[This guide is not relevant to US citizens as the amount of pressure that has been put on foreign countries by US authorities to cooperate with their tax regime means that the United States is now often among the likes of Iran and North Korea on the blacklists financial institutions around the world.]
The legality of using "offshore" companies and banking will depend on your situation in relation to your country or countries of residence/citizenship. To find out what your legal status is you need to find out how your country treats worldwide income, what they consider worldwide income and under what terms of residency you become subject to their tax regime.
You should be able to find this information quickly via web search, for example, in the United Kingdom you are required to pay UK tax on wages earned abroad, capital gains on investments, rental income of overseas property and overseas pensions; but you are only required to pay tax on these forms of income if your are a UK resident. There are a few rules, but importantly you are considered a tax resident if you only own a home in the UK and have resided there for 183 or more days.
There may be further caveats to your country's legal system that will need to be researched on a country-by-country basis. The UK has rules for negating overseas income via property ownership abroad.
If you plan on living and working in a country on a more-or-less permanent basis and you are able to by some means divert your income to an offshore bank account either in your own name or in the name of a company, then this is considered tax evasion (illegal). In short if you want to live and work in a country, you are likely to be subject to its tax codes. Failure to pay taxes leaves you open to asset seizure and prison time. There are ways people use to get around this, which can be in a grey area or by causing so much complication that it is difficult to establish who or what may be liable to taxation where.
The simplest way to legally have no requirement to pay tax is to move to a virtually zero tax jurisdiction(s) or live between three or more countries per year.
The key to offshoring is diversification. The more you can spread yourself and your assets, the harder it will be to know of their existence, know of their ownership and seize them.
Company
One of the most important aspects of offshoring is to hold your assets in a company or companies. This adds an extra legal layer to your assets that would have to be challenged in the registering jurisdiction's courts. This is a process that is typically and deliberately expensive. It also means when you make/receive payments by international wire or make payments by your corporate debit card that rather than your personal name and address going through the international financial apparatus, it will be the name and address of your company. Further, if you want to invest in stocks or engage in other markets like forex, rather than having your personal name lodged with the exchange it will be the name of your company.
There are three attributes your company should have:
1) a closed register that does not disclose the company's owners to the public or other governments
2) no requirement to submit company accounts
3) no taxation
Registering a company typically needs to be done via an agent. I can recommend the following:
https://www.icoservices.com/offshore-com...ation.html
https://www.sfm-offshore.com/jurisdictionsoffshore.html
(scroll down for prices and details)
Annual maintenance will cost upwards of $600 as you will also need to pay for a notorised certificate of standing to send to your bank to maintain the account, which costs about $100.
Some of these incorporations are standard domestic companies, while others are international business corporations, which are exempt from tax on overseas income.
I would recommend Belize as it has the above three attributes with the added security of your personal details not being held by the company registrar in Belize. Your details are only held by the agent who registers the company on your behalf. As an added security measure, agents offer a service to have nominee directors register the company on your behalf.
In the case that your company comes under a legal challenge, there are typically large fees just to do so and will probably be unsuccessful unless you are breaking a law in the registration jurisdiction or stepping on the toes of the IRS (International Revenue Service), DHS, CIA etc.
Registering a company and bank account with an agent or law firm gives the added risk of your data being dumped like the Panama and Paradise Papers. If this concerns you, it would be better to register with a small agent like ICO Services (link above).
Bank
A bank account can be arranged by agents like those linked to above, for fee typically in the region of $500. You'll also need to have documents notorised unless you want to open your bank account in person. Some banks require you open an account in person.
It is highly beneficial to open a bank account in a separate country to the one you are incorporated in. This results in at least two jurisdictions whose legal systems would need to be engaged in the hope of determining and seizing your assets.
There are a number of tax sharing agreements between countries via which banks in one country are obliged to provide client information to foreign governments. These are listed here:
http://www.oecd.org/tax/exchange-of-tax-...stieas.htm
About half of these requests are ignored.
I suggest opening a bank in a country that is stable, but not a major banking jurisdiction, which have been roped much closer into the global financial dragnet set up by the likes of the IRS and the OECD.
