Is this Offshore strategy legal?

[Rezomellow]

Hi there everyone.

Recently I came across this video of how Nando's, a UK restaurant chain that sells chicken manages to pay such little taxes thanks to a web of offshore companies. One way they limit their corporate tax bill is by paying an offshore business (that they own) for "image rights" for their UK-based franchises.

So my questions are the following:

1. Is this completely legal to do? And even though it's known that Nando's owns the offshore business and charges their franchises for "image rights", it's still perfectly legal?

2. Secondly, I own an online business (Let's call it Lexon Digital) that sells a digital service to people around the world. We are based in the U.K. Would it be legal for me to leverage the same tactic in the following structure:

Setup offshore company called "Lexon Global" >> Charge my UK company a fee for rights to the trademark/name >> Pay less in overall corporate tax on my profits of my U.K company.

3. If the structure above were to work, would I be correct in assuming that I would be able to generate tax-free revenue for my offshore company (assuming I was in a zero-tax jurisdiction?).

I'm just wondering if this is all legal? Of course if it isn't it's definitely something I wouldn't pursue.

Thanks!

 

[Clip]

From my understanding, it's legal if the owners or the trademark owners are none of them UK residents.

 

[Sols]

This is a very common setup used by many (most) large international companies. If you plan to do it for yourself or as a small business, you'll soon find it practically impossible due to the high costs of having a legally sound structure, which has all the right paperwork and legal arrangements including actual physical presence and tax residence in a foreign jurisdiction.

You're looking at five and six figure numbers for a solid setup that will hold up if questioned by tax authority and courts. So you'll need to have a tax bill which is greater than those legal and setup costs.

 

[blockchain4ever]

I'm just wondering if this is all legal? Of course if it isn't it's definitely something I wouldn't pursue.

Simply speaking, the legality in practice depends on your net worth. If you are rich or your company is big, then yes, it's a legal setup. If not, no it's not.