You’ve probably heard about offshore tax havens. Registering a company in an offshore tax haven can be a way to legally minimize your tax obligations.
Still, the amount of information on this topic can be overwhelming. Selecting which country to establish a company and what structure to use can be a minefield, unless you have an expert advisor.
Paul O’Mahony shares his personal corporate structure in this video, filmed at the Platinum Mastermind in Fiji. Don’t use this as your final advice, but as a starting point for your research.
CORPORATE TAXATION RATES AROUND THE GLOBE
In many countries, the profits of companies are taxed at a flat rate. In contrast, the income of individuals is taxed progressively. Higher incomes are taxed at a higher rate.
For this reason, you will usually want to set up a company.
What are some of the corporate taxation rates around the globe? In Ireland, it’s 12.5%. In the United Kingdom, it was 20% but was lowered to 19% in 2017.
In Australia, the corporate taxation rate is 27.5% for companies turning over less than $10 million, and 30% for companies turning over more than $10 million.
In the United States, the system is more complicated. There is a progressive federal corporate taxation rate, meaning that companies are taxed at between 15% and 35% depending on their taxable income. Most states also impose their own taxation rate.
In Hong Kong, the taxation rate is 16.5% but only for income sourced within Hong Kong. This means that income declared by a Hong Kong company that was sourced outside of Hong Kong is not taxed.
HOW TO MINIMIZE TAXES WITH A HOLDING COMPANY IN CYPRUS
Cyprus has a similar corporate tax system to Hong Kong in that income sourced outside the country is not taxed.
Our speaker, Paul O’Mahony, has a holding company in Cyprus that owns his other companies in Ireland, the UK and Hong Kong. This means the holding company owns the profits and can let the money grow tax free.
The stipulation is that you must be a non-domiciled tax resident of Cyprus. The requirement is that you must be in Cyprus for 183 days, which is equal to six months, per calendar year.
To do more research on this topic, here is an informational brochure from Deloitte.
external resource: https://www2.deloitte.com/content/dam/Deloitte/cy/Documents/tax/CY_Tax_TaxIncentivesIndividualsRelocatingtoCyprus_Noexp.pdf
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