I. Definition
II. Privacy
III. Asset Protection
IV. Tax Advantages
V. Additional IBC Benefits
VI. Tax Optimization
VII. Management
VIII. Foundations
I. DEFINITION: If your
primary goal is not just asset protection and complete privacy but
legal tax efficiency as well, an IBC in one jurisdiction combined
with an offshore based Foundation in another is ideal. A Foundation
is put in place that acts as a Shareholder of the IBC. Ownership
thereby is divested to another legal entity. IBCs provide much of
the same features and advantages as LLCs except that you deal with
the more familiar and traditional corporate structure and the issuance
of shares.
Although many jurisdictions offer comparable characteristics for
IBC domiciliation, we feel that Nevis offers a slight edge over
other comparable jurisdictions because of the requirement of their
judicial system for a $25,000 bond to be put up before a plaintiff
can get a suit filed. For additional information on the features
and advantages of Nevis IBC’s click
here.
The shareholder Foundation
can also be set up, just to be on the safe side, with a charitable
beneficiary so that even in the unlikely event that the veil is
pierced, it confirms that the assets are held for the benefit of
a charity. Nobody ever questions legitimate charities as a beneficiary
of a Foundation. Setting up offshore Foundations and Trusts whose
primary aim appears to be philanthropic is a savvy and indeed "politically
correct" way to organise one's offshore assets even if only
a little actually goes to the charity. In reality if a Foundation
is only holding the shares of the company and nothing more, the
IBC and its assets and bank accounts are really what determines
the value of the shares. Thus, a distribution of the assets of the
IBC can be easily done without any need to set up any testamentary
wills in regards to the Foundation, so long as one of more trusted
family members have access to the business and investment accounts
of the IBC. However, it is also possible to set up a simple mechanism
for the Foundation to be able to carry out your asset distribution
wishes at the time of your death. A testamentary trust can
be put in place and that is something our law offices can assist
you with at any time before or after the entities have been set
up. In fact we offer an unbeatable package whereby not only do we
offer the IBC and Foundation but we also offer a testamentary trust.
Click here to go to International Fiduciary Structure.
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II. VERY HIGH PRIVACY:
The privacy benefits offered through an IBC /
Foundation combination are similar to the ones presented in the
Nevis IBC and Offshore
LLC pages.
In addition:
- There is not only strict confidentiality
of beneficial ownership but the privacy of your affairs no longer
only have to hinge on confidentiality, since you are not a beneficiary
in any way of your assets.
- No annual reports of financial returns need
to be filed since you have surrendered ownership of your assets
to a trust.
- The Foundation is located in a different
jurisdiction. This makes it that much harder for a plaintiff to
go after any assets since they would have to start all over again
once it had been determined who really owns the assets of the
corporation. In addition long before that could have been determined
the IBC could have been re-domiciled to another jurisdiction frustrating
any would be suitor or creditor.
- As before, the principal office and records
may be located anywhere in the world.
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III.
EXCELLENT ASSET PROTECTION:
The asset-protection benefits offered through
this option would be the same as the benefit of owning an offshore
corporation. However, the question of beneficial ownership is resolved
in a very satisfactory way so that the Foundation replaces you as
the legal owner. It would be very difficult for a court of law to
prove that the Foundation is nothing but an alter-ego of yourself,
since the Foundation exists completely separately and independently
from you and has a “life” of its own which is determined
by the appointed Council Members, which of course you can influence
but do not legally control. Also the Foundation was born out of
Panamanian Civil Law, and such laws cannot be simply overturned
or set aside – unlike with Common Law trusts that do not owe
their existence to civil (statute) law.
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IV. EXCELLENT TAX ADVANTAGES:
An IBC / Foundation combination provides you with a way to safely
avoid any taxation issues until you need to take income or capital
gains (as appropriate). This is because most countries look to the
ownership question to determine if their taxpayer is liable for any
tax on an offshore corporation. If that taxpayer clearly does not
have a legal ownership in the company most countries’ tax rules
clearly state that no tax is payable on the unrealised (i.e. un-repatriated)
earnings of that company. Even then there are ways to set it up whereby
you can take earnings in the form of a loan (to be paid back over
time). This is a highly complex area and since each country has different
tax rules it is important to get assistance from a tax professional
to determine your own possible tax liability in light of your nation’s
tax regime.
