Offshore IBC company for tax management

[CWI]

Greetings all,


I am still a newbie on these matters and after a few days of research I came up with a solution to my problem and would like to hear some critics and better suggestion from more educated people.


I work as an expat inspector in many countries around the world and my main employers are located in the EU (I am myself a citizen of an EU country). In order to be able to invoice my employers I created a company in my home country, but I am being completely "eaten away" by taxes, and its upsetting, to say the least, to see the profit generated by my sacrifice being away from my family being taken by a corrupt government. But enough with the politics and on with my suggestion to avoid this.


My first intention was to put an end to my company in my home country and start an offshore IBC and not declaring anything to tax authorities. The problem is that I have my family back home and would need to transfer money regularly to my home country. I could get away with it for a while if I kept my transfers within a reasonable limit, but it would be a matter of time until problems would come knocking on my door.


I was thinking of incorporating an offshore IBC company in the Seychelles with a nominee director, with a bank account in Cyprus or even in the Seychelles (another option I have seen recently is to incorporate the IBC in the UAE with a bank account there) and start invoicing my employers from that IBC. Then I would have my company in my home country invoicing my offshore company just enough to keep the profits in my home country down to a minimum. Of course I would still pay my income tax and company tax back home, but the tax volume would be greatly reduced compared to how much I am paying right now. This way I would save most of my hardly earned money in an offshore account and make use of it through the anonymous debit cards provided by the bank, one for me, other for my wife.


Would it be wise to create another bank account for savings and use the IBC bank account for the common expenses paid through the debit card?


What do you guys think of this setup? Any flaws with it? Better ideas?


Thank you all for your comments and suggestions.

Last edited by a moderator: Apr 20, 2012

 

[JohnLocke]

Well, it doesn't really matter where the company is incorporated! If the only purpose is‌ to hide from the local tax authorities. You will want to look into your situation‍ and local tax laws. In most countries it is possible to resign as an resident⁠ of the local country and establish an offshore company anywhere, now by resigning you will⁤ not be liable to any tax(this applies to many countries but it can be different⁣ in yours, please check this) in your home country any longer and you are free⁢ to send money to your family, however, there can be tax complications doing so towards︀ your family, you will need to check this as well.

One you have figured out︁ how to structure your self into a tax free world as an expat, you will︂ have any country available to establish your offshore company, you may then be looking for︃ a offshore jurisdiction with privacy, and no accounting or tax filing requirements. Or you may︄ look into Cyprus which is where most Expats worldwide are incorporating to because it is︅ part of Europe but still have fabulous privacy and tax regulations.

Not sure if it︆ really help you, feel free to get back:tongue:

 

[fionix]

Do you think it will work to resigning as an citizenship to avoid to pay‌ tax? Say I do so, what will happen if something bad hits me, I mean‍ am I protected by any social or medical system any longer?

 

[CWI]

Thanks for the feedback.

As I understand, if I want to "save tax money" in‌ a legit way I need to get the non-resident status, otherwise I would only be‍ hiding my money from tax authorities, correct? If then I decide to incorporate my IBC⁠ in Cyprus, being non-resident I am free from income and company profit tax, correct? Or⁤ are the Seychelles better because of the absence of the need for accountancy and tax⁣ filling requirements? The Seychelles look more appealing because of this and the lower incorporation costs,⁢ but I also need to check if it would be a problem for my employers︀ to do business with a Seychelles IBC. In Cyprus I would not have to worry︁ about that.

fionix, there are health insurance plans for expats worldwide at reasonable prices, depending︂ on your location.

 

[JohnLocke]

Yes you⁤ are right, you will need to make sure that the company is managed in Cyprus,⁣ this is accomplished bu appointing nominees.

You will need︃ to find out what your employers will say to be employed by an Seychelles company,︄ if they don't mind you may be fine wit ha Seychelles company as well.

 

[CWI]

Thanks Admin,

Just to get one thing straight. Lets assume I can't get non-resident status‌ because of my family and for having a property in my name back home.

If I incorporate an IBC offshore, probably in Cyprus to avoid raising any red flags, to‍ serve as intermediary between my company back home and my employer. I would invoice my⁠ employer from the Cyprus company and have my company back home invoice my Cyprus company⁤ just enough to pay the expenses and keep profit to a minimum. This way I⁣ would be saving my money in the offshore company bank account.

I do not see⁢ this being illegal in any way. My name would not be mentioned in any transfer,︀ just the Cyprus company name would be mentioned when I transferred the invoiced amount to︁ my company at my home country. And with nominee director (would I need shareholder?), the︂ more privacy I would have and less chance for problems if any, because like I︃ said, I do not see any legal issues with this setup. To use the money︄ accumulated in my Cyprus bank account I would use an anonymous ATM debit card.

Also, just to make sure, even if having local nominees, the fact that the company will︅ be doing business outside of Cyprus would make it exempt from any taxes?

 

[JohnLocke]

Tue the described scenario isn't illegal, the issue may be to convince the local authorities‌ about the setup and to proof that you are not in direct control of the‍ Cyprus company and that the management is for real, means, there are real people who⁠ they can speak with and hopefully feel comfortable with their decisions to approve your business⁤ model.

In the past we have seen this done successfully many times, however, it need⁣ to be done right otherwise you will get into troubles.

