Most of you have probably heard of Labuan, but it still seems to be somewhat of a rare setup in the offshore world. However, I've started the process and I thought it might be of interest to some of you on the forum to follow my journey.
As a bit of background, I'm a UK Chartered Tax Advisor, Trust and Estate Practitioner, Licensed Probate Practitioner and have run my own practice in the UK for the past 10 years. My wife and I love to travel and particularly love Asia. Over the last few years I've been increasingly advising clients around offshore moves where they can minimise their taxes and live a better lifestyle, so a couple of years ago I started to have the conversation with my wife about the advantages of doing it ourselves. Effectively it meant we could go from the UK rates of tax which are approaching 50%, to an offshore setup with circa 5% tax. On top of that, we love Malaysia, the cost of housing is 1/2 the UK, the cost of living is 1/3 of the UK and they have some fantastic British private schools (especially important bearing in mind 20% VAT).
Although it's not a massive difference, the VAT on school fees was (one of) the final straws. In Malaysia we can send our kid to a British owned private school in huge grounds, with great facilities equally or better to his current school, following the same syllabus, but with the VAT increase we save £250k over the life of his education... I can move to Malaysia, we can establish a Labuan company, which will be subject to 3% CT, I'll have to take a small salary and my dividends thereafter are tax free. My Labuan company will then bill the UK companies for my time on an hourly rate basis with a reasonable proportion of the income shifted (justifiably) out of the UK and into Malaysia. Any funds left back in the UK are subject to 25% CT (unless I contribute them into a pension) and dividends from the UK are tax free.
So last year I contacted a few agents and spoke with several about the practicalities, setup and running costs etc and eventually settled on a firm who had historic links to the UK and Jersey. They put in the application in November last year and we then sat back and waited. Just over a month later we had notice from the Labuan FSA that the company had been formed.
The next challenge was banking. They started the application with Maybank in January, but they were being difficult about the fact that I was the visible shareholder/director and currently non-resident, they then tried OCBC, had a video call with the onboarding team in April, but still couldn't get through. May it was suggested that the issue was simply that they don't like offshore shareholders/directors (although I can't get onshore until the company has a bank account to employ me...), so we put in place nominee shareholder/director agreements. Finally 3 months later at the start of September we got an account set up with Maybank. Although 3 weeks later they still haven't issued online banking registration.
I've now physically moved to Malaysia (family are back home for now) and I'm staying in AirBnBs until the end of the year when I'll head back for Christmas before travelling a bit around Europe and moving back to Malaysia in March to take on a longer lease on a property.
Apparently Labuan are starting a new 5 year director's visa which will come into effect from January next year, which will certainly be easier than the current 2 year visa with re-application every 18m.
Free free to ask me anything about the process - I'll try and keep this updated with any news/changes.
As a bit of background, I'm a UK Chartered Tax Advisor, Trust and Estate Practitioner, Licensed Probate Practitioner and have run my own practice in the UK for the past 10 years. My wife and I love to travel and particularly love Asia. Over the last few years I've been increasingly advising clients around offshore moves where they can minimise their taxes and live a better lifestyle, so a couple of years ago I started to have the conversation with my wife about the advantages of doing it ourselves. Effectively it meant we could go from the UK rates of tax which are approaching 50%, to an offshore setup with circa 5% tax. On top of that, we love Malaysia, the cost of housing is 1/2 the UK, the cost of living is 1/3 of the UK and they have some fantastic British private schools (especially important bearing in mind 20% VAT).
Although it's not a massive difference, the VAT on school fees was (one of) the final straws. In Malaysia we can send our kid to a British owned private school in huge grounds, with great facilities equally or better to his current school, following the same syllabus, but with the VAT increase we save £250k over the life of his education... I can move to Malaysia, we can establish a Labuan company, which will be subject to 3% CT, I'll have to take a small salary and my dividends thereafter are tax free. My Labuan company will then bill the UK companies for my time on an hourly rate basis with a reasonable proportion of the income shifted (justifiably) out of the UK and into Malaysia. Any funds left back in the UK are subject to 25% CT (unless I contribute them into a pension) and dividends from the UK are tax free.
So last year I contacted a few agents and spoke with several about the practicalities, setup and running costs etc and eventually settled on a firm who had historic links to the UK and Jersey. They put in the application in November last year and we then sat back and waited. Just over a month later we had notice from the Labuan FSA that the company had been formed.
The next challenge was banking. They started the application with Maybank in January, but they were being difficult about the fact that I was the visible shareholder/director and currently non-resident, they then tried OCBC, had a video call with the onboarding team in April, but still couldn't get through. May it was suggested that the issue was simply that they don't like offshore shareholders/directors (although I can't get onshore until the company has a bank account to employ me...), so we put in place nominee shareholder/director agreements. Finally 3 months later at the start of September we got an account set up with Maybank. Although 3 weeks later they still haven't issued online banking registration.
I've now physically moved to Malaysia (family are back home for now) and I'm staying in AirBnBs until the end of the year when I'll head back for Christmas before travelling a bit around Europe and moving back to Malaysia in March to take on a longer lease on a property.
Apparently Labuan are starting a new 5 year director's visa which will come into effect from January next year, which will certainly be easier than the current 2 year visa with re-application every 18m.
Free free to ask me anything about the process - I'll try and keep this updated with any news/changes.
