Tax regulations differ from country to country. Depending on which country you’ve made your money in, you will only be liable to pay the taxes based on the tax regulations in that country.
Basically, once you begin holding your money with a company that exists overseas, it gets treated as wealth that originated in the country in the first place.
The only exceptions to this rule are overseas citizens of the United States. US expats are taxed based on their citizenship; any personal income is taxed according to US tax laws, it doesn’t matter if it’s been earned abroad. Expat Money Show can offer advice on how you can avoid personal income taxes as a US citizen by relocating overseas.
Tax Law Loopholes
It’s possible to avoid tax payments if you understand how tax laws actually work. Tax law ordinances are actually payments to the government for the privilege of holding the currency of the country. Tax avoidance takes into account the fact that once the money leaves the country, it’s no longer within the jurisdiction of the country. Therefore, it can’t be treated as government property and thus they can’t charge tax on it either.
This is what moving your business offshore achieves. If a majority of your holdings are moved to an offshore location, then you’re no longer held responsible for the tax payments in your home country.
Differences in Taxable Amounts
Each country has a different standard for how much tax they can charge on corporation revenue, profits and many other sources of income. Some countries have higher tax rates than others, which makes investors wary of investing in these economies. Other countries, however, have lower tax rates and offer much higher profit potentials.
Moving your revenues and profits to an offshore account helps you avoid any tax payments that you would make if you keep earnings in the same country.
Registering Companies Offshore: Saving Taxes
If your businesses are registered offshore, any profits or revenues you generate in one country are unlikely to be treated as taxable. Many people go ahead and register company headquarters in places where there is minimal tax liability; such as the Cayman Islands and repatriate all the earnings back to the headquarters.
Once the profits reach the headquarters, any minor tax deductions that are required by law are made and you can access a greater chunk of your profits. Bringing the money back into your accounts back home are charged with smaller remittance/transfer tax rates which still leave a larger amount of money as income, compared to when you paid taxes in your own country.
The Expat Money Show is a financial consultancy that helps clients create offshore bank accounts, companies, and gold/silver vaults offshore. We guide our clients through the process of creating offshore financial entities and also give them access to sources where they can register their accounts and/or companies. Get in touch with us today for more information on our services or to book an appointment with our consultants.
About The Author
Mikkel Thorup is the host of The Expat Money Show podcast and Director of Content at Escape Artist. He is also the author of #1 Best-Selling book Expat Secrets on Amazon. He has spent nearly 20 years in continual travel around the world, visiting more than 100 countries including Colombia, North Korea, Zimbabwe, and Iran. His goal is to help people just like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again. For more information on his legal (but creative) tax strategies for Expats watch this free video.
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