Company
THE LLC OR LIMITED LIABILITY TYPE OF COMPANY
The LLC or Limited Liability Company and the LLP or Limited Liability Partnership type of company, are a particular class of company used for offshore business, international business and tax planning because they have the advantage of limited liability but the flow-through characteristics of a partnership for tax purposes. By this, we mean that profits are divided amongst the members, in proportion to their respective holdings, and are taxed in their hands. In some circumstances, if all the members or partners are non-tax residents in the domicile of the LLC or LLP company and no business is undertaken in that country, neither the LLC or LLP company nor the members or partners will be subject to tax in the company’s country of establishment. Such companies are said to be “fiscally transparent” and examples include US LLCs, the Isle of Man LLC and the UK LLP.
COMPANIES INCOPORATED IN TAX ADVANTAGEOUS “ONSHORE” JURISDICTIONS
Companies incorporated in the many onshore countries which have tax regimes that are by statute tax advantageous for specific international purposes.
The world of offshore is more complex than the black-and-white tax world inhabited by the media; offshore business consists not only of tax havens but also of onshore high-tax countries competing fiercely to attract international companies and individuals with all manner of tax planning regulations and opportunities. These tax advantageous regulations are used for a wide variety of tax planning businesses, such as:
Double tax treaty planning relating to dividends, interest and royalty payment
The establishment of holding, international headquarters treasury and finance operations
Specialist business, for example, leasing
Personal and family wealth management and tax planning
In fact, almost all countries offer tax regulations of one kind or another to encourage inward investment.
International tax advisers have long been aware of the opportunities which exist for improving overall tax efficiency by using the special low tax regimes offered by high tax countries seeking to encourage international business. However, successful implementation of such structures is dependent on a wide variety of issues, often relating to matters such as anti-avoidance provisions, double tax avoidance, controlled foreign company and management and control tests and provisions, transfer pricing, thin capitalisation, participation exemptions, capital gains tax and a myriad of other ever-changing tax regulation. More recently, the weapons contained in the armoury of the tax collectors have been supplemented by exchange of information treaties and provisions.
So today the offshore world includes the expert implementation of specific tax advantageous structures domiciled in high tax onshore countries as diverse as the UK, Portugal, Singapore, Greece, Belgium, Austria, Spain, Switzerland, Luxembourg and the Netherlands.
