The SCF Group offers a wide range of offshore and international company formation services but the distinction between offshore (also known as international business corporations or IBC’s) and international and tax planning company formation should be understood. In the case of the former, these are primarily used as conduit or holding vehicles and generally are not suitable for trading as they are normally not protected by international tax treaties resulting in potential exposure to both full withholding taxes and applicable anti-avoidance provisions. In the case of the latter, international and/or tax planning companies are on the contrary normally covered by international tax treaties and/or trade organisation directives such as the EU parent subsidiary directive 90/435, which allows dividend to be paid in full without any withholding taxes provided the payments are made to another EU country. In other words, in modern tax planning it is normally required to have at least one tax treaty and/or trading company within a structure if tax exposure is to be legally mitigated. Factors that must be considered when selecting any tax planning or international company are whether the Organisation of Economic Co-Operation and Development’s (OECD) rules relating to establishing proper local management and control have been satisfied. In most cases, this requires having proper local directors (not nominees), invoicing and client liaison services and potentially local banking and even website hosting services but the actual requirements will vary depending the company objectives.
Example Offshore/‘IBC’ Companies
Example offshore or ‘IBC’ companies would include jurisdictions such as the British Virgin Islands, Belize, the Seychelles and even the Isle of Man, Jersey and Gibraltar with the latter falling under the offshore category (despite their protestations) not because they do not impose corporate taxes (which they do from 0-20%) but because they all have very limited tax treaty protection and are still officially ‘black-listed’ by many countries. However, as stated this does not mean they are not useful but only that they must be used for the right purposes in any given structure.
Example International & Tax Planning Companies
Example international or tax planning jurisdictions would include countries such as the Republic of Ireland, Malta, Hong Kong, Singapore and even the United Kingdom, Switzerland and the Netherlands all because of their domestic tax regimes and/or sophisticated tax treaty networks. It is these countries that are used by most tax planners for their business and indeed individual clients and have been proved successful structures for many years.
For more information, please speak to a tax planning consultant