Tax Treatment to Individuals Holding Shares in an Offshore Company

All Tax authorities act differently. Expatriates are dealt with totally differently by different countries. It is fair to say that many expats have little or no tax liability while they work abroad. Others pay local tax and of course, if you happen to be a US citizen you always pay. It is the latter we will use for an example since most Expats return home and become a tax resident, i.e. taxable, which is effectively the status of a US citizen. This is the worst scenario, yours may be much better.

When you report your share holding you will be expected to state income/dividend or benefits on the tax return. NO income etc, means, NO tax. An offshore company can effectively continue to make profits without you having tax liability. It could own properties, charge rents, buy/sell any investments, own your own company shares, buy your own house and so on. Only when you take a benefit or income will you be assessed for tax and only then on that amount of income/benefit. With careful planning you would be able to utilise all the available allowances thereby reducing the liability.

Offshore Company Misconception Number 1  - I will be taxed on all my profits when I encash
Few people ever spend or dispose of all their assets, particularly, if they are approaching retirement. The sensible, take income, thereby preserving their capital for their dependants!

Offshore Company Misconception Number 2 - My assets will be taxed when I die
Not necessarily. Retain ownership but halve the inheritance tax liability, whilst immediately accepting that not all tax authorities charge inheritance tax (Death Duties), many do. Some also charge a wealth tax. The legal avoidance of 49% of this tax is a simple matter of making assets over to beneficiaries by the giving of shares. This whilst still retaining full control. The widespread use of trusts in this area has been largely discredited with authorities having the legal right to disregard the trust (look through it) should the original owner of the assets held, also be a beneficiary. With an offshore company however and a little creative accountancy, also completely legal, further reductions in the inheritance tax may be achieved.

Offshore Company Misconception Number 3 - Offshore Companies Are Only For The Very Rich!
This is a very telling statement. If it's good enough for the rich maybe it is worth considering! Offshore Companies 's are NOT EXPENSIVE to set up and reasonable to maintain. Clients with prospective assets of $l00,000 or more should consider the offshore company route. When considering the family home as part of the assets this broad brush valuation means many more people could benefit from offshore companies than do at present. Many offshore tax havens do not insist on formal accounts, administration is kept to a minimum.

Offshore Company Misconception Number 4 -Tax Havens Are Not Safe!
Some are, one, we believe, is the safest place in the world to invest money!!

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