Top Tax Planning Uses For Offshore Companies
Avoiding Inheritance tax for Non UK domiciliaries
Non UK domiciliaries can use offshore companies to hold UK and overseas assets free of UK inheritance tax.
Offshore Joint Ventures
When you’re involved with another overseas company this can provide an excellent opportunity to use an offshore company.
Good business/commercial reasons for offshore company
Having sound business reasons for the offshore company can make it much easier to side step the UK anti avoidance rules.
As an income shelter where you and your spouse are excluded from benefitting
There are some potentially nasty anti avoidance rules that can tax UK residents on income of offshore companies. However another case when using an offshore company can be attractive is where you and your spouse can’t benefit from the company
Holding overseas property
Holding overseas property via an offshore company can be attractive for both UK and overseas tax planning.
Non resident individuals running trading companies
If you’re non resident, using an offshore company can provide highly attractive tax and asset protection advantages.
Taking advantage of double tax treaties to reduce withholding taxes (eg Offshore licence/patent companies)
Many countries apply tax at source to interest or royalties that arise within that territory. An overseas company can reduce or even avoid this withholding tax.
Avoiding capital gains tax with a company in a treaty country
Establishing an offshore company in a favourable jurisdiction that has a tax treaty with the UK can help to avoid UK capital gains tax.
To take advantage of indexation relief, yet be taxed personally
Indexation relief is withdrawn for individuals after April 2008. However if you use an offshore company you can still gain this relief.
Non UK domiciliaries with income and gains retained abroad
Non UK domiciliaries are in a very good position to use offshore companies to avoid tax on foreign income and all capital gains.
Anyone planning to be non resident in the future
If you plan to be non resident in the future you can use an offshore company to start obtaining some of the benefits of non residence status now.
UK trading companies looking to expand overseas with < £200,000 profits
Foreign subsidiaries who generate less than £200,000 of profits are now excluded from some anti avoidance rules. This means they can be very attractive in terms of avoiding UK corporation tax on foreign profits.
Where genuine intercompany services are provided overseas
You can use an offshore company to recharge for overseas services and reduce profits in the UK or other higher tax jurisdictions.
Where there are multiple shareholders
Owning an offshore company with a number of other UK resident shareholders means that capital gains can often accumulate tax free overseas.
Using an offshore trust & company combination tax efficiently
An offshore company combined with an offshore trust can make it easier to obtain the advantages of non resident status for the company.
Using UK & Offshore agency companies
An offshore agency company can be useful in terms of reducing UK corporation tax as well as providing good commercial and privacy benefits.
Related Tax Articles
- Using an offshore company
- Establishing the central management and control overseas
- Income tax anti avoidance rules
- Capital gains tax anti avoidance rules
- Establishing a trade overseas
- Top tax planning uses for offshore companies
- Tax for UK domiciliaries with offshore trusts
- The tax benefits of offshore trusts for non UK domiciliaries
- Pros and cons of using an offshore holding company
- Top tax planning uses for offshore trusts
- Transferring a UK trade to an offshore company
- Migrating a UK company overseas
- Tax efficient EU trading