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Holding Investments offshore is a very efficient way to hold personal investments.


The personal wealth of an individual will typically consist of such assets as bank deposits, a share portfolio, life insurance policies, an art collection, real estate, business, bullion gold etc.


All these investments can be held through an offshore company just as easily as in a personal name. Arranging an offshore company incorporation to hold personal investments can lead to a number of advantages.

Keeping track of numerous investments, which may be held in various accounts and locations, can result in a substantial administrative burden for an individual. Through an offshore company incorporation, however, the individual only holds shares in the holding company and the company holds all the investments. The company will prepare accounts every year, thus allowing a consolidated review of the performance of the various investments

An offshore company incorporation can also be a useful tool in succession planning. Consider a situation where a share portfolio is held personally by the father of a family, who stands to be inherited by his children. Upon his death, the portfolio will usually be liquidated and the proceeds divided among his children, in accordance with his will. But it may be the case that the time when the father passes away is not the ideal time to sell the shares, as the stock market is depressed. This will lead to a substantially lower realisation of the portfolio than would otherwise be achievable.


This problem can be avoided with an offshore company incorporation. By holding the portfolio through an investment holding company, the children would inherit the father’s shares in the company and the share portfolio could then be maintained until the stock market rises to a more appealing level before the portfolio is sold. This flexibility to optimise the timing for the sale of investments would also apply to other assets held by the company, such as an art collection or perhaps real estate property.


An offshore company incorporation can also result in substantial tax advantages, especially if the company is incorporated in a jurisdiction where no corporate tax exists. For example, let us suppose some shares within the share portfolio are sold, resulting in a profit. If the shares are held personally, this profit will be considered as income of the individual and probably be taxed. But if the shares are held by the company, then this profit belongs to the company and if the company is not subject to any tax, then no tax will be payable.


It will only be at the point when the company distributes its own profit to its shareholders that the shareholders will have personal income. It may be possible, therefore, to postpone tax obligations for several years by accumulating income within the company, reinvesting it to produce even more income and delaying the payment of dividends until a suitable time in the future.


There is also the possibility of distributing profits in those financial years when the shareholders have relatively low income from other sources and avoiding the payment of dividends in years when they have high income. This allows the shareholders to avoid paying excessive tax in the good years.


An offshore company incorporation in which the company’s shares are held by a trust can also be a very powerful asset protection arrangement.

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