{"id":8851,"date":"2017-01-20T15:00:11","date_gmt":"2017-01-20T20:00:11","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=8851"},"modified":"2020-06-12T09:15:10","modified_gmt":"2020-06-12T13:15:10","slug":"offshore-captive-insurance-company-2017","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/offshore-captive-insurance-company-2017\/","title":{"rendered":"The Offshore Captive Insurance Company in 2017"},"content":{"rendered":"

The two most powerful offshore tax planning tools are insurance products. <\/span>Offshore life insurance<\/span><\/a> allows you to create a massive tax free or tax deferred account for your personal investments. <\/span>An offshore captive insurance company allows you deduct up to $2.2 million a year from your US business, moving that money offshore tax deferred.<\/b> This article will describe how to use an offshore captive insurance company in 2017 to save on your taxes. <\/span><\/p>\n

An offshore captive insurance company is <\/span>licensed <\/span><\/i>in a tax efficient jurisdiction such as the Bermuda. They\u2019re referred to as \u201ccaptives\u201d because they write insurance exclusively for their parent company.<\/span><\/p>\n

Captive insurance has been around since 1950, and has been an important tax planning tool for multinationals for decades. Over 90% of the Fortune 1000 companies use offshore captives, as do many thousands of small businesses. About half of all property and casualty premiums that are written, go through <\/span>captive insurance companies<\/span><\/a>. <\/span><\/p>\n

Over 75% of the world\u2019s captives are owned by US companies. Captives are defined under various sections of the Internal Revenue Code and various Tax Court and appellate court rulings. In fact, there\u2019s over 70 years of law in support of offshore captive insurance companies. <\/span><\/p>\n

This article will focus on IRC \u00a7831(b), known as the small offshore captive insurance company statute. This section is used by mid-sized firms and allows a US business to deduct up to $2.2 million as of 2017 (<\/span>previously $1.2 million<\/span><\/a>) in premiums paid to an offshore captive. <\/span><\/p>\n

The most popular jurisdiction for IRC \u00a7831(b) companies is Bermuda with 958 licenses issued, or 19% of all offshore captives. Bermuda is followed by Cayman with 15%, and Guernsey with 7.4%. European clients typically go with Guernsey and Luxembourg while US clients stay closer to home with Bermuda, Cayman, and Barbados (5.2%). \u00a0<\/span><\/p>\n

Cayman and Luxembourg are the most expensive countries from which to operate a captive. Lower cost options are Belize, Nevis and Vanuatu. <\/span>Click here<\/span><\/a> to read Belize\u2019s captive insurance law. <\/span><\/p>\n

The benefits of forming an offshore captive insurance company are: <\/span><\/p>\n