International Tax Planning and Counseling Explained | InternationalWealth.info (2024)

Registration of an offshore company is a method of international tax planning. These objectives are interrelated and can be successfully and seamlessly accomplished with professional experts’ support. This article discusses in detail what international tax planning and consulting are, and how they help business development.

Ultimate aims and methods of international tax planning

International tax planning is a set of legal methods and tools, including the design of specific company structures, aimed at accessing tax privileges in offshore and low-tax jurisdictions.

On the Internet, you may come across the terms of ‘international tax structures’ or ‘expanded worldwide planning’ (EWP) alongside the ‘International tax planning’ phrase. The concepts behind them are interrelated and serve the objectives of asset protection, privacy, simplified reporting, tax benefits, and other ways to raising after-taxincomes.

Our seasoned experts offer help in choosing and customizing methods and tools that would be most relevant to your tax planning. The following aspects need to be analyzed by our unbiased professionals:

• the type of your business activity
• where the main assets are located
• the jurisdiction in which you conduct your main business activities
• the tax residency of the UBO.

Developed countries have achieved serious progress in the fight against tax base erosion and profit shifting (BEPS). Foreign banks are no longer free to open an account for non-residents without a thorough compliance check by the strict requirements of financial regulators. Tax authorities have developed tools for the automatic exchange of fiscal information between countries. They get access to information about the ultimate beneficial owners of companies in different offshore jurisdictions.

In today’s world, the policy of legal tax optimization is maintained by every multinational corporation. There is nothing shameful or illegal about it, if all the laws are observed. Therefore, large corporations have many subsidiaries in jurisdictions with a favorable tax regime that allow them to minimize the fiscal burden.

The success of international tax planning depends on the competence and experience of the financial expert contracted to consult a client.

Importance of preliminary forecasts in international tax planning:

As mentioned above, the registration of an offshore company is a frequently used method of international tax planning. However, the following issues need to be taken into account:

• You have to set a clear goal you want to achieve in your business.
• With your awareness of this ultimate goal, it is necessary to forecast the consequences of the projected registration of an offshore company.
• You should assess the UBO’s possible tax situation after the registration of an offshore company.
• Analyze the tax implications of the company’s operational management.
• Make an assessment of the likely tax consequences for domestic companies that will become subsidiaries of an offshore company or begin to cooperate with it in trade operations.
• Research the opportunities for opening a corporate account in a foreign bank for the planned offshore company.

International tax planning involves other ways of optimization of tax liabilities through offshore companies formation.

Strategies, goals, principles of international tax planning

International tax planning involves a preliminary analysis of potential tax options based on the type of activity, legal form of ownership, jurisdiction of registration of the company, and its potential counterparties in different states.

The following strategies are used for this purpose:

• Change of the business entity’s legal form for a new one, subject to a more favorable tax regime.
• The choice of another type of the main business activity in order to reduce the tax rates compared to that of the previous main type of activity.
• Change of tax residency, i.e. redomiciliation. Registration of a new company in another country or transfer of a company’s domicile to another jurisdiction that provides full tax exemption or preferential taxation.

The most important goals of international tax planning are:

• to reduce the tax burden (by choosing a jurisdiction with lower tax rates or reducing the tax base);
• to reduce the cost of financial administration, the amount of reporting and accounting;
• to defer tax payments;
• to ensure the protection of private businesses and owners.

The international tax planning priorities include the following corporate objectives:

• to increase the value and reputation of the business;
• to protect your business;
• to enhance the privacy of the owner;
• to upscale the efficiency of export-import operations;
• to significantly reduce the costs associated with taxation.

The principles of international tax planning are:

• COMPLIANCE with the rule of law. Actions that are related to international tax planning need to comply with the norms of international and national law. The key to a successful business is to act legally.
• AUTHENTICITY. Actions and activities part of international tax planning need to be justified and never raise any suspicion from the relevant authorities.
• ONE PROVIDER. Effective results are achieved through the development of international tax planning schemes and their implementation by the same team of experts.

How to properly form international structures?

There are three main concerns to be taken into account before the international company formation:

1. The obvious fact is that there are different tax systems in different jurisdictions. For example, the same amount of income is taxed differently in the United Kingdom and Turkey. If the main business vector is towards a foreign market, then it would be more logical to open a local branch in a target jurisdiction – to get it better focused on such a market and enjoy favorable taxation.
2. Different jurisdictions feature different approaches to regulating the organizational and legal forms of companies. This aspect is extremely important to take into account when registering an offshore structure.
3. Company registration in a jurisdiction with which your country of tax residence has a Double taxation treaty (DTT) helps you avoid the need to pay fees on the same income twice.

