Offshore Company Formation Case Studies

Updated time: Sep 21, 2017 , 12:01 (UTC+08:00)

Case 1: Intermediate Group Holding Company

Telco Ltd., a company incorporated and managed in South Africa and engaged in telecommunication services, is going to invest in China. Its Chinese operations will be both manufacturing and providing services. Telco intends to penetrate the Chinese market for telecommunication and according to some market research carried out before, the operations will be highly profitable within a couple of years.

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Case 2: Intermediate Finance Company

An Israeli investor is investing in the Czech Republic. A substantial part of the investment will be financed with debt. As the Czech withholding tax on interest paid to Israel is 10%, he wonders whether this withholding tax can be avoided by structuring the loan through a third country. The Israeli investors wish to avoid paying this tax for internal reasons.

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Case 3: Licensing Company

Zoomcopter Ltd., a company established in Taiwan, has developed a new widget which is used as a spare part in the assembly of helicopters. By using this widget when producing the helicopters, the operational costs of the helicopters can be substantially reduced. Zoomcopter holds the worldwide patent on this invention and it wonders how the exploitation of the patent can be arranged in a tax-effective manner.

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Case 4: Personal Service Company

Albert Smith is currently working in Luxembourg as an independent IT consultant through a Luxembourg management company. Therefore, he is currently paying Luxembourg taxes (rates up to 38%). Mr. Smith is going to conclude a new service contract to work in Italy for a US-company. The US company has a European office in the UK. It is contract work and the US company is using Albert's services by sub-contracting him out to one of its clients in Italy. Mr. Smith wonders whether he can reduce his Italian income tax exposure (rates up to 45%), for example, by using an offshore company which is directly or indirectly controlled by him?

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Case 5: International Trading Companies (Scenario 1 & 2)

Yuri Ivanov lives in Russia. He is purchasing and selling shoes. He buys the shoes from Italy and sells them to department stores in France, Germany and Spain.

Mr. Ivanov wonders whether he can structure his business in a tax-effective manner, for example by using an offshore company.

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Case 6: Real Property Company

Ferenc Kiss, a Hungarian high net-worth individual living in Budapest, is investing substantial amounts of his wealth in real property, both in Hungary and in other Central and Eastern European countries. Mr. Kiss wonders how the return on his investment can be arranged for in a tax-effective manner. The same question arises in case he sells the property in these countries and he realises a gain.

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Case 7: Holding Company

Oscar Valdez, a Mexican high net-worth individual is planning to invest in new recreational and tourist facilities (spa resort, golf links, holiday cottages, restaurant, etc.) in Portugal. Mr. Valdez is interested in structuring his investment in such a manner that: A. the assets wholly or partly owned by him in Portugal are well protected against various business, economic or political risks; and B. the return of his investment after the commencement of the business operations is tax effective.

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