Operating address in offshore company documents

[flyingadventures662]

I am incorporating an LLC in SVG with BBCIncorp.

After extremely long clarifications of details over email, submitting documents, and paying, they said today by a total surprise that they want to put my address in my country as an operational address in the company incorporating documents.

I am still shocked and I am trying to figure out, if this is a mass practice, what's the point of claiming you are offshore and getting a local Nominee Director. I mean the whole idea of the offshore company is to claim it operates offshore, otherwise the whole tax benefit may be lost.

How did it work for you, which have already opened offshore companies?

Were you forced to put your home country address as operational address when incorporating:

- in SVG,
- in other jurisdictions,
- with BBCIncorp?

And have you saved local tax in this case?

 

[Houdini]

How did it work for you, which have already opened offshore companies?

They did the same with me for a different jurisdiction. The solution is to rent a office somewhere and use this address. I don't know why they are doing it, but it looks like to be mandatory.

 

[flyingadventures662]

They did the same with me for a different jurisdiction. The solution is to rent a office somewhere and use this address. I don't know why they are doing it, but it looks like to be mandatory.

Wow thanks for replying. That doesn't seem like a simple solution at all to me.

Let alone the expenses.

Is this rental address out of the offshore jurisdiction?

And if it is, again, what's the point of opening offshore company at all? It should make you tax liable for the place where the operating address is.

 

[Houdini]

It should make you tax liable for the place where the operating address is.

That would require a company with substance, means you will have to buy a substance package as many offshore company service providers offer now a days. Means they will facilitate the company with all what is required to make it tax resident where it is incorporated.

If you don't have the money to rent a small office, why would you need a offshore company?

 

[flyingadventures662]

A few hundred for rent per month is way more different than 1-1.5K per year and the latter can help dramatically with taxes even for smaller budgets.

Sorry I am not familiar with this substance package. Would you share more info please?

 

[CyprusBusiness]

Usually service providers offer reg. Office address on an annual basis similar to nominee directors service. Of course there are substance requirements that need to be fulfilled. This means rebting/purchasing physical office space and have employees on payroll.

In most jurisdictions ,the address which a company is registered must be located in the place where its headquarters or seat is located, and this will often determine the registry at which the company must be registered.

Did you get any advice before setting up a SVG setup in terms of the tax impact of operating an offshore vehicle from your country? Other exposures I will assume will arise later on. You need to check PE rules, ATAD, substance rules and PoEM rules along with personal tax impact.

Let me know if you need more details.

 

[flyingadventures662]

Did you get any advice before setting up a SVG setup in terms of the tax impact of operating an offshore vehicle from your country?

I got plenty of legal advice and I can confirm on 100% that if:

the company has registered address in the offshore AND it has a local ND there, it is not tax liable here and I only pay dividends.

Thanks for answering, I will recheck with my lawyer, from now I am collecting information about ready solutions.

 

[Larin]

I got plenty of legal advice and I can confirm on 100% that if:

the company has registered address in the offshore AND it has a local ND there, it is not tax liable here and I only pay dividends.

Thanks for answering, I will recheck with my lawyer, from now I am collecting information about ready solutions.

That is unless you live in a country that has implemented any sort of CFC rules: Controlled Foreign Company (CFC) rules.

 

[flyingadventures662]

That is unless you live in a country that has implemented any sort of CFC rules: Controlled Foreign Company (CFC) rules.

Or unless you live in a mafia country where the politicians, including the ex-Financial minister are doing it themselves and it is established as a legal practice.

 

[Larin]

Or unless you live in a mafia country where the politicians, including the ex-Financial minister are doing it themselves and it is established as a legal practice.

You think living in a mafia country means the same rules apply to you as the ex-Minister of Finance?

 

[flyingadventures662]

You think living in a mafia country means the same rules apply to you as the ex-Minister of Finance?

Yes, when I have asked 3 lawyers and one accountant and all of them didn't even second think about it and confirmed with the full certainty it works, it's legal and it's established practice.

 

[flyingadventures662]

Usually service providers offer reg. Office address on an annual basis similar to nominee directors service. Of course there are substance requirements that need to be fulfilled. This means rebting/purchasing physical office space and have employees on payroll.

In most jurisdictions ,the address which a company is registered must be located in the place where its headquarters or seat is located, and this will often determine the registry at which the company must be registered.

Did you get any advice before setting up a SVG setup in terms of the tax impact of operating an offshore vehicle from your country? Other exposures I will assume will arise later on. You need to check PE rules, ATAD, substance rules and PoEM rules along with personal tax impact.

Let me know if you need more details.

Isn't this substance address, wherever it is, supposed to make the company or you yourself tax liable there? Especially when you need a rental contract for it (otherwise the offshore agent might not accept it).

 

[mickey]

@pastet89
You have to know which taxation system your home country uses. When your country uses a territorial tax-system your offshore-tax benefits are NOT lost.

