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Off Shore Company Solution if Business Activity is Illegal in Resident Country

K

Keefington

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Dec 20, 2024
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#1
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Hey OCT,

If a business activity is illegal in Country A (resident country) but perfectly legal in Country B (offshore jurisdiction) will I be removed of liability?

For example if the sale and advertisement of Coffee was illegal in Country A could I incorporate in Country B and sell products through this offshore jurisdiction. All stock would be held in the offshore jurisdiction but products would be advertised and shipped to Country A (assume no customs issue).

What are the chances of the corporate veil being pierced and being prosecuted myself in this case?

Can someone point me in the direction of legal advice/consulting that would be helpful in this case?
 
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#2
Its possible to work. However the type of business you do is important in assessing whether any of those illegal elements of the business could spill into your jurisdiction of residence. Analysing the business operation in conjunction with the law is paramount.
 
#3
#4
Depends on your country how they see it, if it is possible to look up the company owner and your name show up it could possibly mean troubles.
 
#8
daniels27 said:
Temu has had good success with this. You can do it for a couple of months and if you have no connection to the country where it is illegal. Just beware that you may face criminal charges when you enter the country, depending on what and how it is.

https://www.nzz.ch/wirtschaft/weihn...orteurin-illegaler-waffen-mutierte-ld.1858355
In this case, nothing happened.

In other cases, which are more serious, you may face charges as a sender.

I would probably advise against doing it when you are living in the country you are shipping to.

Do you maybe have more details about the goods and the country?
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Thanks for the reply.
Nicotine pouches shipped to Australia.
Therapeutic Goods Administration website on these products: https://www.tga.gov.au/products/unapproved-therapeutic-goods/vaping-hub/nicotine-pouches
All stock would be shipped from Sweden in a completely legal way.
 
#9
I think in this case, the safest is to set up a company somewhere and ship those goods from Sweden to Australia. I would ensure that it does not look like you deliberately try to sell it illegally to Autralia. You just ship anywhere and Australia is your biggest customer base.

The goods are not illegal per se, it just cannot be imported that directly and not without prescription. As long as they cannot claim that you deliverbately were targeting Australian customers, I would not see too much issues. Of course, it is not a truely sustainable business that is legal. But you may get along with it for at least some time.

But what about GST? If you ship goods to Australia, you need to register for GST if you ship low amount shipments. If you do not do this, they have something they can hold you liable for not doing it. And if you do register, you must disclose a lot of company details and your offshore construct may be busted and your personal details revealed. If you live in Australia, they may approach you if they find out you deliverarely were running this business to circumvent their rules.
 
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#13
daniels27 said:
But what about GST? If you ship goods to Australia, you need to register for GST if you ship low amount shipments. If you do not do this, they have something they can hold you liable for not doing it. And if you do register, you must disclose a lot of company details and your offshore construct may be busted and your personal details revealed. If you live in Australia, they may approach you if they find out you deliverarely were running this business to circumvent their rules.
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All taxes paid. Shipping is done through a partnered company all above board.
daniels27 said:
Are you living in Australia yourself?
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Yes.
daniels27 said:
The goods are not illegal per se, it just cannot be imported that directly and not without prescription. As long as they cannot claim that you deliverbately were targeting Australian customers, I would not see too much issues. Of course, it is not a truely sustainable business that is legal. But you may get along with it for at least some time.
Click to expand...
Marketing is pretty obviously targeting Aus customers as of now. The onus is on customers to ensure they have the correct documentation (scripts) when placing orders but most do not provide scripts.
 
#15
Keefington said:
Why so?

Maybe I am missing something but shouldn't the any liability be on the offshore LLC, with business activity in the registered jurisdiction being completely legal.
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To be clear, I havent analysed the legislation to identify the boundaries of legality and accompanying risks. However, why wouldn't you operate this business to another country where it is fully legal and/or you don't have residency?
 
#16
I think with the appropriate disclaimers that customers need to ensure compliance with local laws, the risk is manageable.

Not sure how he wants to handle GST in Austria. Maybe he can use an offshore company with nominee. Because if he operates something in the grey zone and is not tax compliant, they have an easy game. And then Australia where most companies are with personal liability.

I would recommend this business to somebody living in Pakistan with no ability to ever get a visa to Australia. If your live in Australia, just ship the goods to Pakistan, China, Japan, Austria. There are many opportunities that bear less risk.
 
#17
Keefington said:
Maybe I am missing something but shouldn't the any liability be on the offshore LLC, with business activity in the registered jurisdiction being completely legal.
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i think you know this not to be the case, otherwise the world would be a lawless place.
could you supply an ar 15 lower to australia because you have a us llc?
could you supply weed to australia because you incorporate in amsterdam?
theres always a question of how enforceable are these laws, the answer in this case, being a materially australian company breaking au customs law (strict penalty), very enforceable, no liability protections.
right to jail. dont s**t where you eat

daniels27 said:
. As long as they cannot claim that you deliverbately were targeting Australian customers
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you (OP) would have to give information about your ad campaign or the ad provider would, see http://www7.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/tga1989191/s42dr.html and then see 42DS for the year in prison you get if you dont hand that over.
the actual supply would be strict liability customs offences as well as the tga offences op posted, wouldnt need to prove intent on that.

i wouldn't even do this is you're starving op
 
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#18
drysponge said:
you (OP) would have to give information about your ad campaign or the ad provider would, see http://www7.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/tga1989191/s42dr.html and then see 42DS for the year in prison you get if you dont hand that over.
the actual supply would be strict liability customs offences as well as the tga offences op posted, wouldnt need to prove intent on that.
Click to expand...
Running an at campaign targeted at Australians would be intent. As mentioned, he can sell it to everybody and should be fine as long as he complies with his GST obligations and tax obligations in case the company is run from Australia. If he targets Australian customers, he is doomed. But the document he linked initially already mentions that ads are not allowed. Hence, I guessed he had no intent to run ads.
 
#19
Anyway. OP is either not if British ancestry or did not pay attention in history classes. Maybe go to the library and borrow a book on the history of British empire. You will see that wealth come from selling drugs to places you are not present. Check the chapter on opium. You will understand that trying to sell drugs around your home is very, very dumb. Sooner or later, you will be in troubles, one way or the other.

Just sell them to China or the US. It had worked in the past and will work in future.
 
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#20
daniels27 said:
But the document he linked initially already mentions that ads are not allowed. Hence, I guessed he had no intent to run ads
Click to expand...
understandable but:
Keefington said:
Marketing is pretty obviously targeting Aus customers as of now
Click to expand...
 
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