How can you lower your taxes through international corporate structuring?

Holding Companies
Offshore corporations often hold investments in subsidiaries and/or associated companies, publicly quoted and private companies, as well as joint venture projects. Capital gains arising from the disposal of particular investments can be made without taxation. In the case of dividend payments, reduced levels of tax on income can be achieved by utilizing a company incorporated in a zero or low tax jurisdiction that has double tax agreements with the contracting state.

An intermediary company is established in a jurisdiction with a suitable treaty. For example, the company will be used for investments in the European Union, since corporate entities registered there can avail themselves of the EU Parent/Subsidiary Directive. The Netherlands has an extensive double tax treaty network with many Eastern European countries and countries of the former Soviet Union, and the use of Dutch companies for inward investment into these countries provides a tax efficient structure. More over if the holding company in the Netherlands is the subsidiary of a Netherlands Antilles company, which anticipates for a tax efficient exit.

Trading
If a firm has significant business in a third party jurisdiction it is often possible to reduce the overall tax position by transferring management and control to a more tax efficient area. For example, if a Dutch firm purchased a given type of good in Italy for resale to the Middle East it would seem inappropriate to say the least that such a transaction should be subject to Dutch corporation tax. A potential solution would be to set up a company in a low tax area such as the Netherlands Antilles to specifically control these transactions. If this is done correctly and does not offend the anti-avoidance provisions it should be possible to benefit from for example the Netherlands Antilles corporate tax regime.

Investments
Netherlands Antilles/Tax Exempt companies can often be used as an investment entity in order to allow money /assets to grow in a tax friendly environment with you, as opposed to the tax inspector, deciding if, when and how much money should be repatriated.

International Consultancy
With the growing demand for professional consultants to work outside their usual country's of residence there is often the possibility of greatly reducing or even eliminating individual and corporate tax consequences - often using Netherlands Antilles or Anguilla companies. The reason that this possibility arises is that it is often possible to legally free oneself from the tax system of ones home country for a fiscal year or more.

During this expatriate period it may then be possible to avoid the tax system(s) of the chosen host jurisdictions by limiting ones period of residency in any given country to between 4 and 6 months. These being the normal European 'breathing' periods before full local tax obligations exist. The purpose of the company is to provide a fiscally beneficial entity to issue necessary invoices, and/or act as a controlling vehicle for future 'home' country remittances.

Property Companies
A very popular practice is that a real property item is purchased by an offshore company which is registered as the proprietor in the Land Registry, and if the proprietor of this company (i.e. The beneficiary owner of the real property in question) wants to sell the real property, it is sufficient to sell the shares of his or her offshore company and thus avoid the real property transfer tax. (the proprietor - the offshore company is the same). The above-mentioned structure is only possible in those jurisdictions where it is possible that a foreign entity owns the real property in question. In the jurisdictions where this is not possible, the real property can be owned in such a way that it is purchased by a company there which is owned by a foreign offshore company.

This way it is possible to achieve:

In certain circumstances there are significant tax advantages in having properties held by appropriate domestic and/or Netherlands Antilles mechanisms (often by using double taxation treaties).

Further, by using appropriate tax treaties it may also be possible to arrange "back-to-back" loans to virtually eliminate domestic tax liability on rental payments.

Family Protection
One of the major objectives of many tax mitigation clients is to ensure that wealth established during their lifetime is not wasted by future generations/circumstances. To avoid this, tax planning firms can often provide a whole range of 'tailor-made' companies, trusts, foundations and establishments which can be used together with many of the other tax mitigation mechanisms already outlined. In particular, they can often be formulated to allow, whilst the original founder is alive, for initial investment flexibility followed by a fixed structure upon his or her demise. In addition, with the correct advice, asset protection schemes can also legally avoid the forced heirship provisions of civil law jurisdictions.

Intellectual Property
In many cases Netherlands Antilles/tax exempt companies can be very successful in exploiting the various international withholding tax rates for dividends, royalties and interest. For example, it is very common, for a nominal consideration, to transfer patent, copyright or trademarks in favour of an appropriate Netherlands Antilles/tax exempt company before significant appreciation. Once acquired it then being possible to issue intellectual property (IP) sub-licenses or exploitation rights to appropriate third party structures.

Offshore companies are an ideal tool for administration and management of licenses. For example, a majority of software companies license their users through companies, which are established in an offshore jurisdiction, or through a firm, which is not established in a classical offshore jurisdiction, but is controlled by such a firm.

Typical examples of such users include without limitation:

- software companies; - companies doing business in information technologies; - licenses and copyrights to books, articles, music, films, etc. - certification authority, publishers of professional certificates, etc.

Yacht/Vessel Registration/Management
There has been a great transfer of merchant navy registration from traditional areas like Britain, Norway and Greece to Offshore shipping jurisdictions such as Panama, Liberia, the Isle of Man, Cyprus and the British West Indies. Correctly advised, an individual can also benefit from such low tax environment through the use of Netherlands Antilles company. Apart from the lower registration fees it may also be possible to rent or charter a vessel without any significant, or even any tax repercussions.

Such benefits together with the ability to maintain a respectable flag - if a vessel is registered in the Netherlands Antilles it is fully entitled to fly the Dutch flag as if it was a native Dutch vessel - have meant that few private yachts of any size are today registered in their home territory. In addition, in certain circumstances it may also be possible to purchase a yacht through the Isle of Man with a local tax exempt company and then reclaim back any VAT paid by registering for VAT on the Island.

Possibility of transferring domicile to a new country

A number of offshore jurisdictions make it possible to transfer domicile from one country to another one. A company established e.g. in the Netherlands or in another country can be re-registered in Curacao, while keeping its name, registration date and possibly the company registration number as in its original home country.