Professional Company: International Consultancy

With the growing demand for professional consultants to work outside their usual countries of residence there is often the possibility of greatly reducing or even eliminating individual and corporate tax consequences, by using offshore companies. The reason that this possibility arises is that it is often possible to legally extricate oneself from the tax system of one's home country for a fiscal year or more.

Individuals receiving substantial fees in respect of their professional services in capacities, for example, designers, consultants, authors or entertainers, may wish to establish an offshore employment company to which they may assign the right, or contract with an offshore company the right to receive those fees. In a tax-free jurisdiction the offshore employment company may not have to pay tax on its profits that can be reinvested in a tax-free climate to generate further income from the offshore company. Payments to the individuals concerned will of course be taxed according to the laws of their country of residence but payments can be structured in such a way as to minimise their tax liabilities. For instance it may be possible to increase subsistence expenses as against fees that would be paid to the individual. Profits made by the company will be subject to low or no tax and there are particular benefits where profits are allowed to roll up, so that there are tax advantages not only on the original profits, but also on any investment income generated on those profits. The profits are therefore cumulative and can be substantial.

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30/09/2006
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