A few common options:
1) Euro-Pacific Bank, St Vincent and The Grenadines (minimum opening balance: $500)
2) CIM Banque, Switzerland (minimum opening balance: $10,000)
3) MCB, Seychelles (minimum opening balance: $100,000)
4) UBS, Switzerland (minimum opening balance: $1 million)
5) Liechtenstein Landesbank, Lichtenstein (minimum opening balance: $1 million)
You can usually get an indication of a bank's financial health via the country's financial services authority or the bank's annual report.
Banks that hold foreign currencies do not directly hold money with that country's central bank; the reserves are held with a corresponding bank in that country. The structure is something like this:
Registering agents, like the two listed above, can provide proxy beneficiaries to a corporate bank account, thus solving the issue of the possible exchange of your information with foreign governments. This will also protect you from any leaks.
Address
If you don't feel comfortable using unknown nominee directors for your company and nominee beneficiaries for your bank account another option is to buy a foreign property. This is information that will only be held by your bank and possibly offshore corporate registry/agent, but it makes you slightly more difficult to identify and bring another jurisdiction into the jumble of confusion you are surrounding yourself with.
A foreign address is not so essential if you are just a speculator, but if you have real business income then you likely have clients/suppliers who you invoice and/or invoice you. This means you'll be providing them with an address for invoices, which are stored in databases that could be browsed by the government or leaked; as well as likely being delivered across the Internet by insecure email.
Anywhere off the reservation will likely be good. I would recommend Serbia and Macedonia. These are two countries that are a long way from the global tax dragnet, where you will get at least a +1 on your SMV, no GMO, clean food, anti-PC and cheap. If you want to buy a dump, you can pick them up for < $3,000; something habitable for about $8,000; and large houses in good condition with pools from about $40,000.
Also an alternative to a PO Box.
Identity Documents
Even if you open a corporate bank account, you will be required to provide the personal details, including identity documents of its beneficiaries. The countr(y|ies) of that or those passport(s) are the ones that can potentially request disclosure of your assets. This can be avoided by gaining second citizenship of a country that does not aggressively pursue tax.
Many countries have citizenship by investment programs. The two cheapest are:
Dominica:
a) $100,000 donation to a national fund (which you loose) + $10,000 in fees
b) purchase real estate worth >= $200,000 + a minimum of $35,000 in fees
Serbia:
a) €100,000 donation to a national fund (which you loose) + €32,000 in fees
b) purchase real estate worth >= €250,000 + a minimum of €32,000 in fees
The Serbian passport gives visa-free access to most of the former Soviet Union plus China.
Developed nations usually offer similar programs for visas.
There are a number of countries that offer citizenship by descent. They may have other qualifications, but here is a partial list with the terms of descent through which they may be obtained:
Spreading yourself out by having your company, bank, address, and dual citizenship in different countries creates a legal mess of courts who are likely going to be uncooperative, offering you protection from creditors, tax authorities and outgoing wives.
For those with a real business, the ultimate would be establishing a headquarters in a country with virtually no domestic taxes, such as the British Virgin Islands. If foreign labour is required this could either be obtained on a freelance basis or via establishing a service company in another country which bills your headquarters.
For those with no real business and just using their offshore account for investments, establishing a primary residence in a virtually zero tax jurisdiction or not living and any specific country is a legal option.
If you do break a few rules, so long as you cover your bases, as above, it's not likely your authorities will ever discover what assets you own. Cases of people being busted with offshore accounts engaging in illegal tax evasion typically consist of those doing so in a manner where their home country has easy access to records of the offshore country, such as UK and Jersey and countries with tax exchange information agreements. The legal mess of a well constructed offshore package makes it to cumbersome and to unfruitful to be worth pursuing.
If you want to live off the tax reservation it's best to cut as many ties with your home country as possible:
The legality of using "offshore" companies and banking will depend on your situation in relation to your country or countries of residence/citizenship. To find out what your legal status is you need to find out how your country treats worldwide income, what they consider worldwide income and under what terms of residency you become subject to their tax regime.