If your country taxes worldwide income and has CFC-Rules in place you need to rent a virtual office in a country with a territorial tax-system, otherwise your tax benefits are lost.

To declare this rented address as an address with substance you need some additional proofs like an internet/telephone and gas/electricity invoice. These proofs are important for banks when you are about to open an account with them. You as the ultimate beneficial owner needs to have an address in an territorial taxed country as well. Maybe you use the rented addres (the same as your offshore company has).

 

[flyingadventures662]

@pastet89
You have to know which taxation system your home country uses. When your country uses a territorial tax-system your offshore-tax benefits are NOT lost.

If your country taxes worldwide income and has CFC-Rules in place you need to rent a virtual office in a country with a territorial tax-system, otherwise your tax benefits are lost.

To declare this rented address as an address with substance you need some additional proofs like an internet/telephone and gas/electricity invoice. These proofs are important for banks when you are about to open an account with them. You as the ultimate beneficial owner needs to have an address in an territorial taxed country as well. Maybe you use the rented addres (the same as your offshore company has).

@Larin
Thanks to you and the other gentlemen for the information.

I actually just did a research. I did not understand initially why all lawyers told me it's OK without an office and substance.

Now I checked the CFC-Rules and I understand why: because, in my country, with two small exceptions which I don't fall into (and barely anyone falls into), they do apply only to companies and not to natural persons. I.e., if you have an offshore company as a natural person owner, and you don't fit in these small exceptions, this does not apply to you.

There was even an legal article commenting why (kinda "disappointing") the people who make the laws lack the desire to achieve the law effect as it's obvious the law won't work this way.

So, you need to cover just the PE - and all lawyers told me for this I need just an address at the corresponding jurisdiction + an ND there.

Now this is what I mean what it is to live in a mafia country - as the mafia crafts the laws to fit its affairs well.

P.S. What's even more hilarious is that they tried to do it the hard way. Initially they put like "a small mistake" in the law that it applies only to jurisdictions with low tax but not to jurisdictions with zero tax. Later, EU forced them to correct it. But regarding the other flaw, I just checked the law and indeed it is still not covering in the general case natural persons.

 

[Larin]

Great to hear that @pastet89!

I have found that the actual implementation of CFC rules is quite inconsistent from place to place and I am glad you live in a country that chose to implement it in such a convenient way

 

[flyingadventures662]

Great to hear that @pastet89!

I have found that the actual implementation of CFC rules is quite inconsistent from place to place and I am glad you live in a country that chose to implement it in such a convenient way

Sure!

And now, to be completely happy, I still need to find a nice offshore agent that in the same time will open the company without stating other operating address AND will provide an ND who is fine with signing custom POA, giving away personal documents and being ready to sign and provide all extra documents needed for KYC procedures on crypto exchanges, banks, EMIs, etc...


Which is not an easy task.

 

[wellington]

I am incorporating an LLC in SVG with BBCIncorp.

After extremely long clarifications of details over email, submitting documents, and paying, they said today by a total surprise that they want to put my address in my country as an operational address in the company incorporating documents.

I am still shocked and I am trying to figure out, if this is a mass practice, what's the point of claiming you are offshore and getting a local Nominee Director. I mean the whole idea of the offshore company is to claim it operates offshore, otherwise the whole tax benefit may be lost.

How did it work for you, which have already opened offshore companies?

Were you forced to put your home country address as operational address when incorporating:

- in SVG,
- in other jurisdictions,
- with BBCIncorp?

And have you saved local tax in this case?

I'm surprised people haven't just considered renting a room in the (some third world tax friendly nation) or some other country, hiring an employee there, for peanuts and setting that as the main office.

With companies increasingly operating digitally this makes sense.

 

[mickey]

I'm surprised people haven't just considered renting a room in the (some third world tax friendly nation) or some other country, hiring an employee there, for peanuts and setting that as the main office.

With companies increasingly operating digitally this makes sense.

Theoretically you're right but ... did you tried to find a fair priced condo for longtime rent in a tax haven already?

I did or better I tried, 99.9999% of all offerings are overpriced villas for tourists. Sure you could find a garage in a third world country somewhere but which Bank would accept this?

The most risky part of any offshore cooperation is the bank-account opening. The chances are the best when the entity, business operating address AND the address of the ultimate beneficial owner are in the SAME jurisdiction as the Bank. This does not looks so offshore, the substance requirements are automatically fulfilled and CSR is tricked as well.

Sadly, you will never find such a property.

 

[blackmax]

Germany - Corporate - Group taxation here you will find CFC rules country by country, regularly updates. Very useful website.

 

[European]

Or unless you live in a mafia country where the politicians, including the ex-Financial minister are doing it themselves and it is established as a legal practice.

@pastet89
What country would that be?