Withdraw funds from an offshore company

[GrumpyMess]

How to legally take money out of an offshore company not as dividends or any other form of personal income? May it be a loan to another company or transferring the funds to a trust?

 

[Sols]

You can take out loans from your company, subject to applicable laws which may restrict how much you can many and how big loans you can take out. If you ever forgive the loans instead of repaying them, they might be retroactively considered dividend or salary and taxed accordingly (where the company is based and/or where you are based).

Transfer to a trust is not technically a way to withdraw from a company. But the company can itself put the money in a trust. So you can't just wire money from the company to a trust that you have set up for yourself, but the company can set up a trust (as settlor) and settle the funds there.

In either case, check with legal advisers. These are things you don't want to get wrong.

 

[Fulton Abraham Sanchez]

Hi. You can take a loan, but make sure you have a promissory note and pay interest at least once a year.

 

[GrumpyMess]

Hi. You can take a loan, but make sure you have a promissory note and pay interest at least once a year.

I won't renew the company so any future actions will be impossible

but the company can set up a trust (as settlor) and settle the funds there

Is it a good idea overall? I found very little information about such setup. The main idea is to get rid of a company and not to trigger any personal tax.

 

[Sols]

Is it a good idea overall? I found very little information about such setup. The main idea is to get rid of a company and not to trigger any personal tax.

Can't answer that. Depends on what local law says about it and how the step before (i.e. the company and its profit) is/has been viewed for tax purposes.

I doubt you will be able to avoid taxation on it, if dividends and capital gains are taxed where you live. Wouldn't hurt to discuss your options with a local tax adviser, though.

If local law permits it, using a trust would at best probably just defer the tax obligation. That would buy you time to relocate to a tax haven and cash out there. However, if time is also of the essence, you probably won't have enough time to establish tax residence in your new place and tax non-residence in the old.