WHAT DOES THE TERM MEAN ‘CONTROLLING MIND’ WHEN USING OFFSHORE COMPANIES?

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The term ‘controlling mind’ means the actual physical place where the daily business decisions and operations are taking place. For example, many people assume that ( and I will use the UK in this example ) that they can simply form an offshore company based in a tax free jurisdiction to benefit from the zero corporation taxes in that Country. This is not as simple as it sounds and many incorporation agents pull you in with cheap offers of offshore company formation for a few hundred pounds. If someone wishes to avoid and reduce their profit taxes then being drawn to these cheap offers may put them at risk.

If the controlling mind is based in the UK, then HMRC may stipulate that the Company falls into the tax laws of the UK and thus will be liable for any tax due on the Company profits. This is because of the day to day decisions being made within their jurisdiction and have every right to this argument.

By removing the legal controlling mind offshore and by justifying that any sales revenue is coming from outside the UK, then there are ways to reduce any tax liabilities in a correct and legal manor. Trusts are a legal vehicle and act as an example of correct structuring of an entity. But it must be done correctly, and under the advice of professionals.

Board meetings must be held outside of the UK, meaning that the controlling mind is ‘Offshore’

The board of Directors should be positioned outside of the UK as with any shareholding.

Banking, customers, business income, and physical offices should also be based outside of the UK giving your business a legitimate offshore presence and not just a registered office based in say, The Seychelles.

Many service providers will allow you to simply form a company in a tax-free jurisdiction, charge you upfront and let you ‘get on with it. But you are placing yourself and your business at risk.

For any advice in respect to Offshore Company Formations, Offshore Banking, the uses of Nominee Directors and Shareholders and complex offshore structures, visit our website at www.intelligentformations.com or talk to one of our senior sales consultants.

Do not incorporate an offshore company without talking to us first

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