|The structure provides a high level
of credibility and is one of the most exciting Tax Planning opportunities
currently available. This structure is sometimes known as the "fiduciary"
or "agency" structure.
A major difficulty with many International Tax Planning arrangements is
the fact that Invoices from Offshore Companies appear in the accounts
of the Owner.
The Nominee Structure provides a solution to this
in that all transactions are with an ONSHORE COMPANY!
A "Nominee Company" is formed in the United
Kingdom or Ireland which acts on behalf of an Offshore Company.The Offshore
Company is the Principal in all transactions and the Nominee Company contracts
for business and acts on the Offshore Company's behalf rather like an
Agent. All the advertising, marketing and promotion is done by the Onshore
Nominee Company. Transactions are invoiced by the Nominee Company in its
own name and the monies received by the Nominee Company pass straight
to the Offshore Company. The Nominee Company is not collecting the money
in its own right - it is collecting it on behalf of the Offshore Company.
The ultimate customer is only aware of dealing with a normal company in
a mainstream onshore jurisdiction. There is no necessity to declare the
relationship between the Nominee Company and the offshore principal.
The only income the Nominee Company has is a fee for
providing its services. The audit of the Nominee Company shows only its
fee income and its expenses. The trading income does not generally form
part of the accounts as this is only handled on behalf of the principal.
The level of the fee paid by the Offshore Company to the Nominee Company
needs to be chosen carefully. A rough guide would be 5% to 10% of the
gross turnover. Expenses of the Nominee Company are set against this and
tax will be paid in the United Kingdom or Ireland on the resulting profit.
The tax authorities then see a Resident Company with a Resident Bank A/C
which is paying tax. This is much less likely to attract their interest
than a zero-tax company! If questions are asked by the tax authorities
about the structure, the Nominee Agreement between the Nominee Company
and the Offshore Company provides sufficient protection. Both Companies
(Onshore & Offshore) may NOT trade in their countries of incorporation
and the Onshore Nominee Company can REGISTER for VAT in Ireland or the
United Kingdom, facilitating trade within the EU.
The nominee structure is well suited to physical trading with invoicing
being done by the Onshore Nominee Company and title in the goods being
with the Offshore Company. The Offshore Company buys the goods and they
are sold by the Offshore Company with gross income received back to the
Offshore Company so that profits are made there.
Holding: The nominee solution works just as well for property and share
holding. The Offshore Company owns the asset and the Nominee Company acts
like a property letting agent or a broker. Rental income is invoiced by
the Onshore Company and received by it on behalf of the offshore principal.
A fee is paid to the Nominee Company periodically, usually as a percentage
of the rent collected.
Other Uses: The structure can also be used
for the supply of services, consultancy, etc where the client does not
wish to receive invoices from an Offshore Company.
- Mr. A in Greece is buying construction products
from various international suppliers. He wishes to centralise his international
purchases through an offshore structure in order to access stable interest
rates offered by international banks and in order to access all available
international discounts; there may also be reasons of confidentiality
involved. However, if his Greek Company purchases these goods directly
from a British Virgin Islands (BVI) or Bahamas Company a tax investigation
is likely to follow. Mr. A therefore utilises a Nominee Company to sell
the goods on behalf of the Offshore Company into Greece.
- Mr. B is selling electrical equipment from the
Far East into North America. Mr. B is based in Europe and does his trading
through an European Offshore Company. Some of Mr. B's clients in North
America tell him that they would rather not receive invoices from an
Offshore Company, so Mr. B uses a Nominee Company to keep his clients
- Mr. C wants to own some real estate in his favourite
European holiday destination, but using an Offshore Company might give
him problems! He therefore uses a nominee structure to avoid tax problems
in the holiday resort and his own jurisdiction!
assets should be in the ownership of the Offshore Company.
physical goods are sold, these are owned by the Offshore Company and sold
for it by the Nominee Company. Title remains with the Offshore Company.
is received into a bank a/c, possibly offshore, in the name of the offshore
company and controlled by the directors of the Offshore Company.
second bank a/c, usually offshore, is opened to receive the fee income
of the Nominee Company and to handle the payment of its expenses.
recommend that the two companies have different directors and shareholders.
with the Nominee Company must be signed outside its country of incorporation.
If the company is trading in Europe, it will need to register for VAT.
is preferable that the directors of the Nominee Company live OUTSIDE the
jurisdiction of its incorporation although one resident director will
soon be required in Ireland. The directors of the Offshore Company should
also be non-resident. We can provide suitable directors subject to certain
Non-resident individuals or corporations only pay United Kingdom tax on
their United Kingdom source income. The same applies in Ireland. The use
of a Nominee Company does NOT cause a liability to United Kingdom or Irish
tax for the offshore principal. Profits made by the Resident Nominee Company
are taxed at the United Kingdom or Irish corporate tax. The extraction
residual profits from the Nominee Company's activities may result in a
liability to withholding tax, although planning can be undertaken to reduce
or eliminate this. The client still has, of course, responsibilty to pay
tax in his own country.
Our firm can provide the ongoing administration of the companies at a
statutory level only or at a fully comprehensive level to include the
operation of the Nominee Company and its invoicing, banking and VAT arrangements.
The Onshore Nominee Company will need to have Audited Accounts prepared
annually by an independent auditor. These are submitted to the tax authorities
and provide the basis for computation of tax.
Our Nominee Package
and administration of a United Kingdom or Irish Company to act as nominee.
and administration of an Offshore Company - usually in BVI or Bahamas
- to act as principal.
of a suitable Nominee Agreement between the parties.
Offices for both companies.
and Secretary for both companies if required (subject to conditions).
of bank a/cs onshore and offshore for the structure together with provision
of signatories if required.
registration for the Onshore Company.
invoicing and bookkeeping facilities if required.
to suitable auditors
corporate documentation - corporate kit, completed minutes and registers,
printed share certificates, seal etc.
or UPS delivery of documents
Where to incorporate: We recommend the use of both Ireland and the United
Kingdom as suitable jurisdictions for the incorporation of your Nominee
Company. The United Kingdom is one of the world's major trading nations,
thus lending credibility to the structure, but the use of a Nominee Company
prevents access to this market. Currently the tax exposure of a United
Kingdom Nominee Company is lower than that of its Irish equivalent, but
with Irish tax rates being progressively lowered to 12.5% by 2003 this
will shortly change. Both options may be attractive to different clients
for different reasons.
The Next Step...
Call us to discuss your plans and to ask for a fee estimate. We will send
to you an incorporation questionnaire to set out your precise needs and
will then proceed with the incorporation of the companies, the execution
of the Nominee Agreement, opening bank a/cs, appointing directors, etc,
keeping you constantly advised of progress.