Offshore bank accounts and corporations are one of the best ways to save taxes on your income. Corporate income is one of the most highly taxed income streams in the United States, with a corporate income tax rate of 21%, companies are expected to pay hundreds of thousands of dollars a year. This cuts directly into the profitability of the company and in some cases can also cut into your earnings as a company owner. In addition to these corporate taxes, your personal incomes are also subjected to taxes which cost you thousands of dollars a year.
Offshore bank accounts and companies provide a rather effective way through which you can do away with your financial responsibilities to the state. Major corporations like Facebook, Microsoft and Google have already set up their headquarters in locations that don’t charge high taxes on any incomes. Mitt Romney himself, the previous candidate for the presidency also had offshore accounts in the Cayman Islands to save up on his tax payments.
Countries known as tax havens provide corporations a chance to cut down on their tax payments. These countries are considered the best locations for headquarters because these have very low corporate income tax rates. So places like Ireland, the Cayman Islands and a few others allow foreign companies to set up offices and present themselves as based out of these countries.
Although the process to incorporate offshore is a rather complicated one, the time investment is worth it. Once your corporations are registered in these tax havens, they become subject to the laws of that country alone. Assuming that you continue operating and generating profits from major markets like the United States, these profits are repatriated to the headquarters where they are charged a minimal tax rate.
With these lower tax rates, you stand to retain much more of your profits and then redirect these funds into improving your organizations or keep as your personal expense. So if you report revenue of $1 million in the United States, you would have to pay $210,000 but in Ireland; with a corporate tax rate of 12%, you would have to pay $120,000 only. The remaining $90,000 would fall under your profits.
This particular step requires you to also have a valid address in whichever country you set up your account in. Regulations across most countries require you to be an active part of the nation before they would let you set up a bank account with their banks. In any case, it depends on what you want out of your offshore bank account that decides where you want to set up the bank account.
Banks across the world offer different financial services that serve various purposes. Singapore is well known around the world as the financial hub of one of the fastest growing economic regions in the world. The investment opportunities that you get from working in Singapore outweigh the profitability you would find anywhere else. Switzerland, as another famous example, is well known throughout the world for ensuring the secrecy of their clients.
However, the tax advantages offered by offshore bank accounts basically include sending your funds and returns on investment out of the jurisdiction of the United States. Even if the money originates in the United States, once you’ve siphoned it out of the system, no one can touch it under any circumstance.
Therefore, none of the tax laws that apply to your wealth in the United States would apply to your wealth in an offshore bank account. Much as how offshore corporations protect your corporate income from excessive taxation, an offshore bank account would also protect your wealth from excessive taxation. As a result of this, you have a greater degree of disposable income that you can easily live off of. In terms of maintaining your retirement income and your long term financial well being, offshore bank accounts are one of the best ways that you can save up without being subjected to your financial obligations to the United States.
As a business owner, your biggest challenge is to somehow save your income from the encroachment of the tax system. Working in the United States, the financial regulations and the high tax rates are going to erode away much of your incomes. There are two levels on which the taxes are applicable to you; one at the level of your organization and the other on your personal income that you generate from various sources.
You one option is to of course siphon off money into an SDIRA, however, the other much more secure way of saving up this money is obviously off-shoring. Once you take your company to a tax haven, you will have first of all reduced much of your tax burdens. The profits that you generate from the operations of your company can be transferred into a company account that has also been set up in the tax haven.
The second step of this procedure is to acquire a second passport in this or some other tax haven. With this new nationality, you can own property and set up an address under your name. With this address, you should set up an account in a local bank where you can siphon the incomes you generate from any of your sources. Since these transactions are going to originate from your accounts in the offshore locations, your returns on investment, personal incomes and any other source of wealth is going to be taxed a smaller amount than in the United States.
With these few basic steps, you would find yourself saving up on a significant amount of your taxes and therefore enjoy greater financial security and liberty.
For more on the offshore market, please download a copy of The Ultimate Guide to Going Offshore. You will want a copy for your personal library.
To set up your offshore services today, please contact our office HERE. We will work with you throughout the entire process to ensure your needs are met.
About The Author
His goal is to help Expats like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again. For more information on his legal (but creative) tax strategies for Expats watch this free video.
Source: https://www.escapeartist.com/blog/tax-savings-through-offshore-corporations-and-banks/