No, you will︁ need Foreign Nominees otherwise you will properly face complications in Cyprus when then company sends︂ in their application to be exempted from tax.

 

[CWI]

Once again thank you very much for your help.

Can you give me a price‌ for both the Cyprus and Seychelles IBC so I have an idea?

 

[JohnLocke]

Your welcome, you can find our fees here:

Cyprus Company, Cyprus Company

Seychelles Company, Seychelles‌ Company

Just get in touch with us here or Skype:CCLOGIC if you need anything further.‍

 

[luckyme]

Will you be able to setup the two companies i.e. Seychelles and Cyprus in a‌ way to avoid the tax in Cyprus? how much are the costs? I asked a‍ local tax adviser who told me roughly 3000 Euro for the paperwork alone:s-confused:

 

[robertisnt]

Isn't the criteria, that company is resident of a⁣ country, if the management and control takes place in this country (mostly). So if he⁢ own company and controls it, this doesn't means he makes all important decision in hos︀ home country. He may go to the offshore country make decision and then come back︁ to his home country with no worry as far as i can see.

Also shouldn't︂ the authorities have to prove you do not manage company from your home country, rather︃ than you proving them you do not. I mean if they want your money, they︄ should prove it themselves.

 

[JohnLocke]

I second that. I'm sure⁣ in 99% of all sudden structures there won't be any issues, however, if you want⁢ to safeguard your offshore company structure you will wan to use foreign nominees if you︀ live in the same country as the "offshore" company is incorporated.

Again, true. The problem can be that you have to︄ spend money on legal or tax advisers to convince the local authorities about the same.︅ One thing is what the law says another thing is how the authorative person reads︆ the context of the law and how the offshore company setup comply with sudden laws.︇ And again, in 99% of all sudden offshore company setups it may never be any︈ issue but if you want to safeguard your offshore company and avoid complications with the︉ local authorities you must take measures against those issues.

 

[CWI]

I am non-resident in the IBC location so it would not be︁ a problem if I was the director and shareholder of the IBC. In case nominee︂ director and shareholder are used for anonymity, they will have to be foreign in order︃ to avoid taxation in case of a Cyprus company.

After some more research my question︄ now is: Do I really need nominees or to be anonymous? I mean, I am︅ using an offshore company to be the intermediary between my company in my home country︆ and my employer, which should be perfectly legal. I do not see any law being︇ broken here and its not tax evasion as the intermediary company will be doing business︈ from a 0% tax jurisdiction. What would be the advantages of going anonymous?

 

[fionix]

Well you will need a nominee if you don't want to be listed on a‌ public register in the offshore jurisdiction and if such thing exists there. For my own‍ safety I appointed a nominee shareholder and director to my Cyprus company, now no one⁠ can see who the real owner is (only with a court order) and I have⁤ proof that the company is managed abroad.

 

[robertisnt]

And it is pretty cheap. I mean, everyone is doing it, so why shouldn't you.‌

I am not sure you need to report you have a company in Cyprus to‍ authorities in your country, if your country has the double tax agreement with Cyprus?

I am pretty sure you do not have to. If you need no to pay taxes⁠ in your country, because you pay all the taxes in Cyprus, your government has nothing⁤ to do with your company. I guess you only need to show them proof you⁣ got a dividend from a company, if you buy something expensive such as flat or⁢ car. But they still won't know this is your company, even if you show them︀ proof you have received money as dividend from a foreign company, and proof the tax︁ is paid, in case it is signed by nominee director.

Admin.

A totally agree for︂ nominee directors. Not sure why do you need nominee shareholder, as those by default do︃ not manage company. I just think one should get even better security. Especially for those︄ who sell digital products. Such as physical office, where owner can sometimes work from, so︅ he can prove it is a purely Cyprus company.

 

[JohnLocke]

Agree, problem is, if you don't make use of the nominee shareholder your name⁣ (beneficial owner name) will appear on the public register of companies in Cyprus. That's the⁢ reason for why we say to achieve 100% anonymity for a Cyprus company you will︀ need both nominee shareholder and director.

 

[CWI]

In my case, I will probably incorporate in the Seychelles, that for now does not‌ have any TIEA with my home country, that is why I am inclined not to‍ use nominees. I understand that using nominees the anonymity is almost 100% assured, but the⁠ chances of the government coming after me for some reason are slim because they will⁤ have no reason to suspect I am the director of the Seychelles company. I am⁣ planning for a company bank account in Cyprus so all the money coming to my⁢ home country company's bank account will be coming from Cyprus. Anyway, I plan to send︀ any funds accumulated in my Seychelles' company's account in Cyprus to a personal bank account︁ in Switzerland to keep it safe from any unlikely investigation.

As for the nominees I︂ still have to think if the low risk of being investigated justifies the extra cost︃ of having nominee director and shareholder.

 

[tiea-hunter]

Please shed some light on the legity of this solution if it works‍ I'm in for it.

 

[moneymaker]

Have you asked your tax man actually? Can someone here please tell if this works?‌ It would great if a coopeartion between a Seychelles and a Cyprus company could work‍ that way.

 

[JohnLocke]

Sure no issue to do that...you just need to have an agreement in place in‌ order to do so, or some other documentation.