haven of value. Banking, investment (trading/brokerage accounts) and financial activity are included in this. This includes real estate ownership, stocks and securities and bonds.

True, off shore havens have created a unique legal and tax climate for foreign individuals and businesses. They cater specifically to them. More than half the world's wealth resides in such asset havens.

Financial privacy, a stable legal climate and realistic regulations are the hallmarks of these jurisdictions.

While there will always be instances of shady offshore or even onshore deals, the vast majority of off shore investing companies are perfectly legal. In fact, depending on your situation, offshore investing companies may offer you many advantages.

Offshore investing refers to a wide range of investment strategies that capitalize on advantages offered outside of an investor’s home country.

We will briefly touch on the advantages and disadvantages of offshore investing.

There is no shortage of money-market, bond and equity assets offered by reputable offshore companies that are fiscally sound, time-tested and, most importantly, legal.

Many countries, known as tax havens, offer tax incentives to foreign investors. The favorable tax rates in an offshore country are designed to promote a healthy investment environment that attracts outside wealth. For tiny countries e.g. Mauritius and Seychelles, with very few resources and a small population, offshore investors dramatically increased their economic activity.

Simply put, offshore investment occurs when offshore investors form a corporation in a foreign country. The corporation acts as a shell for the investors' accounts, shielding them from the higher tax burden that would be incurred in their home country.

Because the corporation does not engage in local operations, little or no tax is imposed on the offshore corporation. Many foreign companies also enjoy tax-exempt status when they invest in U.S. markets. As such, making investments through foreign corporations can hold a distinct advantage over making investments as an individual.

In recent years, however, the U.S. government has become increasingly aware of the tax revenue lost to offshore investing companies, and has created more defined and restrictive laws that close tax loopholes. Investment revenue earned through offshore investment is now a focus of regulators and the tax man alike.

Many offshore jurisdictions have secrecy legislation which makes it a criminal offense for any employee of the financial services industry to disclose ownership or other information about their clients or their businesses.

But in instances where criminal proceedings can be proved, identities are being disclosed. Thus the Know Your Client due diligence documents are becoming just more complex.

Many investors like to be able to meet and talk to the person setting up there incorporation offshore investing companies and traveling to the tax haven costs money.

In some countries you are taxed on your global income, so not disclosing offshore income is illegal. In other countries having offshore accounts is illegal for individuals but permissions can be obtained for companies.

Some banks in offshore jurisdictions require minimum investments of US$ 100,000 and higher, or to own property locally.

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Offshore Investing Companies To Save Your Wealth, Not Just To Invest It In Offshore Assets