{"id":24108,"date":"2019-04-08T00:33:54","date_gmt":"2019-04-08T04:33:54","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=24108"},"modified":"2020-09-18T05:28:42","modified_gmt":"2020-09-18T10:28:42","slug":"offshore-companies-a-guide-to-asset-protection-strategies-part-3","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/offshore-companies-a-guide-to-asset-protection-strategies-part-3\/","title":{"rendered":"Taxes With Offshore Companies: A Guide to Asset Protection Strategies – Part 3"},"content":{"rendered":"

There\u2019s typically a lot of empty moralizing that accompanies any mention of offshore companies and trusts. To the uninitiated, these legal structures are nothing more than shady money laundering tools that are more suited to mobsters and corrupt politicians than entrepreneurs. \u00a0<\/span><\/p>\n

Let me be clear, if you\u2019re internationalizing in an effort to <\/span>hide<\/span><\/i> your income and assets, then this description absolutely holds true. Underreporting business income is considered a crime in pretty much every jurisdiction, and any such attempt will be prosecuted to the full extent of the law under the category of tax evasion. In the US, that means penalties that can rise to well over $250,000 as well as a possible federal prison sentence of up to 5 years. <\/span> \u00a0<\/span><\/p>\n

However, when experts like Joel Nagel advocate for offshore companies and other mechanisms, they make sure to recommend fully legal strategies that exploit existing loopholes and exemptions in their clients\u2019 home countries. This is known as tax avoidance and it is really the only way to effectively protect your assets from the government. <\/span><\/p>\n

For laypersons, the difference between these two approaches may seem negligible, so let me give you a little example to illustrate the difference.<\/span><\/p>\n

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Tax Evasion<\/b><\/h2>\n

Tom is an American citizen that resides in the United States. He is the part owner of a profitable online business that sells mobile phone components to customers all over the world. \u00a0<\/span><\/p>\n

In an effort to reduce his tax burden, Tom decides to incorporate his business and sets up an IBC (international business company) structure in <\/span>Belize<\/span><\/a> (zero local taxes on corporate income, capital gains and dividends) by the name of Tom LTD. He takes ownership of 70% of the company\u2019s shares, and hands over the remaining 30% to a partner that also lives in the United States. All of Tom LTD\u2019s earnings are collected in an offshore bank account in Belize.<\/span><\/p>\n

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