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Going Offshore With A Company or Corporation - 10 Top Where and Why's

Apr 18, 2008
The thought of using offshore companies and bank accounts was once the domain of the rich and famous. The Swiss bank account, the residence in Monaco, Ronny Biggs in Brazil! A dichotomy of images that nearly always never related to the average man in the street. But times have changed, and with the globalisation of the world economy through the internet, the accessibility to tax panning through offshore vehicles for the average investor has now become real.

So what are the benefits of investing offshore? and more importantly today, in a world where information is king and governments around the globe are using the threat of terrorism to pry into every individuals private affairs, where should one look to escape the prying eyes?

1. Saving Taxes

It may seem obvious but it is definitely the main reason for investing through an offshore company or corporation. As a resident of say, the US or the UK, you are governed by a tax regime that taxes an individual income wherever it is earned in the world. This means that even if you earn money from an offshore business you are liable to pay income tax at the prevailing rate and should declare such income on your annual tax returns.

An offshore company or corporation however, is a completely separate legal entity from you as an individual. It may carry on business, own assets and pay debts and liabilities of the company through its offshore bank accounts without there ever being any liability for you as an individual to make a declaration in your country of residence.

In its simplest form an offshore bank account could earn gross interest on a deposit for years enhancing its real return through gross roll up of interest. Tax would only be payable if the deposit was cash and returned to the individuals country of residence by which time it would have grown substantially more than if it had been receiving interest taxed at source. Of course an offshore company and bank account offers a much wider scope for investment than this and methods of distributing income through visa cards and other offshore vehicles means that an individual may conduct much of his investment strategy without ever having a liability to tax in his country of residence.

2. European Tax Havens May Be Places to Avoid

As mentioned in the opening paragraph, the places we most associate with offshore tax havens are the Monaco's and Switzerland's of this world. Recent events though in Liechtenstein and the increasing propensity of the Euro Zone governments to force European tax havens to disclose private individuals informations has meant that tax havens outside the scope of European pressure have become much more in demand. Panama and Guatemala are two such countries whose privacy laws are second to none and who have, since the stabilization of their economies and politics, become sort after destinations for offshore company accounts.

Panama is no newcomer to the offshore company environment. In the 1970's it held more company accounts for offshore corporations than all the Caribbean islands combined. It resurgence to reliable tax haven status owes much to the modernization of its banking system and its accessibility to the US. For those wishing to gain expatriate status, it has a moderate climate and exceptional laws benefiting 'pensioners'. (The 'pensionada' laws apply to anyone over the age of 18 with a pensionable income - they provide discounts for citizens covering all aspects of everyday life)

Whatever your circumstances both Panama and Guatemala have the tightest of privacy laws and with no taxation charge on offshore transactions, you can be assured that your monetary affairs are not only private, but they are also tax free.

In the title I stated that there were ten good where and whys to investing offshore. I may have slightly over exaggerated the facts. That is unless you remember that reasons 3 to 10 are also saving tax, saving tax, saving tax... and privacy!
About the Author
Panama Legal are a Panamanian based law firm that specialize in offshore corporation and offshore company formation. Panama Legal can guide you through the legal procedures. Read finance articles at OMDN
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