Offshore Then & Now (How it Changed and Why?)
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- เผยแพร่เมื่อ 28 ส.ค. 2024
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This is the story about Offshore and how it changed over the course of 10 years.
When someone says ''offshore'' the first thing that comes to mind is a tropical island where big corporations form shell companies in order to pay less tax. People commonly refer to jurisdictions such as the British Virgin Islands, Cayman Islands, Belize, Vanuatu, Anguilla, and offshore jurisdictions. But how true is this? How relevant are these jurisdictions and do people really form companies there anymore?
The answer is NO. The time when small islands were tax havens where one could hide money is long gone. They are pretty much useless today. And we will tell you the story of why is this the case.
As you're probably aware, the world has changed drastically over the last couple of decades. Under the pressure of the US, many banks globally needed to change and update their rules about bank secrecy. Therefore banking got much tougher, and banks will rarely accept businesses that they don't understand or that don't have substance in a local jurisdiction.
This pretty much meant the death of offshore islands - these places just weren't viable as places to set up the operations.
CFC rules, FATCA rules, Company residency rules, Anti-tax avoidance acts, etc. really cracked down on traditional tax-havens. The world of offshore shifted from shell companies to actual operations in low tax jurisdictions.
This meant that many companies moved to Singapore, Hong Kong, UAE, or believe it or not the USA. Also, places like Bulgaria and Georgia became increasingly popular. The same can be said for Malaysia, where many companies were incorporating in Labuan and were running operations from Kuala Lumpur.
These more reputable jurisdictions could grant you good banking, unlike small black-listed islands.
At the same time with digitalization, many businesses were concerned with payment processing which is simply impossible if you don't set yourself up correctly. Many people started thinking of ''planting flags'' and getting multiple citizenships and residencies to use them as a plan B.
Residency became more important than ever, and we can see many people opting in to pay some taxes just so they can say that they did it somewhere.
That's why we see the rise of so-called mid-shore jurisdictions, countries that have some taxes but they're not too high.
What people think of offshore is nowadays very outdated and wrong. This world has changed drastically and is continuing to change as we speak.
Hiding money in an offshore bank in the Cayman Islands is simply not an option anymore. Bank secrecy is not a thing of the 21st century and governments want to access more and more information about their citizens. Unfortunately for you, they're able to do so more than ever before.
Amidst all this, we've seen the rise of crypto, which has the potential to change the world, especially our industry. The rise of DAOs, smart contracts, privacy and security, safe and fast transfers with no compliance, are just the beginning.
The world of offshore is continuing to change. It is an exciting but at the same time nerve-racking journey. If anything else, we can expect to see more changes in the near future. Where will these changes take us? Let's wait and see.
Who are we and what do we do?
We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.
We have lots of interesting articles on different topics, we have relevant information up to date.
Author: Michael Rosmer
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Excellent overview of high-level trends and changes in offshore finance. Thanks
Always our pleasure!
Anything you'd like to see next?
This is one of your best videos! Illustrates why professional structuring is so important long term. Thanks greatly appreciated.
Thanks! Glad you liked it!
Killer video, man. You've been knocking it out of the park recently!
Thanks! Appreciate it.
Anything you'd like to see next?
@@OffshoreCitizen It would be nice to know what options should be considered at certain levels of net worth. Lots of us are doing amazingly well with crypto. What should we be doing after our first $500k, $1mil, $5mil, etc. I will be leaving the USA in 6 years after my kids are grown and on their own. What should I be prepping in the meantime?
@@OffshoreCitizen .. countries in Eastern Europe worth living in with a good bank or 2?
@@OffshoreCitizen - Can you please do another video on Crypto regulations in Portugal ? What's not very clear is regarding the "regular income" in crypto actually being taxed. What if someone has another activity which generates income from non-crypto and also generates regular crypto income, would crypto really be taxed then? I'm asking from an EU Citizen's point of view who's country of origin has no double taxation. Thanks
I really loved this video. It’s quite entertaining to see how this industry has changed overtime. Very interesting insight.
This might be your best video. That was interesting.
Thanks!
Great video. Basically what becomes too easy for individuals will eventually become easy for governments to muscle in on.
Exactly. What is easy doesn't last and what lasts isn't easy at least not as easy.
