The issue of property rights concerns every person who owns something. When it comes to simple facilities or services, everything is quite clear - you bought it, which means it’s yours. But in the case of non-material things, explaining and understanding the essence of this matter can be more difficult. So how are things with the ownership of an offshore business?
Placing property in the ownership of an offshore company leads to many advantages, including avoiding inheritance tax and capital gains tax. An offshore company may transfer to another owner in case of resale or death of the previous owner, but the property remains within the company.
An additional advantage is that any subsequent sale is greatly simplified. It is known that, in some countries, the establishment of the right to property is very costly in time, but if the right to property of the company has already been established, there is no need to return to this issue. In other words, a company can be sold instead of property.
Selling a company through the transfer of shares almost always allows one to save on statutory duties, transfer taxes or value added taxes, which are mandatory in some countries. Government stamp duties and capital gains taxes can also be avoided.
How is ownership of an offshore company confirmed?
If the company has registered shares, then the ownership of the company or part of it can be fixed by issuing shares directly to its owner. Although most offshore jurisdictions do not require disclosure of company shareholders to government agencies, information about them is entered into the company’s corporate books, which are stored at its legal address.
For best confidentiality, shares are issued to nominee shareholders. These can be individuals or employees of the administrator company or legal entities / offshore companies that belong to the administrator. In this case, nominee shareholders sign trust declarations. Trust declarations can be simple or notarized.
Some jurisdictions still allow for the issue of bearer shares. In this case, the company belongs to the person(s) who physically owns the shares.
Let us immediately clarify that the ideal ownership protection scheme does not exist. Still, a properly organized ownership scheme might allow you to solve the ownership problems. The ownership of a company can be organized as follows:
Bearer stocks – an almost perfect way, but it almost doesn't work anymore.
Advantages:
- minimum expenses;
- complete anonymity.
Disadvantages:
- more and more jurisdictions prohibit such promotions;
- high risk of loss;
- problems opening a bank account.
Shares on the beneficiary - the least popular scheme.
Advantages:
- minimum expenses;
- good security of property rights.
Disadvantages:
- information about the shareholders is entered into the corporate books of the company;
- in some countries, information on the owners of shares is publicly available;
- difficulty of inheritance.
Nominee shareholders – the most common ownership scheme.
Advantages:
- low expenses;
- extra protection.
Disadvantages:
- poor protection in the context of expanding cooperation between countries.
A trust – a good, but less popular way.
Advantages:
- high flexibility;
- high degree of protection of trust assets;
- great for inheritance.
Disadvantages:
- difficulty understanding;
- the complexity of the creation;
- the complexity or inability to make changes after creation;
- high cost of creation and maintenance;
- the trustee must be a professional with an impeccable reputation.
A private foundation – an approximate analogue of a trust in the European continental system.
Advantages:
- a legal entity;
- high flexibility;
- high degree of asset protection;
- Suitable for inheritance.
Disadvantages:
- high level of expenses;
- difficulty in understanding.
