Tuesday, September 16, 2008

Where to establish your offshore property investment company

This is a follow up to yesterday's post in which I set out the 'myth' of investing in property overseas using an overseas company.

Recently I was asked in which overseas tax haven should someone base their company if, despite the views I shared yesterday, they were comfortable with the idea.

Here's how I replied:

1 - As I said in yesterday's post - I don't give tax advice any more.

2 - Tax avoidance (the legal approach ) as opposed to tax evasion (illegal) is not that straight forward. Anyone who indicates an immediate willingness to provide a definitive answer to that question does not have a full understanding of the tax issues. And that includes many so called experts based in those tax havens.

3 - The answer will depend upon a number of factors including:

- Short term and long term plans,
- likely levels of rental income,
- whether you will want to extract that income,
- the extent to which you will be borrowing money to fund the property investments,
- how any interest will be paid,
- how long you are prepared to tie up your money,
- where you are domiciled (nb: this is a VERY different concept to where you are resident),
- where you plan to live in the future,
- whether you have been or will be resident in the UK for more than 7 years,
- your family circumstances now and any likely changes into the future,
- the local laws of inheritance in each of the countries in which you will own property,
- the amount you are prepared to invest in overseas tax structures (which will depend on the sums you will have invested in property overseas),
- the countries in which you will be investing and the double tax treaties they have with the tax havens in question,
- the terms you are prepared to have (or already have) in your will,

NB: That list is off the top of my head and not intended to be comprehensive.

It can be very short sighted to invest without first seeking out a good independent overseas tax planning expert (such as one of the relevant members of the Tax Advice Network) and paying for advice on a complex subject like this.

The alternative is to act on partial advice or hearsay and take a chance. In my experience people who do this ALWAYS regret it later. Sometimes within a couple of years - but normally five to ten years later.

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