Crystal WorldWide acts for a wide range of clients
from large multinational companies to family businesses
to private individuals. Our clients are engaged in
their own country or internationally in many areas
of activity such as:
The Arts, Agriculture, Banking, Brokerage, Chemicals,
Constructions, Distribution, Electronics, Exporting,
Energy, Engineering, Fund Management, Film Production,
Hotels, Importing, Insurance, Investment Advice,
Manufacturing, Natural Resources, Oil and Gas, The
Professions, Property, Project Financing, Retailing,
Shipping, Show Business, Textiles, Trading and Unit
Trusts.
Some examples of the areas in which Crystal WorldWide
helps its clients follow. Apply the principles to
yourself or your company and you will appreciate
how we can help you.
 INTERNATIONAL
TRADING AND PURCHASING COMPANIES
One of the most popular uses of a company incorporated
in a low tax area is for international trading. Significant
tax saving opportunities can arise by interposing
an offshore company in to an international trading
transaction. If an offshore company were to obtain
products from one country, and then sell them on
to another country the profits arising out of the
transaction may be accumulated in the offshore company,
free from taxation in the offshore centre.
For European Union transactions, the Isle of Man
and Madeira have become very popular locations for
conducting cross-border trading activities. Both
the Isle of Man and Madeira are able to obtain VAT
registration, which is imperative for transactions
within the European Union. As an example, if an Isle
of Man company wished to source products from France
for sale to Germany, the Isle of Man company would
inform the French company of its VAT number so that
it could zero rate its sales invoice. The French
company would not have to charge VAT to the Isle
of Man company. The Isle of Man company would then
obtain the German company's VAT number so that it
could zero rate its sales invoice.
This type of transaction would not normally be possible
through other jurisdictions without the requirement
of either establishing a branch office or appointing
a tax agent within the European Union which can be
a complicated exercise and may give rise to taxation
implications.
INTERNATIONAL
INVESTMENT
Both corporations and individuals regularly make
use of offshore companies as vehicles to hold investment
portfolios. Such portfolios may consist of stock,
bonds, cash and a broad range of other investment
products. Cash assets held by offshore companies
may earn deposit interest gross or be placed in collective
cash funds.
Many of our clients instruct us to arrange for offshore
life insurance and pension contracts to be established
by their offshore companies.
High net-worth individuals often use offshore companies
as personal holding companies to hold investments
made in a number of different markets and countries.
Personal holding companies can provide privacy and
may save the professional and other fees associated
with setting up and maintaining entities in a number
of different structures. In this connection, offshore
companies are regularly used for inheritance planning
and to reduce the costs and time delays associated
with probate.
The selection of a politically and economically
stable corporate domicile may reduce risks that both
corporations and individuals may face in either their
home or third party countries.
PERSONAL
SERVICE COMPANIES
Many individuals engaged in the provision of professional
services in the professions and in the construction,
engineering, aviation, finance, computer, film and
entertainment industries can achieve considerable
tax saving benefits through the establishment of
a personal service company, based offshore.
The offshore company can contract to supply the
services of the individual outside the country in
which he/she is normally resident and the fees earned
can accumulate offshore, free from taxation in the
offshore centre. Payments to the individual can then
be structured in such a way to minimise income tax.
HOLDING
COMPANIES
Offshore corporations and trusts are often used
to hold investments in subsidiary and/or associated
companies, publicly quoted and private companies
and joint venture projects. In many cases, capital
gains, arising from the disposal of particular investments,
can be made without the encumbrance of taxation.
In the case of dividend payments, reduced levels
of withholding taxes can be achieved by the utilisation
of a company incorporated in a zero or low tax jurisdiction
that has double tax agreements with the contracting
state. An example of this is a Mauritian Offshore
Company, which can invest into Indian companies and
benefit from the double tax treaty that exists between
the two countries. Moreover, there is no capital
gains tax upon the disposal of the investment in
India.
INTERMEDIARY
HOLDING COMPANIES
Many large corporations and companies wishing to
invest into countries where a double tax agreement
does not exist between the investor's country and
the country where the investment is to be made will
establish an intermediary company in a jurisdiction
where there is a suitable treaty. The Madeira SGPS
Company, for example, has been used extensively for
inward investment in to European Union since corporate
entities incorporated there are generally able to
avail themselves of the EU Parent/Subsidiary Directive.
Cyprus has an extensive double tax treaty network
with many Eastern European and CIS countries, and
the use of Cypriot companies for inward investment
in to these countries provides a tax efficient conduit.
