Offshore Business Planning

Multinationals have enjoyed the benefits of offshore business planning for decades. ProperBusinessman with ideas for success Businessman with ideas for success planning has allowed these companies to legally stash billions offshore and out of the reach of the IRS.

For example, Apple has $157.8 billion in cash sitting overseas and reported the biggest quarterly profit in corporate history this month. Microsoft and Google, not to be outdone at offshore business planning, hold about $82.1 billion and $60 billion respectively overseas.

While tech companies are often better suited to offshore business planning, these laws can be used by anyone willing to diversify abroad. For example, General Electric holds about $110 billion offshore. Other big time offshore business planners include tech and pharmaceutical giants such as Pfizer, Merck, Johnson & Johnson.

According to Forbes, U.S. companies seeking to avoid high corporate tax rates stockpiled an additional $154.5 billion overseas in the last year, bringing the grand total to more than $2 trillion (link is to Forbes).

But, here’s the thing: U.S. laws may have been designed by lobbyists for big corporations, but they apply equally to all of us entrepreneurs. Whether you’re a one man shop or a medium sized venture with millions in sales and 100 employees, offshore business planning can help you cut your taxes, increase profits, and protect your assets from frivolous lawsuits.

  • Our team of US expats has decades of experience offshore… and we live what we recommend. We are all American expats and Premier operates from Panama and Belize.

Here are just a few of the areas our offshore business planning service can help:

Planning Your Offshore Strategy: Beginning with the jurisdiction and then the type of entity, we will design a custom offshore business structure that will reduce your worldwide tax obligations, diversify your business abroad, and protect your asset.

For example, let’s say you have an ecommerce business. Together, we decide that the country of Panama is the most efficient jurisdiction for the parent company and call center:

  • the business can be structured to eliminate local taxes,
  • low cost English speaking employees are available,
  • the country offers excellent internet connectivity,
  • banking and ecommerce are available at competitive rates, and
  • 5) visas are available for you and your executives.

Next, we decide to add an offshore subsidiary in the country of Belize to receive payments from clients outside of Panama. Panama will not tax foreign sourced income, so billing through a subsidiary is efficient.

Then we transfer existing and future intellectual property in to subsidiaries incorporated in Cayman Islands. The Panama corporation licenses the IP from these companies, providing another level of asset protection, country and currency risk diversification, and tax mitigation.

Finally, we wrap all of this up in to an offshore trust or a Panama Foundation to maximize privacy and protection.

Offshore Staffing and Visa Issues: As expat entrepreneurs we bring years of experience to your team. We can help you find, qualify, and manage employees and independent contractors.

We can also help with work and business visas for you, your family, and your executive team. Some of our visa programs are proprietary and, depending on your country of operation, can reduce costs and speed up you entrance to the market.

Onshore and Offshore Merchant Accounts: We can negotiate both onshore and offshore merchant accounts on your behalf with ISOs and acquiring banks around the world. The country and structure selected will depend on many factors and we have experience in all levels of merchant processing.

Of course, if you are going to go offshore, you should go all the way. Moving your credit card processing offshore has many benefits. So long as you have an office with employees offshore, your discount rates will be reasonable.

Some clients require U.S. banking and credit card processing. We can assist you to find the best processor for your niche and mary your desire to go offshore with your need for a U.S. account. Such a structure adds layers of complexity to your offshore business plan, but we can guide you through the minefield.

For a detailed description of the offshore merchant account, see my article: How to Get an Offshore Merchant Account.

International Tax Planning: We are one of the few firms offering international formation and tax planning services to small and midsized businesses. Our offshore business plans are specifically designed for closely held companies looking for the same tax and business benefits available to the multinationals.

For example, we might develop an offshore plan that allows you to qualify for the Foreign Earned Income Exclusion, draw a salary of up to $100,800 tax free from your active offshore business ($200,000 p.a. for a husband and wife), and retain earnings over an above the FEIE tax deferred. For more on this, see my article on retained earnings in an offshore corporation.

Or, as mentioned above, we might decide that an IP holding company is the cost effective way to move a portion of your profits from foreign sales out of your parent company.

Another offshore business planning technique making headlines is the offshore inversion. This is where your business buys a foreign competitor (doesn’t need to be a competitor, but that is the most common) based in a low tax country. At the end of the transaction, the tax home of the business becomes the low tax jurisdiction, greatly reducing your worldwide tax obligations. That is to say, the tax home of the company is “inverted” from the U.S. to the low tax country.

If you, your business, and your employees must remain in the US, and you don’t have significant foreign sales, an offshore captive insurance company might be the solution. An offshore captive will allow you to move up to $1.2 million per year out of your U.S. corporation on on to the books of your offshore insurance company. That is to say, you pay insurance premiums to your offshore insurance company of up to $1.2 million which are deductible to your U.S. company.

The offshore captive is most effective for a U.S. based business with at least $500,000 p.a. in net profits it wants to move offshore for several years.

We can assist with these and other offshore business planning techniques. Every situation is unique and we will build a plan that fits your needs. Maybe a “double Irish,” or a “double Irish with a Dutch sandwich,” fits the bill. Or maybe you have significant capital gains and will benefit from a US complaint offshore life policy. Or maybe a merger or JV with a foreign partner that minimizes both taxes and reporting fits your goals. No matter the situation, we can help.

All you need to benefit from these offshore planning strategies is a guide. Our team has decades of experience advising entrepreneurs and navigating international waters… and we are US expats living what we recommend.




Contact us for a free and confidential consultation