April 11, 2019

Offshore trust – a mechanism to protect assets or theft?

Today, using an offshore company is a widespread product. However, elementary use is not enough to use offshore opportunities to the maximum.

Twenty years ago, offshore companies were used in the simplest schemes that allowed them to evade taxes and successfully fill their wallets. Today, this can no longer be done. The fact is that the offshore areas “took seriously”. International organizations tirelessly publish all new international standards of transparency, and leaders of highly developed countries successfully finance the theft and declassification of confidential information about beneficiaries.

Privacy to protect your assets via offshore trusts

An absolutely different layer of the concept of confidentiality offshore is to protect your business. Competition makes you look for ways to protect your business. At the same time, such a notion as raiding did not disappear anywhere, especially if we are talking about countries in which political and economic problems continue, for example, in Ukraine.

Consequently, offshore allows you to protect your business from detractors and enter the international market.

How to choose an offshore for asset protection is a matter of practice and in-depth business analysis. You can consider the most famous offshore, such as Nevis, Panama, and Belize, or to establish a midshore, for example, in Cyprus, Hong Kong or Singapore.

All these areas offer a closed register of beneficial ownership, therefore, the name of the owner will be under the lock of secrecy.

But even when choosing an offshore, you need to know and take into account macroeconomic factors. The mega-popular British Virgin Islands are constantly under attack from the media and all sorts of organizations, such as the International Consortium of Investigative Journalism, which is sponsored by the United States. As a result, data about the owners of companies in the BVI have repeatedly emerged, and the UK is constantly thinking about whether or not to increase the transparency of this ex offshore.

Will the “Panama Paper” cause the death of the British offshore.

In order not to miscalculate with the choice of offshore asset protection trust, it is better to contact a specialist at this site who will tell you and help you where and what is better to buy.

Offshore Privacy 2016

Let’s first understand what confidentiality is in general? For someone, this is the concealment of personal data from the tax service of the country of their tax residence, for another person – this is anonymous business management. And for the third, it is an opportunity to hide your name in order to protect your loved ones.

In fact, the stratification of the definition of confidentiality in an offshore allows us to determine what is real and what is not today.

Tax confidentiality

If we are talking about tax services and other state authorities, then everything will depend on your country of residence.

Should I criticize those who evade taxes? Rather, yes, than not, since taxes help stabilize the very concept of the state, which in addition to successful entrepreneurs have retirees, people with disabilities, medicine, schools, and other social issues that need help from the working population. Another question is which government is in power. Few would wish to sponsor corrupt politicians who build palaces while the people are starving. However, this is more a philosophical question that we will not dive into.

Today, total confidentiality is possible, but only in a radical way, such as a change of citizenship and the country of tax residency. Thanks to numerous programs of acquiring citizenship for investments, you can become a citizen of a foreign state, for example, an offshore one, and get rid of the need to pay draconian taxes in the country of the first passport.

If you are not ready for such a radical step, you need to look for the remaining corners that do not plan to start exchanging information with your homeland in the near future. Starting in the fall of 2017, the OECD plans to launch an automatic information exchange system for tax purposes. The convention involves the exchange of information between all the participating countries, the number of countries willing to share information already exceeds one hundred. But even in such a thoughtful project, there may be failures.

Some of the countries wondered what about bilateral agreements, what is the basis for a smooth and secure exchange of information. For example, in Panama, there are no such agreements at all, after which she stated that she wants to exchange information only on the basis of these agreements. In fact, this will allow the jurisdiction to delay the exchange of information for another few years.

Will Panama be able to force the OECD to change the terms of the Automatic Exchange of Information?

 Information exchange with the Russian Federation and Ukraine is also a big question. If in the case of Ukraine, the EU has questions about the safety of the information provided, then there is still a lot of sanctions against the Russian Federation.

But the field of political battle is much wider. After Panama expressed its displeasure with the automatic exchange of information, a couple of weeks later, Panama Papers were thrown into the media, revealing offshore companies and accounts of corrupt politicians from around the world.

After this, it is unlikely that Panama will reiterate something against the OECD system.

Will there be legal consequences for Panamanian offshore companies after the scandalous declassification of “Panama Papers”?

From all of the above, without mentioning FATCA and BEPS, it should be understood that there is still room to hide data from the tax authorities. But such opportunities are gradually fading. In addition, if such opportunities will be after the automatic exchange of information, then only in jurisdictions with a bad reputation and an undeveloped banking system, for example, such as in the Philippines.

Privacy to protect the family

No wonder they say, the more money, the worse the dream. In addition to our personal safety, there is always the risk that our success can harm our loved ones.

This aspect especially worries all owners of British companies, since after the UK declared that it would open up the beneficial ownership register, many beneficiaries were outraged because they were sure that this could cause blackmail, kidnapping and other threats to the lives of their loved ones.

But politicians do not stop. The idea of transparency seems to have blinded their eyes and mind. As a result, the decision was reached, but how effective it will be and whether everything will be able to use it is unknown. So, those who believe that their lives and the lives of relatives are in danger may apply to the Registry with a request to leave some of the personal information confidential to third parties.

Open registry of beneficial ownership of the UK – from idea to implementation

Offshore with a closed registry can hide information that can harm, and this priority is priceless.

From all the above, it follows that modern offshore is a way to protect your capital, not theft. The increase in the requirements of transparency forces us to go to mid-sized countries, which can provide not only confidentiality, business-oriented environment, but also restrict from scandals that can harm not only the business reputation but also the life of the beneficiary and his relatives.

Any financial instrument, such as an offshore company, bank account, trust, fund or other, can be used both in good intentions and fraudulent. But a similar comparison can be applied to everything. The knife can give food, but can also take life. However, everyone uses knives, and no one shouts that they should be banned or destroyed.


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