tax planning vehicle
Three Important Aspects of International Tax Planning
Individuals and corporations engage in international tax planning in order to legally reduce their taxes. The field of international tax planning is broad and complex but there are three important aspects from which to start. There are three basic means of reducing taxes. They are to change residence, to change the source of income, or to set up legal offshore entities in tax advantaged jurisdictions.
Moving Offshore to Reduce Tax Burden
In the modern world communication across the globe is virtually instantaneous and travel from point to point is increasingly easy. Many parts of what were previously referred to as the “third world” have developed services and infrastructure on a par with Europe, North America, and Japan. Thus moving offshore to reduce tax burden may not mean a lesser lifestyle. In fact, the individual moving offshore may find that his money goes farther and that a better lifestyle is possible away from his country of origin. Thus, the decision to move offshore to reduce tax burden simply has to do with finding an offshore jurisdiction with favorable tax laws.
Tax advantaged jurisdictions will typically not tax income earned in other countries. Many have double tax treaties with countries in Europe and North America so that income from one jurisdiction is not taxed in both jurisdictions. Simply moving “offshore” may be sufficient for many to accomplish a reduction in taxes. This is typically a solution for retirees or those with very substantial wealth who don’t want all of their “eggs in one basket.”
Moving a Business Offshore to Reduce Tax Burden
For individuals or corporations looking to gain more income and not just save it the better solution may well be to start or move a business offshore. By setting up an international business corporation or taking advantage of government issued financial licenses in any of several jurisdictions it is possible to do business in a tax advantaged location. It is possible to take advantage of government issued financial services licenses in any of several offshore jurisdictions in order to provide, and charge for, services such as asset management and protection, trust services, money changing, money transmission, or a Forex business to name a few of the possibilities.
Using Offshore Solutions to Reduce Tax Burden
It is the use of various offshore “solutions” that are the most important aspect of international tax planning. Through judicious selection of an offshore jurisdiction, offshore banking, international business corporations, foundations, and trusts it is possible legally reduce or eliminate taxes as part of a comprehensive asset protection and privacy solution. A vehicle such as a Panama Private Interest Foundation has no owner but has beneficiaries. Such an entity can own an international business corporation or offshore bank account. Any income not gained for doing business in Panama will not be taxed in Panama. An individual can benefit from many aspects of this type of entity and legally reduce taxes at the same time.
Each of the three general aspects of international tax planning has its place. In order to most effectively benefit from any or all options the individual or corporation is well advised to consult with competent counsel regarding offshore choices and solutions.
About the Author
An offshore formations and banking specialist working for several companies regarding offshore structures, formation of companies, foundations, banks and financial institutions in several jurisdictions, including provision of government issued financial licenses.
Working for User Bancorp Ltd, which is providing private and corporate accounts, merchant accounts, offshore companies such as Belize IBC’s (International Business Company), Panama corporations and foundations, wire transfer services, managed funds/forex, credit- debit- and prepaid card issuing.
We also offer co-ownership and shares in different investment programs such as real estate investment in profitable jurizdictions like Panama, Belize and Spain.
Certificate of Deposit/Term Deposit accounts available up to 9 % p.a.
Contact me on e-mail: geir.holstad@userbancorp.com
California tax on new vehicle price minus trade in?
For simplicity sake, lets use these figure: Im planning to trade-in my car which the dealer will value at $50,000. I want to purchase a new one from them at $100,000. When I go to register my new vehicle, willl DMV assess sales/use tax based on $100,000 value of brand new, or $50,000 – which is just the difference of the two?
Bostonian is partially correct. You will have to pay the taxes on the full $100K, but CA is hardly the only state that operates this way.
It’s about half and half across the country.