How to know if my offshore company or offshore bank account is legal?
MOST OF THE TIME, OWNING AN OFFSHORE COMPANY AND/OR OFFSHORE BANK ACCOUNT IS LEGAL.
Owning an Offshore Company and/or Offshore Bank Account is most of the time (except maybe in extremist countries) legal. In general, all countries allow tax residents or citizens to own offshore companies, but back to the basics, being tax resident in a worldwide tax system country or a territorial tax system country plays a big role in answering the questions of whether you must disclose your offshore affairs to your tax authority or not.
Worldwide tax system: If your country of tax residency is under a worldwide tax system, it might surely, in general, require you to disclose, report, and pay taxes on your worldwide income, and you might have the duty to report your foreign-owned company ownership. What is illegal. With the correct tax counseling, you can own offshore companies and offshore bank accounts without paying corporate or personal taxes in your country of tax residency. Please be advised that you can be a tax residency in a country by virtue of nationality or time spent in a territory.
Territorial tax system: In general, the territorial tax system does not require you to report ownership of offshore companies and/or bank accounts. Ownership itself is not illegal at all.
So, when are offshore companies or bank accounts illegal?
Offshore companies are double-edges swords. Corrupt politicians, drug dealers, and/or money launderers may use the secrecy jurisdiction offshore to launder money, take bribes (in case of politicians).
Offshore companies are illegal when you don't report or hide such ownership to your tax authority (in general when your country has a worldwide tax system).
Information Exchange Treaties
Some Countries have subscribed Information Exchange Treaties in order to combat or avoid tax avoidance, money laundering, terrorism financing, etc. These tax treaties are agreements subscribed between countries where a country reports to another country the ownership of its nationals of companies of companies incorporated under their territory.
So, where does the illegal stigma come from?
The mass media's misinformation has brought an illegal stigma and deceiving reality of offshore affairs. Even though some Parties involved in the offshore companies leaks, most of offshore companies and offshore bank accounts owners are planning their tax affairs within the legal framework.
DO NOT HESITATE TO CONTACT US TO DETERMINE IF YOUR OFFSHORE AFFAIRS ARE WELL STRUCTURED OR TO STRUCTURE YOUR OFFSHORE AFFAIRS.
About the author: Jean Franco Fernández Clark. Corporate and International Tax Lawyer from Nicaragua, Central America. Speaks English, Spanish, French, Italian, Russian. 学习普通话
Disclaimer: Nothing in this article shall be considered legal, financial, or tax advice. If you wish to obtain advice you must address your tax consultant or attorney. The publication of this article is for information purposes only and the content in this article comes from personal experiences and it is not by any means a legal or tax advice. Information may not be updated or correct.