Very interesting Mike. Another aspect of offshore that has changed quite dramatically is expat employment. I was an expat kid in the 80’s and then moved to Malaysia as an expat engineer in 2008. Long story, but eventually left in 2019. In that time, both the conditions on offer to expats, as well as how easy or difficult the Malaysian government made it for expats, changed a whole lot. Banking in general in Malaysia, even for locals (my wife is a citizen ), became a lot more stringent after 1MDB. So this is a very interesting topic to me.
Happy to hear you liked it and thanks for sharing your story and insight.
Have you seen some of our videos on Malaysia?
@@OffshoreCitizen yes indeed, that’s what drew me to your channel in the first place - seriously considering retirement over there! Perhaps with a spousal visa if MM2H remains too difficult. Still, got 5-10 years left to decide.
@@dbrown101272 yeah 1MDB definitely shook up the whole region especially when it came to banking.
Great review! Imo all these developments are good for everybody...
Also worth noting that interest rates have fallen dramatically in recent years so banks are less interested to park your money.
Thank you, and thanks for sharing that info!
Anything you'd like to see next?
Yes, very true they are in fee businesses today, thanks for pointing it out.
Great content you put out there, thanks
Glad you enjoy it!
Thank you Michael, for sharing such a clear and informative timeline of the last few decades of the changes to offshore companies, international banking and taxation having formed the time we are operating in now. Glad you mentioned crypto, and I realize that it was not the focus but to me the biggest influence on all business is how companies will adapt to meet trading requirements through and post-covid 19?
Brian
You're welcome! Happy to hear you liked the video. We can just wait and see😄
What do you think? Any predictions?
@@OffshoreCitizen I can only speak for effect of COVID-19 on small business in Australia but it has wiped out approx 1/3 of the small businesses. To survive many businesses have had to relocate from a shop-front to a more affordable garage with an online store with payment processing.
Use of cash is in decline. I see these trends to continue.
I think you need to be online and take that thinking to the extreme.
Just realize covid mostly hasn't created something new it has accelerated the trends that were already going to happen. Lean into those trends.
Do you still enjoy it as much as day 1 ten years ago when you started?
These videos help someone like me who has just started so much so thank you.
Thankyou Michael
You're welcome, Frank ☺
What do you think about today's topic?
@@OffshoreCitizen clear video, I'm actually looking for 1 country or island that has everything, little VAT or feeling tax, good banks, cheap living, nice weather, safe and friendly people. Do you know such a country or island? and can you tell me more about curacao?
@@frenk3754 I think we're all looking for that ;p
Whether banks are good or not depends in large part on what you need them for.
The only reason we haven't seen a revolt so far is because normal working people aren't affected by most of these changes.
Super interesting!
Glad you think so!
great recap of the past and present state of offshore world..I am waiting for Cayman Islands special economic zone video
👍
Thanks, happy you liked it.
You're considering Cayman Islands?
@@OffshoreCitizen yes just researching about it but very few info in youtube about it .
Great video. I have a large TH-cam channel (not this account) I’m based in Australia and the personal income tax rate is 47% for every dollar over $180K Australian. Most of my income is taxed at the highest tax rate. I’ve considered the UAE as I prefer city lifestyle for services and also English speaking (but UAE has no tax treaty with USA so TH-cam will withhold 30% of my monthly income payments). So I am considering whether setting up tax residency via a company and bank accounts in somewhere like Bulgaria (which has a minimal 5% tax treaty with USA) and then periodically transferring my money to UAE or wherever is most favourable to physically reside most of the year. I think I want to talk to you directly about this - and also about whether I could setup tax residency in UK (which has 0% tax treaty with USA for withholding tax) plus my TH-cam income would be foreign income and I think UK or for that matter Bulgaria etc don’t tax on on foreign sourced income?? Also my parents were born in the UK (so maybe I can get a UK passport if that helps my situation. Currently I’m in Australia but we are ready to leave in the next few months - once we have a solid and secure plan in place. Any thoughts?
There's a lot to cover here. You suggested some good options that might work. It's probably best to get on a call and discuss it all in detail calendly.com/michael-rosmer
I'll guide you on the best solution and any next steps
@@OffshoreCitizen Thanks Michael I’ll book something in the next few days with you. I’ve just got to work out my questions carefully first. I was actually hoping for a consultant/advisor that can devise a plan and implement a plan for me if possible… Do you actually get involved in helping clients implement plans or are you more hands off so to speak
Can you talk about the difference between TIEA and DTA countries and what requirements there are for management and control for Canadian companies.
