Advice on structuring a offshore bank/company

[benben12]

HI all,

New to this all, I'm trying to set up a bank account and company abroad, which is secure and tax rate is low. I need the account in Sterling and be easy to use, where would everyone suggest, so far I've heard about Singapore, Dubai, Seychelles and more?

Thanks

 

[Spinat]

You may tell us where you are located! Seychelles has for instant 0% tax but it won't help you if you can't relocate to their or if your country tax on foreign earnings!

 

[benben12]

I live in the UK sorry, is it possible at all to work with any of you experts on this and have a discovery talk about what would be the best? Do any of you provide this?

 

[Sols]

It's really quite simple. If you live in the UK, any company you form and which you control (directly or indirectly) is tax resident in the UK and must pay tax as if it were a UK company. Failure to comply can lead to hefty fines and — in really nasty cases — prison.

Unless you plan to also move to a zero-tax jurisdiction or at least some place where the tax law enforcement is more lax, I'd just go ahead and form a UK company instead.

The days of offshore companies the way you might read about them on unregulated service providers' websites are gone. You're just strapping a time bomb to yourself. With CRS/AEOI and other information sharing initiatives, it's only a matter of time before HMRC sends you an invoice for taxes due on your overseas business.

 

[Perry8]

It's really quite simple. If you live in the UK, any company you form and which you control (directly or indirectly) is tax resident in the UK and must pay tax as if it were a UK company. Failure to comply can lead to hefty fines and — in really nasty cases — prison.

It is not that simple. But, you are correct in that you cannot just incorporate an offshore company and think that your local tax authorities will accept that construction. This is extremely important to understand, or you will definatly end up in a bad place.

There are two set of rules here that you have to consider.
1) The CFC-rules. These rules are based on OECD-standards, but is implemented a bit differently in different countries. All EU countries have now implemented these type of rules. These rules allows the tax authorities to "buy-pass" your offshore company and tax you (the owner) as it did not exist.
3) The domicile principle. A company are deemed to be resident in the country where it is actually operated from. This means that the tax authorities can re-domicile your company for tax purposes.

So, either you will need to cloak your ownership, or you will need to check your situation before you decide where to incorporate. Often you can get around this with a company tructure instead.

 

[benben12]

It's really quite simple. If you live in the UK, any company you form and which you control (directly or indirectly) is tax resident in the UK and must pay tax as if it were a UK company. Failure to comply can lead to hefty fines and — in really nasty cases — prison.

Unless you plan to also move to a zero-tax jurisdiction or at least some place where the tax law enforcement is more lax, I'd just go ahead and form a UK company instead.

The days of offshore companies the way you might read about them on unregulated service providers' websites are gone. You're just strapping a time bomb to yourself. With CRS/AEOI and other information sharing initiatives, it's only a matter of time before HMRC sends you an invoice for taxes due on your overseas business.

So most posts on this forum when they ask a question about opening a company for example in the Seychelles are talking about relocating there? I read alot of posts where this isn't stated.

 

[Sols]

So most posts on this forum when they ask a question about opening a company for example in the Seychelles are talking about relocating there? I read alot of posts where this isn't stated.

No, they are just setting themselves up for massive headaches when/if their structures fail. Some are going to not get caught, usually through lack of enforcement resources with tax authorities and law enforcement. You don't have that luxury in UK and with the HMRC, which is very much capable of going after tax dodgers.

You still have a chance to do things right, instead of placing yourself in the middle of an illegal structure.

 

[JohnLocke]

So most posts on this forum when they ask a question about opening a company for example in the Seychelles are talking about relocating there? I read alot of posts where this isn't stated.

The time has changed, things have changed, that's why people talk about relocation. What you need to do is to figure out how things work in your country where you live.Maybe you need to consult a tax advisor if you can't find the answers here at OffshoreCorpTalk.

There are still setup's which may be possible options for your situation depending on where you live.

In the past you could simply setup a Belize company with a Cyprus bank account and you were almost good to go, but that's not possible any longer just like that.

 

[user9823671]

from my understanding (which isn't a lot and there are much more knowledgeable people on this forum) but it isn't the company that gets you reported / in trouble, but the bank account. The business bank account will report to your resident country.

Adding to that, even getting a bank account for a belize / seychelles company is not straight forward.

 

[JohnLocke]

Adding to that, even getting a bank account for a belize / seychelles company is not straight forward.

correct, forget about it, you won't get an account in Cyprus for the Belize company as it is right now. You may get an EMI, but then it would be better with a Seychelles company and Transferwise account where you still have your privacy for now!

 

[crazycookie]

If you live in the UK, any company you form and which you control (directly or indirectly) is tax resident in the UK and must pay tax as if it were a UK company. Failure to comply can lead to hefty fines and — in really nasty cases — prison.

This is exactly what I'm discovering right now. I'm in a similar situation as the OP in that I'm finally looking to incorporate so I can have some sort of separation between my personal life and business activities while getting tax benefits. I've been looking primarily into Singapore since 1. I like their country 2. low corporation taxes (especially if you're making under $300K) 3. no capital gains tax 4. things are in English 5. I trust their banking system.
I'm having difficulties deciding since I'm between tax residencies at the moment (as in, I'm tax residence of an Asian country that is not a territorial system and my spouse is a UK national so I may become tax resident in the UK in the future).
I've spoken to a Singaporean tax consultant about my situation and the first thing she pointed out is that CFC rules would apply strictly if I became UK tax resident. If I stayed tax resident where I am, she said it may be workable (I'm scheduled to speak to a local tax attorney about this tomorrow).
Another option I'm actually looking into is trying for Malaysian residency, which I think might work well with a Singaporean company, possibly resulting in my company paying fairly minimal taxes and any dividends I withdraw not being taxes at all in Malaysia (which is a territorial tax country). They have a second home residency program that is not too expensive and may be a good investment for the future (as in, the tax savings that can accrue over the future). Anyone have any experience with this, btw?
All in all, the posters here seem to be correct. It's no longer sufficient to move your company and bank accounts overseas - you also have to move in order to get the tax benefits.