How to show Company control is in foreign country even thouh it is in resident country?

[halowe9672box4mlscom]

Laws like POEM require to prove that, control of the offshore company is in foreign. How to prove that, even if it is in resident country.
I heard about Nominee Directors, can they be used to this? If yes, how?
Also, can other people see if the company has Nominee directors or not?
Thanks.

 

[GrumpyMess]

I have started the similar thread few months ago, still haven't found the answers. Some people say that simple management agreement with a nominee person is enough, even without a Nominee Director, but I do not think it is a reliable solution

 

[mattoy]

I guess this would really depend on which country your company is in.

 

[James Turner]

In general control is defined by where decisions are made. If decisions are made in a none resident country then you should be able to evidence this, I would suggest using general confirmation of communication of decisions, email, letter, texts even. The simple appointment of a nominee will not suffice and even an agreement with the nominee where the decisions are then made by you is pretty easy to follow. You should also consider the positions of authority within a business, i.e. Directors and Shareholders and the people who hold the positions of authority as they have control, even if they are creating communication to suggest otherwise. It is a wholistic approach to ensure that the control actually exists in the right location.

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[asilgulsar]

James Turner said:
In general control is defined by where decisions are made. If decisions are made in a none resident country then you should be able to evidence this, I would suggest using general confirmation of communication of decisions, email, letter, texts even. The simple appointment of a nominee will not suffice and even an agreement with the nominee where the decisions are then made by you is pretty easy to follow. You should also consider the positions of authority within a business, i.e. Directors and Shareholders and the people who hold the positions of authority as they have control, even if they are creating communication to suggest otherwise. It is a wholistic approach to ensure that the control actually exists in the right location.
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We had a litigation in India where the tax payer had made a trust in one country, appointed a bank as trustee, and the trustee held the underlying companies incorporated in a third country through another step down entity. The directors of the underlying companies were non-individuals (companies) which were incorporated in the third country

The authorities were still arguing that POEM was in India from the letters they obtained, where the tax payer was instructing/advising the trustee to make certain decisions applicable to the trust and its underlying companies.

 

[James Turner]

asilgulsar said:
We had a litigation in India where the tax payer had made a trust in one country, appointed a bank as trustee, and the trustee held the underlying companies incorporated in a third country through another step down entity. The directors of the underlying companies were non-individuals (companies) which were incorporated in the third country

The authorities were still arguing that POEM was in India from the letters they obtained, where the tax payer was instructing/advising the trustee to make certain decisions applicable to the trust and its underlying companies.
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The issue here is that the client retained control of the Trust/Trustee rather than the Trustee as they should be, being in control. If it can be proven that the Trust is a sham, then it will not serve to protect.

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[asilgulsar]

James Turner said:
The issue here is that the client retained control of the Trust/Trustee rather than the Trustee as they should be, being in control. If it can be proven that the Trust is a sham, then it will not serve to protect.
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I agree with you. But the point I was trying to make was that they were trying to 'show' control in another country when it was actually in the country of residence. If the trustee actually controls the assets then, POEM cannot be established in the country of residence.

 

[CaptK]

The trail of emails will show where the directive came from.
If you instruct them from the home country to the HQ then control is from the home country and then the nominee is useless in the structure.

 

[JohnLocke]

If you want to setup something like this you will need to do it right. Nominees and virtual office services will not work for you. If you ever get into a check from the tax office and you have setup your business structure like that, they will refuse to accept it and you risk even fines and penalties on top of the tax you have to pay.

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[halowe9672box4mlscom]

CaptK said:
The trail of emails will show where the directive came from.
If you instruct them from the home country to the HQ then control is from the home country and then the nominee is useless in the structure.
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@CaptK How the Tax department knows what Email conversations we had? If its because of surveilance, then isn't is too easy to fake via either creating fake email conversations or use anonymous / encrypted communication way?

 

[user9823671]

halowe9672box4mlscom said:
@CaptK How the Tax department knows what Email conversations we had? If its because of surveilance, then isn't is too easy to fake via either creating fake email conversations or use anonymous / encrypted communication way?
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I imagine mistakes. Everyone makes mistakes, slips up, thinks "It won't matter this one time". Keeping on point with your security consistently is not easy. We all get careless, we all get complacent etc

 

[CaptK]

halowe9672box4mlscom said:
@CaptK How the Tax department knows what Email conversations we had? If its because of surveilance, then isn't is too easy to fake via either creating fake email conversations or use anonymous / encrypted communication way?
Click to expand...

You will get sloppy, its inevitable!!
No emails everything via phone (Telegram or Signal).

The nominee is not your brother so dont expect any favors from them if the authorities come knocking.