Offshore Tax Avoidance Strategies

After the big scandal that Panama Papers caused a year and half ago, the most recent leak, named Paradise Papers, exposed more of the tax avoidance schemes the ultra rich use. The names of a number of huge celebrities, large corporations, public figures and even the British Queen Elizabeth II were mentioned in the Paradise Papers scandal. It is evident from the documents that the tax strategies used are extremely elaborate and specifically designed by savvy and creative tax advisers to maximize the wealth of the rich. So let’s look at 5 of these tax strategies.

1.- Trust and estate tax

The first successful and completely legal tax strategy, that was revealed as part of the Paradise Papers is related to trusts. These can be onshore and offshore. Here’s how it works:

Set up a trust
Appoint trustees to run the trust
Become a main beneficiary
Have the trustees determine amount and frequency of cash out payments to you as a main beneficiary
Click here for more details on how to open a Trust Offshore.
In papers the financial assets belong to the trust, which is what the tax bodies see, but in reality you own them without having to pay tax. Offshore trusts serve the same purpose and are organized in almost identical ways. One of the notable names in the Paradise Papers who used this tax strategy is Lord Ashcroft who was a beneficiary of a trust containing $450 million.

More about the offshore trusts and names emerging from the Paradise Papers you can read here.

2.- Asset protection

Many rich individuals choose asset protection offshore as a main tax strategy. This can be risky if done by someone who is not experienced and knowledgeable enough. When asset protection is done smartly, it can save you a lot of money, which otherwise you would have to pay in taxes, but it can also put you in big trouble if you do not report what you are required. These are the main points you need to know about asset protection:

It should be done in good times, before a claim arises.
Late planning can cause more problems and extra charges.
Personal assets should be moved in trusts and business assets in business entities such as partnerships and corporations.
There are many laws protecting the trusts, but the control over assets should be balanced and best crafted by an experienced tax advisor.
A famous name that was named in relation to this tax strategy is of the Canadian Prime Minister Justin Trudeau. Click here to keep reading : Protected content

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