Great idea, thanks for the suggestion! Will see what we can do😄👍
How did you like this video?
Have you watched any of the videos I've done on corporate tax residency and management and control?
@@MichaelRosmer Yes Michael, I have seen almost all of your videos in depth. I'm partnering with a Canadian company that wants to decide if it's better to go to Cayman Islands or Barbados. We are setting up their management and control outside of Canada for their CFA. I want to have the flexibility to have employees and directors work outside of Canada without a permanent establishment. It looks like Cayman is better for this reason. Then send exempt surplus back to Canada.
Please provide regular updates to the global 15% tax. When will this be implemented? Is a global wealth tax coming soon? I get the feeling I'll be calling you soon.
Will do, stay tuned 👍
How did you like this video?
@@OffshoreCitizen Great stuff
Creditable solution is renouncing U S citizenship ........by by
For a growing number of US citizens, yes.
any ideas why my business account was closed by a challenger bank in the UK? Purely receivables from Amazon. What would be the likely reason?
Sometimes it has nothing to do with you, they’re just de-risking their portfolio and dump a bunch of accounts in categories where they want to shut down or reduce exposure.
It could be any number of things, sometimes it's too high a share of foreign transactions, sometimes yes it could just be derisking, or a myriad of other things.
@@alexnezhynsky9707 are you trying to make a positive argument for CBDCs? lol
does this only apply to US citizens ? im a Brit or a Russian opening an account in Cyprus to hide taxes ,my respective government can't force me to pay brit/Russian taxes right ?
"to hide taxes" - good choice of words on a public forum, numbskull!
What are the best places to live up to $10k per month - for a couple?
What are you looking for? Pretty much entire Eastern Europe would qualify. Also lots of Asia and South America 😄
@@tw9419 Yep... Too much choice! We are venturing to Portugal next week for a long scouting trip. Just wondered what other options. I really would like to visit Georgia - we also love Mexico.
@@tinglestingles Portugal is lovely, and quite affordable in comparison to many other countries! Personally I’m not a big fan of Georgia. It’s still quite undeveloped and doesn’t offer enough in order to justify living there. It’s fine to visit, though.
I recommend checking out Serbia, Croatia and Montenegro. All better choices than Georgia. Also quite affordable!
@@tw9419 Yes, been to Novi Sad, Serbia many times - my VA, who assists in my business, is based there. Maybe a trip to Croatia and the rest of the Balkans is in our future? THanks!
@@tinglestingles Check out Bulgaria. I'm here since 2004. Worth a look while you over this way
For my money, today, for a fair percentage of US citizens in the digital products game, their best bet is probably a Hungarian company, owned by a US C-Corp which is owned by enough partners to ensure that none of the shareholder's of the C-Corp have more than 9.5%.
The CFC of the US C-Corp blocks any PFIC potentiality for the individual shareholders. Each owning less than 10% means they are not US shareholders in regards to the CFC subject to personal Subpart F or G.I.L.T.I. liability, and by owning a CFC in a double tax treaty jurisdiction, the dividends paid to the C-Corp are treated as qualified dividends and subject to no tax beyond Subpart F or G.I.L.T.I. to the US C-Corp and dividends paid by the US C-Corp to it's shareholders should get favorable qualified dividend treatment too.
If those US citizen owners are living and working overseas and using proper transfer pricing studies they can potentially keep their overall tax rate to less than 13%, so that is not bad.
I don't think this is very practical for most people.
First, you're not likely to reduce your shareholding in your company to below 10%. The issue for most people is they are a lone shareholder or fairly large partner.
The GILTI tax liability applies based on the corporate shareholder.
The structure also begs the question of why pay 9% tax at all?
Hungary can be useful but Every case is different. Depends on the business, income levels of the shareholders and company, goals with the money, long term lifestyle objectives, etc.
Can you elaborate on what you mean when you say that the US is increasingly a tax heaven?
thnx barry sotero, aka barack hussein obama, the gift that keeps on giving ~ time to flee
Lol
Where would you flee?😄
Etcetera, etcetera, etcetera!