The most common reason for banking, conducting business, creating retirement accounts, and retiring offshore deals in part with the benefit of offshore institutions providing a tax haven for their clients. A tax haven is a jurisdiction within which banking institutions and business organizations offer tax advantages to their clients. Each tax haven offers different services based upon the needs of an individual or a company. For example, most tax havens typically don’t levy taxes against offshore accounts and businesses. In some cases, they charge a reduced tax for income investors and residents earn within the country.
In addition, many jurisdictions have tax treaties with the individual’s or corporation’s home country barring double taxation. For example, offshore jurisdictions may offer special tax treatments for income earned from investments and for retiring professionals who move to the country. For companies setting up businesses in an offshore jurisdiction, there may be substantial tax incentives such as long term clemency of taxes for investing in certain types of businesses and incentives for employing native residents.
There are six broad categories that fall under a tax haven:
1. No Taxes: There is no tax in many jurisdictions such as Anguilla, the Bahamas, Bermuda, the Cayman Islands, Nevis, Turks and Caicos, St. Vincent, and Vanuatu.
2. Tax on Local Income: There are certain countries that tax only the income generated and earned in the country. These countries include Belize, Costa Rica, Liberia, Panama, Gibraltar and Hong Kong.
3. Low Taxes and Benefits of Treaty: The Netherlands, the Netherlands Antilles, the British Virgin Islands, Luxembourg, and Singapore are included in the low taxes category and normally have treaty agreements barring double taxation.
4. Privileges of Unique Tax Laws: Jurisdictions with unique tax laws and provisions include the Channel Islands and the Isle of Man.
5. Individual Tax Treatment: A number of countries offer exceptional tax treatments for individuals. These countries include Andorra, Sark, Campione d’Italia, and Monaco.
6. Tax Havens for Businesses: Countries that tend to offer complimentary tax treatment to international businesses include Antigua, Barbados, Grenada, Jamaica, and Montserrat.
Offshore planning includes more than finding the jurisdiction with the lowest tax rates or best services for asset protection.
Tips to Remember
Before setting up an offshore corporation, research offshore banking and investment laws.
Seek a competent lawyer who has experience with drafting offshore contracts and investment vehicles for establishing a business, retiring, or securing asset protection services.
Choose an offshore institution that offers services in more than one country. Make sure that the asset protection manager is well-versed in the statutes of different jurisdictions which are important when dealing with issues of offshore taxes.
Companies that provide offshore financial solutions are required to demonstrate competence and knowledge of tax laws. As laws are subject to change, choose competent counsel who will help you to stabilize your assets.
Work with an expert who provides updated and accurate information.
Harbor Financial Services (HFS)
Harbor Financial Services is a professional company that provides offshore financial advice and investment services to its clients. HFS recommends offshore products and services to suit any personal and/or business need. The company has helped clients find solutions to meet their long-term financial needs. HFS has the experience and the expertise to create the best offshore package for you. Visit http://www.hfsoffshore.com for more information about the company’s products and services.
Disclaimer: Many countries have laws regarding offshore entities and accounts. For example, citizens that form offshore entities, (for example an offshore corporation, offshore trust, offshore partnership, offshore limited liability company, etc.) own stock in offshore entities or hold positions within offshore entities may need to file a tax return. Citizens that form an offshore trust, move assets into an offshore trust or are the beneficiary of an offshore trust may need to file a tax return. Citizens that sign on offshore bank accounts or offshore investment accounts may need to disclose this fact to their government and pay taxes on any interest or capital gains. We strongly recommend consulting with a local, licensed professional to obtain tax and legal advice in order to understand the law and to fully comply with all applicable laws and reporting requirements regarding offshore companies, offshore trusts, offshore bank accounts and offshore investments.