You should be able to find this information quickly via web search, for example, in the United Kingdom you are required to pay UK tax on wages earned abroad, capital gains on investments, rental income of overseas property and overseas pensions; but you are only required to pay tax on these forms of income if your are a UK resident. There are a few rules, but importantly you are considered a tax resident if you only own a home in the UK and have resided there for 183 or more days.
There may be further caveats to your country's legal system that will need to be researched on a country-by-country basis. The UK has rules for negating overseas income via property ownership abroad.
If you plan on living and working in a country on a more-or-less permanent basis and you are able to by some means divert your income to an offshore bank account either in your own name or in the name of a company, then this is considered tax evasion (illegal). In short if you want to live and work in a country, you are likely to be subject to its tax codes. Failure to pay taxes leaves you open to asset seizure and prison time. There are ways people use to get around this, which can be in a grey area or by causing so much complication that it is difficult to establish who or what may be liable to taxation where.
The simplest way to legally have no requirement to pay tax is to move to a virtually zero tax jurisdiction(s) or live between three or more countries per year.
The key to offshoring is diversification. The more you can spread yourself and your assets, the harder it will be to know of their existence, know of their ownership and seize them.
Company
One of the most important aspects of offshoring is to hold your assets in a company or companies. This adds an extra legal layer to your assets that would have to be challenged in the registering jurisdiction's courts. This is a process that is typically and deliberately expensive. It also means when you make/receive payments by international wire or make payments by your corporate debit card that rather than your personal name and address going through the international financial apparatus, it will be the name and address of your company. Further, if you want to invest in stocks or engage in other markets like forex, rather than having your personal name lodged with the exchange it will be the name of your company.
There are three attributes your company should have:
1) a closed register that does not disclose the company's owners to the public or other governments
2) no requirement to submit company accounts
3) no taxation
Registering a company typically needs to be done via an agent. I can recommend the following:
https://www.icoservices.com/offshore-com...ation.html
https://www.sfm-offshore.com/jurisdictionsoffshore.html
(scroll down for prices and details)
Annual maintenance will cost upwards of $600 as you will also need to pay for a notorised certificate of standing to send to your bank to maintain the account, which costs about $100.
Some of these incorporations are standard domestic companies, while others are international business corporations, which are exempt from tax on overseas income.
I would recommend Belize as it has the above three attributes with the added security of your personal details not being held by the company registrar in Belize. Your details are only held by the agent who registers the company on your behalf. As an added security measure, agents offer a service to have nominee directors register the company on your behalf.
In the case that your company comes under a legal challenge, there are typically large fees just to do so and will probably be unsuccessful unless you are breaking a law in the registration jurisdiction or stepping on the toes of the IRS (International Revenue Service), DHS, CIA etc.
Registering a company and bank account with an agent or law firm gives the added risk of your data being dumped like the Panama and Paradise Papers. If this concerns you, it would be better to register with a small agent like ICO Services (link above).
Bank
A bank account can be arranged by agents like those linked to above, for fee typically in the region of $500. You'll also need to have documents notorised unless you want to open your bank account in person. Some banks require you open an account in person.
It is highly beneficial to open a bank account in a separate country to the one you are incorporated in. This results in at least two jurisdictions whose legal systems would need to be engaged in the hope of determining and seizing your assets.
There are a number of tax sharing agreements between countries via which banks in one country are obliged to provide client information to foreign governments. These are listed here:
http://www.oecd.org/tax/exchange-of-tax-...stieas.htm
About half of these requests are ignored.
I suggest opening a bank in a country that is stable, but not a major banking jurisdiction, which have been roped much closer into the global financial dragnet set up by the likes of the IRS and the OECD.
A few common options:
1) Euro-Pacific Bank, St Vincent and The Grenadines (minimum opening balance: $500)
2) CIM Banque, Switzerland (minimum opening balance: $10,000)
3) MCB, Seychelles (minimum opening balance: $100,000)
4) UBS, Switzerland (minimum opening balance: $1 million)
5) Liechtenstein Landesbank, Lichtenstein (minimum opening balance: $1 million)
You can usually get an indication of a bank's financial health via the country's financial services authority or the bank's annual report.
