Richard Lawrence On Snoop Proof Tactics

Inside Track - Richard Lawrence On Snoop Proof Tactics

"Don't let your IBC be jurisdiction dependent."

You will have read and perhaps worried about the pressure being brought to bear by the OECD, FATF and FSF (see lead article in the last issue of The Freebooter) on offshore centres to come into line on various privacy, reporting and exchange of information issues. I am raising this issue, because as a result off Big Brother's Tax Haven Attack, I am now frequently being asked how these changes might affect the kind of structures I put into place for my clients.

Possibly to your surprise, I can say that they will not adversely affect them at all. How come? Well it's simply a matter of jurisdiction or more importantly, a lack of it.
By way of explanation, let's take one of the major building blocks of many offshore structures, the offshore company or IBC. The choice of jurisdiction for the incorporation of an IBC is now enormous. You have many options, from an expensive and prestigious company, incorporated, say, in the Channel Islands, to, on the other end of the scale, one set up on what amounts to a couple of volcanic rocks in the middle of the Pacific.

First Things First
When incorporating an IBC, you first need to examine what it is you are trying to achieve by having it. Usually it's a means of providing a layer of anonymity and distance from yourself, a vehicle, and a safe refuge for your assets that can be easily passed on to others if and when the time comes.

In most circumstances we can presume that your IBC will never trade publicly, so the name is not that important and therefore neither is the registered office address.
It's helpful if the jurisdiction you choose has no requirement to file annual accounts and also if directors' and shareholders' names are not a matter of public record.
This latter point is where the wish list of the OECD starts to come into play because they want to black-list tax havens that inter alia have "a general lack of transparency".

Avoiding Vulnerability
The use of nominee directors can go some way to overcome any present or future snooping into public records. If, and here is the proviso, as has happened in the past, certain individuals act as nominees for hundreds or even thousands of companies, the authorities will clearly know they are nominees, and demand to know for whom they are acting.

Even if individuals acting as nominees are not identified as such; if they are residents of the jurisdiction of incorporation or some other offshore location, then the IBC will inevitably be deemed to be managed and controlled and thus resident in whatever country those directors reside.

Should that be an offshore location then the IBC may still not have achieved the removal of the reporting requirements that may in future be attached to that particular jurisdiction.
However, if companies, either on shore or offshore, are managed and
controlled by directors who genuinely have no fiscal residency anywhere, then the issue becomes a whole lot more cloudy to say the least.

Taking it further, if a company were incorporated in one of the offshore jurisdictions which eventually caves in to OECD pressure on reporting and exchange of information, who will be interested in the fiscal details of its apparent directors and beneficial owners, if they are individuals who genuinely have no obligation to pay taxes anywhere?

Key Manoeuvre
Given that I try to structure all my clients' IBC's so that the nominee directors and apparent owners of their IBC's do not come under the fiscal jurisdiction of any particular country, the choice of jurisdiction of incorporation then also becomes relatively unimportant. As do any concerns about the increasing pressure placed on any particular jurisdiction to introduce 'greater transparency'.

This benefit extends to the IBC's bank account, whether it's offshore or onshore. If the IBC is structured in a way that it and its directors genuinely have no tax liability to any particular country, then it follows that it does not matter a jot who is able to demand information from the bank or to whom they give it.

Now I am not suggesting that it is simply a matter of structuring an IBC in this way, and then it is free to do any kind of business with any country, and not be liable for any taxation anywhere. There are still all kinds of tax rules; double taxation treaties, which themselves have exchange of information treaties built into them, which still need to be avoided (but not evaded!).

The major point to grasp is that if the basic building block of the IBC is initially structured in the correct way, it can go a very long way to nullifying the kind of onerous obligations that the likes of the OECD are seeking to impose.

How To Contact Me
Readers interested in contacting me directly about this or any other aspects of tax mitigation or asset protection can do so by e-mailing me at

About The Author
Richard Lawrence is an expert on tax mitigation and asset protection, who has an international portfolio of clients. His modus operandi is to respond to all client email within twenty-four hours, seven days a week. For snoop-proof confidentiality he uses PGP encryption. He is friendly, clued-up, helpful, and if you want to hire him, his fees are reasonable ... so, if you have an asset problem to solve, or an offshore agenda you'd like to fulfil, drop him a line.


"They want to black-list tax havens that have a general lack of transparency."

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