If you’re a wealthy individual or a business owner, chances are, you’re tired of paying taxes.
The tax code in your home country, especially if it’s the United States, is complex and penalizes you for the money you make. In the U.S. alone, the Internal Revenue Service collected $3.4 trillion last year alone.
There are many benefits to taking your business offshore. Avoiding paying taxes is one of them. Setting up an offshore business isn’t difficult and the payoff is high.
Whether you manage wealth or have earned your money yourself, you need to be smarter about taxes. If you’ve ever wondered about offshore corporation tax advantages, keep reading. This article will tell you everything you need to know.
1. The Foreign Earned Income Exclusion
For U.S. citizens, the IRS has a special regime for income earned in a foreign country.
If you qualify, up to approximately $100,000 of the foreign income you earn each year is excluded from your federal tax return. This can benefit people living and working in the United States who operate a small business.
The exclusion applies to both salary and profits. So if you form an offshore company or an offshore corporation, you get to reduce the taxes on any salary you pay yourself.
There are a number of different ways to structure a company to take advantage of this exemption. In order to pick the right one, consult a service that has experience in setting up offshore companies.
2. Avoiding Inheritance Tax
Often when a company owner dies, there’s a heavy tax burden, i.e., inheritance tax. It taxes your possessions as well as your property. This can be a hard pill to swallow, especially if you’re leaving your assets to your children.
By opening an offshore business, you can ensure that the assets go to the right people when you pass on and not to the taxman. This could be your family or whomever else you choose.
3. Retain Earnings from Your Internet Business
Are your companies based online? If so, structuring your companies overseas makes sense. Internet businesses don’t need to operate in any specific location, so an offshore jurisdiction is a perfect match for this type of work.
If clients and the work you do are spread out around the world, your company is international. Therefore there’s no need to restrict its operation by basing it in your home country. Also, you can defer tax payments if you incorporate it right.
How To Make Offshore Corporation Tax Advantages Work For You
To form a company, it’s advisable to get advice from a professional. They can help you pick the type of company to form, how to structure it, and advise you on how to organize its finances.
The sooner you do this, the sooner you can start benefiting from offshore corporation tax advantages.
If you’d like to find out more, our blog can help. Read more about the benefits of an offshore business in Anguilla and how it can help you achieve your tax management goals.