Options for tax-complient (US) offshore company - minimizing dividend tax

[dyrewolf]

My business partner and I both live in the US, and we own a company that sells licensing rights to independent movies. We are currently a California corporation, though we have no physical presence there (except shareholder residence). It occurred to us that instead of paying CA franchise tax, City of LA business tax, FICA on payroll, etc, etc, etc, we need a better plan. Basically all we do is broker movie rights and get a few large wire transfers per month. There is no real "US nexus" in lawyer speak.


We would like to move the company offshore, while fully disclosing profits on our personal US tax returns. Our goal is to set up in a country that 1) has 0% tax on IBCs and 2) would allow us to pay 15% dividend tax on money coming back into the US. #2 seems dependent on "qualified foreign corporation" status which is tied to tax treaties.


Has anyone setup an offshore company with similar parameters?

 

[webdriller]

I say Cyprus is your best options. They have the lowest tax in Europe (10%‌ corporate tax, I think) and they have a DTA with the US! Seems it is‍ all what you are looking for.

Here is more information:

 

[TheCollector]

DTA is importan, to be a US citizen makes it not easy to find a‌ solution sincem ost CSP's and Banks are started to refuse to open bank accounts for‍ US citizens so they don't want to incorporate companies! However, I know US citizens are⁠ still welcome in Cyprus and their banks 🙂 That's the good news.

 

[JohnLocke]

Actually we do not have any difficulties to help to open Cyprus bank accounts for‌ US citizens. So we can help with the incorporation of the company in Cyprus!

 

[clemens]

Do you mind to share what the outcome was for︅ your offshore company plan's?

 

[dyrewolf]

The only country I have found that has 0% corporation tax‍ of offshore profits and a treaty with the IRS that allows for qualified dividends is⁠ Cyprus. So you can have a corporation in Delaware/Nevada/Wyoming that passes all profits to Cyprus⁤ holding at 0% Cypriot tax, and then repatriates the profits to US shareholders as dividends,⁣ for which they are taxed at the (currently) 15% qualified dividend tax rate. From what⁢ I have read, this is totally within the bounds of IRS and Cypriot laws (without︀ any creative interpretation, even).

 

[bulgina]

Do you think this would work legally for Portugal too?︀

 

[trevor]

Yes why not... it comes all down to how the offshore company is structured.

 

[clemens]

Regardless where in Europe or in the Wolrd you are located you may carefully research‌ your options in a certain offshore jurisdiction.