Offshore taxation issues and advice

A great deal has been written over the years about offshore taxation, offshore bank accounts, offshore trusts, offshore payments and offshore tax havens. It is certainly worth thinking very carefully before entering into any form of offshore tax planning arrangement that deals with any of these issues.

To begin with, it is important to clarify that there are very few individuals who are actually working offshore - and most of them tend to be in the Oil and Gas industry, working on oil platforms or in similar locations. There are specific regulations within tax law covering these issues and it is worthwhile speaking to a specialist if you fit within this category.

In the majority of cases, offshore facilities are used to reduce taxes - which, on the face of it, is a good thing - but the methods used often do not meet the requirements of the relevant local or international tax compliance rules.  For example:

Offshore trusts have been legally used in the past from the UK, for an individual working in the UK and adhering to all of the relevant UK tax rules for Trusts.  If however the individual then moves to a contract in Italy, Germany, France, or The Netherlands and is working in (and therefore under the jurisdiction of) that country, the same tax rules for trusts will not apply, and therefore income going into the trust may be viewed as fully taxable. This will result in an additional tax bill, on top of the cost for the trust.

The lesson here is that ensuring tax compliance when working abroad (or indeed at home) is very important - but many offshoring opportunities can work against that compliance when considered in a wider context.

There are things that you can legally do to ensure that your tax compliance is managed effectively and your tax liability is minimised. 

We recommend that you contact our international tax planning specialists for appropriate advice, and allow us to structure a solution that is relevant for your circumstances.