Each specific situation is unique. We advise you to contact our experts for important advice and legal assistance in international tax planning.

How to choose a jurisdiction for international tax planning?

Currently, about 60 countries around the world offer tax incentives or full tax relief for non-resident companies registered in their territory.

In order for experts to give a clear answer to the question about the best jurisdiction for a non-resident company registration, it is necessary to study and analyze the main aspects of its future activities and the strategic plans of the owner.

To understand the specifics of the choice, we recommend studying the difference between classic offshore and low-tax jurisdictions. Let us define the following 3 groups of countries:

1. Classic offshore jurisdictions. Such states have established a full tax exemption, except for a small fixed annual fee for offshore companies registered in their territory that conduct their activities only abroad. It is not necessary to submit financial statements to the tax authorities of classic offshore companies. As an example, you can consider the British Virgin Islands, Belize, and Nevis.
2. Low-tax jurisdictions are the countries with established tax rates below the standard level for certain organizational forms of business. Such jurisdictions are also rather frequently called ‘offshore’, and companies registered in them — offshore, non-resident or tax-exempt companies. For example, a holding company like SOPARFI in Luxembourg is exempt from paying corporate tax. At the same time, for conventional local companies, the effective tax rate is above 25%. Therefore, Luxembourg is considered a low-tax jurisdiction. They also include Liechtenstein, Cyprus and Hong Kong.
3. Highly reputable jurisdictions are countries that can offer certain tax benefits if the business structure meets some strict requirements. In no case can they be classified as offshore companies. Registration of a foreign company in such a jurisdiction is for the sake of promotion of the business and for its access to the market. Good examples are Switzerland and the United States.

International tax planning with InternationalWealth experts

International tax planning is an increasingly popular service. Businessmen understand that the experts’ assistance in their relations with fiscal authorities is a way to the legal significant reduction of the tax burden and optimization of direct and indirect taxes.

Our experts can assist you with the following:

• Reduction of the tax burden through the formation of offshore structures entitled to fiscal benefits in some target jurisdictions.
• Expert knowledge of local taxation, procedures and accounting requirements in multiple jurisdictions to guide you and offer comparisons.
• Development of a customized plan that allows you to optimize taxation and achieve your international business goals.

Modern challenges for entrepreneurs acting on their own:

• Global deoffshorization.
• Introduction of sanctions against some jurisdictions.
• Introduction of sanctions against some corporations, and UBOs.
• Automatic exchange of fiscal information.
• The requirement of individual jurisdictions for the substance of registered companies.
• Challenges faced when opening accounts and performing transactions of offshore companies in some international banks.

To bypass or fight such challenges, you need modern international tax planning tools that our experts can provide. With their help, you can achieve the following objectives:

• optimize commodity and cash flows and the fiscal burden locally and internationally;
• protect businesses and private assets from illegal take-overs, aggressive acquisitions and mergers, political and economic risks, and threats;
• build a transparent and clear corporate structure to attract foreign investors, access international markets;
• enhance privacy protection and reliable control over business operations of offshore firms, trusts or holdings.
• relocate the business profit center to the most tax-friendly jurisdiction.

When implementing international tax planning for each individual business, International Wealth experts carefully study the financial and business aspects, the organizational structure, and deliver the right result.

The following tools are available to our clients:

• advice on selecting a jurisdiction and a foreign bank to open a corporate account;
• registration of an offshore company and annual facilitation in all matters of its management;
• opening a personal or corporate account with a foreign bank.
• establishment of a foreign investment fund or a holding company.
• business redomiciliation.
• registration of a residence permit for the change of tax residency.
• accounting services, preparation of financial statements for tax authorities.
• hiring and nomination of staff.
• arrangements for the non-resident company’s substance.
• comprehensive solutions aimed at protecting private assets.
• change of the registered agent in the jurisdiction.
• liquidation of a foreign company.

We suggest you to get acquainted with some articles on our portal explaining how to choose your business model based on offshore company formation, start an IBC, use our Pre-Approval service to obtain prior approval for opening an account with a certain foreign bank, find out how to get free advice on selecting a foreign bank account, and learn about many other aspects of taking your business offshore.

You can order a consultation from InternationalWealth experts by writing to our e-mail address given at the top of this page.