Banks that hold foreign currencies do not directly hold money with that country's central bank; the reserves are held with a corresponding bank in that country. The structure is something like this:
- Your bank account
- Your offshore bank
- Offshore bank's corespondent bank in currency's issuing country
- Issuing country's central bank
- RVFer
- CIM Banque
- Natwest Bank
- Bank of England
Registering agents, like the two listed above, can provide proxy beneficiaries to a corporate bank account, thus solving the issue of the possible exchange of your information with foreign governments. This will also protect you from any leaks.
Address
If you don't feel comfortable using unknown nominee directors for your company and nominee beneficiaries for your bank account another option is to buy a foreign property. This is information that will only be held by your bank and possibly offshore corporate registry/agent, but it makes you slightly more difficult to identify and bring another jurisdiction into the jumble of confusion you are surrounding yourself with.
A foreign address is not so essential if you are just a speculator, but if you have real business income then you likely have clients/suppliers who you invoice and/or invoice you. This means you'll be providing them with an address for invoices, which are stored in databases that could be browsed by the government or leaked; as well as likely being delivered across the Internet by insecure email.
Anywhere off the reservation will likely be good. I would recommend Serbia and Macedonia. These are two countries that are a long way from the global tax dragnet, where you will get at least a +1 on your SMV, no GMO, clean food, anti-PC and cheap. If you want to buy a dump, you can pick them up for < $3,000; something habitable for about $8,000; and large houses in good condition with pools from about $40,000.
Also an alternative to a PO Box.
Identity Documents
Even if you open a corporate bank account, you will be required to provide the personal details, including identity documents of its beneficiaries. The countr(y|ies) of that or those passport(s) are the ones that can potentially request disclosure of your assets. This can be avoided by gaining second citizenship of a country that does not aggressively pursue tax.
Many countries have citizenship by investment programs. The two cheapest are:
Dominica:
a) $100,000 donation to a national fund (which you loose) + $10,000 in fees
b) purchase real estate worth >= $200,000 + a minimum of $35,000 in fees
Serbia:
a) €100,000 donation to a national fund (which you loose) + €32,000 in fees
b) purchase real estate worth >= €250,000 + a minimum of €32,000 in fees
The Serbian passport gives visa-free access to most of the former Soviet Union plus China.
Developed nations usually offer similar programs for visas.
There are a number of countries that offer citizenship by descent. They may have other qualifications, but here is a partial list with the terms of descent through which they may be obtained:
- Armenia, grandparent
- Canada, parent
- Finland, grandparent (residence)
- France, parent
- Germany, grandparent (limited)
- India, great-grandparent (overseas citizenship)
- Ireland (including what is now Northern Ireland), great-grandparent
- Italy, grandparent
- Jamaica, grandparent
- Netherlands, parent
- Pakistan, grandparent
- Poland, grandparent
- Portugal, grandparent
- Russia, grandparent
- Serbia, parent
- Spain, grandparent
- United Kingdom, grandparent
Spreading yourself out by having your company, bank, address, and dual citizenship in different countries creates a legal mess of courts who are likely going to be uncooperative, offering you protection from creditors, tax authorities and outgoing wives.
For those with a real business, the ultimate would be establishing a headquarters in a country with virtually no domestic taxes, such as the British Virgin Islands. If foreign labour is required this could either be obtained on a freelance basis or via establishing a service company in another country which bills your headquarters.
For those with no real business and just using their offshore account for investments, establishing a primary residence in a virtually zero tax jurisdiction or not living and any specific country is a legal option.
If you do break a few rules, so long as you cover your bases, as above, it's not likely your authorities will ever discover what assets you own. Cases of people being busted with offshore accounts engaging in illegal tax evasion typically consist of those doing so in a manner where their home country has easy access to records of the offshore country, such as UK and Jersey and countries with tax exchange information agreements. The legal mess of a well constructed offshore package makes it to cumbersome and to unfruitful to be worth pursuing.
If you want to live off the tax reservation it's best to cut as many ties with your home country as possible:
- remove yourself from voter lists
- sell real estate and direct equity
- remove yourself from corporate appointments
- close your domestic bank accounts
- pay off debts
- remove yourself from state medical and dental services
- use another name for deliveries
- try and avoid using PayPal, Amazon and eBay (particularly selling)
