Offshore Company Structure recommendation

[BSStar]

Hello Guys

I'm new to all of this and have no prior experience with offshore companys. I have read a lot on this forum and also have gone through the resources from the mentor group.

Me and my cousin are looking to set up a company which engages in stock and option trading. We both live in switzerland and have family here, so switching our tax residence is not possible.
We use Interactive Brokers for our trading and prefer to stay with them. The main goal would be asset protection and some privacy.

Currently we saw that an Wyoming LLC should be fine for that purpose. Is that true? Does anybody have some experience with a same set up? Or any other recommendation?

Thank you very much for you help and time.

 

[Sols]

Switzerland considers any company tax resident in Switzerland if it has its place of effective‌ management in Switzerland. This means that any company you form, or which you exercise control‍ over, is legally considered a Swiss company for tax purposes. So there are no tax⁠ benefits.

For privacy, you get the same degree of confidentiality with a Swiss AG/SA but⁤ without all the hassle and headache of including a foreign company.

In terms of asset⁣ protection, I'm a little confused. The company will do trading. What assets do you want⁢ to protect? From what? Who or what is the threat?

I wouldn't be surprised if,︀ all things considered, your best option is to set up an AG/SA and trade through︁ it, if you don't want to do it personally.

 

[BSStar]

Thanks for your response.

Yes i know that i need to pay tax in switzerland‌ which is fine.

regarding an Swiss AG it would cost a 100k which i don't‍ have so i'm looking for much cheaper options.

In terms of asset protection, i meant⁠ that i want to have my portfolio and trading activity under an company and not⁤ as an private ownership. currently i don't have to face any threat but if something⁣ happens i want to feel save that my assets can't be touched.

 

[CyprusBusiness]

Hello

Sols is right to point out that the offshore company will be︂ considered a tax resident of Switzerland as management and control would reside there. However, with︃ proper planning there are ways around this, but in essence and to form the bulletproof︄ structure is for you to relocate as well.

In Cyprus the use of nominees is︅ still widely used and also significant benefits exist on personal income tax for those wishing︆ to relocate to the island. So, I would urge you to consider Cyprus as it︇ offers significant tax benefits for the activities of investing in securities (including derivatives). In Cyprus︈ any gain realised on sale of a title is tax exempt.

The word "titles" according︉ to the income Tax Law N.118(I)/2002 means: "shares, bonds, debentures, founders' shares and other︊ titles of companies or other legal persons incorporated in Cyprus or abroad and rights thereon".︋

As the above definition was not clear; a circular was issued by the Income Tax︌ Authorities listing the financial instruments that fall within the definition of "titles" as mentioned in︍ the Income Tax Law N118(I)/2002. The legislation provides that any gain on the disposal of︎ titles is exempt from income tax.

The full list of financial instruments that fall within️ the definition is as follows:

• Ordinary shares
  
• Founder's shares
  
• Preference shares
  
• Options on titles
  
• Debentures
  
• Bonds
  
• Short positions on titles
  
• Futures/forwards on titles
  
• Swaps on titles
  
• Depositary receipts on titles‌ (ADRs and GDRs)
  
• Rights of claims on bonds and debentures (rights on interest of these‍ instruments are not included)
  
• Index participations only if they result in titles
  
• Repurchase agreements or⁠ Repos on titles
  
• Participations in companies; Russian OOO and ZAO, US LLC provided that their⁤ profits are subject to taxes, Romanian SA and SRL and Bulgarian AD and OOD.
  
• Units in open-end or closed-end collective investment schemes that have been incorporated, registered and operate in⁣ accordance with the provisions of the relevant legislation of the incorporated country
  

Examples of such⁢ units are:

• Investment trusts, investment funds, mutual funds, unit trusts, real estate investment trusts
  
• International collective investment schemes - ICIS
  
• Undertakings for collective investments in transferable securities or UCITS
  
• Other similar financial institutions
  

Hope this helps.

 

[Sols]

If all you need is‍ a cheap company with privacy, then a US LLC can work. But be mindful of⁠ how an LLC is treated under Swiss and local cantonal tax law. They are neither⁤ equal to AG/GmbH nor a partnership under US law but rather a hybrid. This can⁣ affect your tax burden at the end of the day.

Other options to consider might⁢ be BVI, Cook Islands, TCI, and Cayman Islands if you what zero tax companies with︀ privacy (and at least somewhat half decent reputation). I'll defer to Interactive Brokers or other︁ members for what that particular institution accepts.

What something do you worry might happen?

Asset protection is usually tailored around a︆ specific threat against a specific asset. This takes into account the laws applicable where you︇ live and laws applicable where the structure might span (which is often multiple jurisdictions). In︈ many cases, just putting a company that you own directly between yourself and an asset︉ is not meaningful in case you do something to incur a debt, liability, or obligation︊ against a motivated adversary. So it really depends on your threat vectors and applicable laws.︋

 

[JimBeam]

First thing, how much money are we talking about? (Is it worth the hustle?)
Have you considered something in EU like Cyprus or Estonia... Or even UK...

Next, you need‌ to check if you need a license in these countries to perform these activities (stock/option‍ trading)...

 

[kilor]

If you pay your tax in Switzerland you won't⁤ need to pay tax in your home country or you will have to pay double⁣ the tax?

 

[Sols]

That depends on whether there is a Double Tax Avoidance Agreement (DTAA) between Switzerland⁠ and your home country, the details of that agreement, and the applicable local laws.

In other words: check with a local tax lawyer first. Paying double tax is no fun.⁤