PROPERTY
AND LAND OWNERSHIP
The ownership of real property and land by an offshore
company can often create tax advantages, including
the legal avoidance of capital gains, inheritance
and property transfer taxes.
If, for example, an offshore company, beneficially
owned by a UK non-resident, purchased a property
in the United Kingdom for investment purposes and
the property was then later sold on to a third party
the capital gain arising from the transaction would
not be subject to United Kingdom capital gains taxation.
In addition, by structuring the financing correctly
through a back-to-back loan facility, the offshore
company can reduce the effective level of any withholding
taxes on rental income that may apply.
EMPLOYMENT
COMPANIES
Many companies utilise offshore companies for the
employment of staff working on overseas assignments.
This helps to reduce the costs associated with payroll
and travel expense administration, and may provide
a tax and social security saving benefit for the
employees.
INTELLECTUAL
PROPERTY, LICENSING AND FRANCHISING
Intellectual property, including computer software,
technical knowledge, patents, trademarks and copyrights
can be owned by or assigned to an offshore company.
Upon the acquisition of the rights, the offshore
company can then enter in to licence or franchise
agreements with companies interested in the exploitation
of such rights around the world. The income arising
from such arrangements can be accumulated offshore
and by the careful selection of an appropriate jurisdiction;
withholding taxes on royalty payments can be reduced
by the commercial application of double tax treaties.
The UK, Netherlands, Madeira, Cyprus and Mauritius
are good examples of jurisdictions used for holding
intellectual property.
STOCK
MARKET LISTINGS AND CAPITAL RISING EXERCISES
With political and economic uncertainty in some
countries, many large corporations have sought to
mitigate risk by moving ownership of assets and bases
of operations offshore. Luxembourg and Bermuda has
been host to many companies wishing to re-domicile
their operations.
Offshore companies are regularly employed to raise
money through loan or bond issues. Such a structure
may reduce withholding tax on interest payments as,
for example, countries such as the UK raise a withholding
tax on interest paid on non-quoted bonds to non-residents.
Double taxation avoidance planning is vital in cases
such as these.
FINANCE
Offshore finance companies can be established to
fulfill an inter-group treasury management function.
Interest payments from group companies may be subject
to withholding taxes, but often these taxes are different
to the normal rates of corporation taxes that are
levied. The interest paid would be a deductible charge,
for taxation purposes, and so consolidating interest
payments in an offshore finance company may provide
a tax saving benefit.
Many large companies establish their own offshore
mixing companies to mix dividends from their subsidiaries
and to take maximum advantage of tax credits.
In certain countries, foreign exchange losses are
not deductible for tax purposes. If an offshore finance
subsidiary was formed, then made a foreign exchange
loss, and was then liquidated, the investment could
be a tax-deductible item for the parent company.
Offshore companies are often utilised as part of
mechanisms and structures for acquiring foreign entities;
international restructuring of corporations, real
estate and other investments and other corporate
finance related projects.
Another application of offshore structures is leasing,
and such mechanisms are particularly favored when
an offshore structure is rich in funds, which, unless
invested, would have to be repatriated and face high
levels of corporate taxation.
SHIPPING
AND AVIATION COMPANIES
Since the early part of the 20th Century, the use
of offshore companies to own merchant ships and pleasure
craft has been an important function of certain offshore
jurisdictions, such as Panama and Liberia.
Many other important offshore jurisdictions have
modern ship and pleasure craft registration facilities
that provide low cost registration fees and tax exemption
on income derived from shipping and chartering activities.
These jurisdictions include the Isle of Man, Madeira,
Jersey, Gibraltar, Cyprus, Bahamas, Belize and Mauritius.
It should be noted that owners of pleasure vessels
being operated within European Union waters for extended
periods require specialised advice in relation to
Value Added Tax.
Crystal WorldWide has particular expertise in aircraft
registration and finance and is able to assist clients
wishing to register aircraft in the UK, Isle of Man,
Aruba, Mauritius, Seychelles, Bermuda, Cayman Islands
and elsewhere.
PRE-EMIGRATION
TAX PLANNING
Crystal WorldWide respects the fact that the anti-avoidance
legislation of most high tax jurisdictions is primarily
aimed at long-term residents of that jurisdiction
or alternatively at countering action taken while
a resident of that jurisdiction. This leaves an enormous
amount of scope for planning when an individual is
physically moving between high tax countries.
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Utilising
offshore companies
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