V. OTHER IBC BENEFITS:
Nevis IBCs provide these additional advantages:
- Flexibility of ownership and management structure.
- There are no residency requirements for Directors, Shareholders
or Officers.
- Corporate or Trust entities may act as Director, Secretary
or Shareholder.
- Re-domiciliation of other foreign companies into and out of
Nevis.
- There are no limitations on corporate ownership.
- No corporate tax, income tax, withholding tax, stamp tax, asset
tax, exchange controls or other fees or taxes are levied in Nevis
on assets or income originating outside of Nevis.
- Nevis permits sole director IBCs
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VI. TAX EVASION vs. TAX OPTIMIZATION:
As mentioned before a big issue for citizens of North America, Australasia
and the E.U. as well as other nations is the proper use of an offshore
IBC - so that any tax advantages are not deemed to be "tax
evasion". The primary issue here is whether such a corporation
is deemed "controlled" or "not controlled".
And depending upon the verdict - the tax consequences will vary.
Let's take the United States Internal Revenue Service as a good example.
Their code defines a Controlled Foreign Corporation (CFC) as: "any
foreign corporation of which more than fifty percent of its value
or voting stock is owned by United States shareholders on any one
day during the taxable year of such Foreign Corporation." A US
shareholder is also specifically defined as a US citizen or entity
holding or controlling more than 10% of the shares.
Here's an example of a Controlled Foreign Corporation:
Imagine that US shareholder "Bob" owns 50% of the voting
stock of the foreign corporation "X". US shareholder "Sue"
owns 11% of the voting stock. The remaining 39% is owned by an offshore
shareholder "Chris". Under the existing IRS rules, this
is a CFC because more than 50% of the voting stock is held by US shareholders.
As you can see, the simplest way to avoid ending up with a CFC is
to ensure that less than 50% of the voting stock is held by US shareholders
- and that no individual shareholder holds more than 10% of voting
stock. This can be done by using a Foundation to own the majority
of the stock, or any variant where the end result is the required
"less than 50%" holding.
Consequently, for business and investing purposes carried on outside
of the jurisdiction of residency, the simplest solution is to subscribe
the shares of an IBC to a Foundation. This puts ownership into the
hands of another legal entity, away from the actual beneficial owner.
The bearer shares in an offshore corporation can therefore be owned
by this other entity which we recommend as having a charitable beneficiary.
An international charitable based Foundation is now the most advantageous
direction to go in if you want to divest ownership of any asset (in
this case the assets of what would otherwise be termed as Your Company).
VII. Proper Management is the Key:
The structures should ideally be managed by an independent third party.
This party can be someone you know and trust or a professional company
such as Sovereign Management Services that specialises in such management
services. (See Management Services)
The most important fact here is that this party must be residing in
a country other than your own and preferably in a country such as
Panama which still has strict privacy laws for such matters.
Even if the assets are not in your control, you can still make recommendations
to your hired managers which they are bound to follow so long as there
is nothing illegal in what you are requesting. A testamentary will
along with a testamentary trust can be put in place for your wishes
to be followed in the event of your death and this can be lodged with
our in house lawyers. Click
here to go to International Fiduciary Structure.
VIII. Points to bear in mind
in regards to the Foundation:
The Foundation exists purely as a passive entity. It’s purpose
is to remove ownership of the company from your hands so that you
are not subject to your country's reporting and tax requirements.
This is possible as long as you are not a beneficiary of the Foundation
in any way. For maximum safety, you must conduct the business of the
corporation at "arms length".
Since this Shareholder entity acts in a passive role there is no day-to-day
involvement necessary with it, since all day-to-day business is carried
out by the IBC through its bank and brokerage accounts. You can be
the signatory on the bank account if you wish or even better you can
appoint a professional management company such as our company to be
the signatory, while you act as an advisor or consultant to the company.
See Account Signatory Services.
To set up an IBC combined with an Offshore- Based Foundation or to
get answers to any questions you may contact us now at scib@hushmail.com
or if you are ready to order, go to the order
form. |
