Protecting wealth through the creation of a family trusts, and, if you can, Offshore Trusts for family-owned company investments, has never been in question – until now. An EU ‘Tax haven-hunt’ and to SA tax legislation on foreign-derived income has not undone the benefits of offshore companies and trusts. But is it time to rethink the way we go about structuring offshore company structures?
Offshore companies in the right places made it possible to reduce property / asset taxation or avoid it altogether. There were a multitude of jurisdictions that invited offshore investments from around the world with next to no taxation and benefits for family wealth to be parked offshore in a static trust ‘company’ were glaring.
EU Regulations on offshore ‘tax havens’ hitting SA owners of offshore companies:
The European Union has threatened economic blacklisting of so called ‘tax havens’ due to a lack of what is termed ‘economic substance requirements’. In simple terms, you could invest your money in a company incorporated in one of these countries, and not do anything with it in that country, operating or investing elsewhere instead.
As a result of the EU threat, these ‘jurisdictions’ (e.g. Isle of Man) may soon tax your nest egg and/or require that your ‘company’ operate in other ways within its borders. Bottom line = TAX.
South Africa Tax Regulations – impact on offshore company income structures:
Although SA still has agreements in place to avoid double taxation on capital gains, new tax legislation on foreign-derived income will affect offshore company profits being directed to beneficiaries in South Africa.
The question now is how to get around the new tax legislation to protect your family wealth? The answer to that question is re-structuring your offshore company to take the new tax thresholds into account and leverage existing double taxation agreements. Now, in 2019, with the assistance of experienced and ethical advisors and wealth managers.
Reduce asset taxation by finding the right place for your offshore company structure.
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