Every once in awhile we get the request about investing offshore. It's a complicated matter and I know there is a number of considerations.
First, you wish to change your residence , this link will give you some perspective of what might be required, investment in a property or business
For business's wishing to get their income taxed at lower rates, you will need to do some strategic planning if you are desiring to have a legal tax saving structure. Will add some tips on this as we develop this resource. Some firms specialize in this and will search these out. At first glance, you will need to have a significant taxable income to make this a practical course of action, fees and complexity will screen out many and most people will not be in such a place to utilize such structures. Implementing this stuff is typically kept pretty secretive as CRA is always on the hunt for people doing it wrong. Reflecting on the last one we got help with, the fees started at $7500 for the idea of the plan and then there would be the implementation costs. The whole process was under a shadow of secrecy. That was a few years ago, but I suspect the principals remain the same. You would want a very strong desire to go through the hoops to save tax.
Dealing with your RSP's should you leave Canada
"If you retire abroad, RRIF withdrawals and annuity income are subject to Canadian withholding tax. That tax rate depends on your country of residence in retirement and the withholding tax rate is generally 15-25% depending on the tax treaty (or lack thereof) between Canada and the country you live in at that time.
Lump-sum RRSP withdrawals are generally subject to 25% tax.
Most countries have a foreign tax credit mechanism whereby your Canadian tax withheld at source is credited against your foreign tax payable on the income in your country of residence. This prevents double taxation."
Off Shore Investment Warning
Because of the shroud of secrecy that is common practice and the complexity of the structures, there is high risk of scamming. One would have to be super diligent in the matter. We don't endorse this, but write about it as a way to help understand it better and hopefully protect one from it.
These sites have a number of contacts and articles on the topic
Some of the history of these tax havens is interesting , take Liechtenstein as an example https://en.wikipedia.org/wiki/Liechtenstein
Liechtenstein is situated in the Upper Rhine valley of the European Alps and is bordered to the east by Austria and to the south and west by Switzerland. The entire western border of Liechtenstein is formed by the Rhine. Measured south to north the country is about 24 km (15 mi) long. Its highest point, the Grauspitz, is 2,599 m (8,527 ft).
Belize , one hears lots about Belize, here is an example of one company that provides the services, similar to incorporating in Canada, but the ongoing maintenance fees are substantial in my humble opinion. If you have any substantial assets one would have to weigh the tax benefits against the fees to maintain.
|FIRST YEAR - from date incorporated to 31st of December|
IBC Incorporation Fee ( Inclusive of Government Fees)
Registered Agent / Office Fee
|SECOND & SUBSEQUENT YEARS - from January 1st following the year of incorporation|
|Annual Renewal Fee (Inclusive of Government Fees)
(A) IBC's with Standard Authorized Capital of USD$50,000 or Less
(B) IBC's with Authorized Capital over USD$50,000
(C) IBC's having shares with no par value (and Authorized Capital of USD50,000 or less)
|OTHER SERVICES (optional)|
Power of Attorney
Some insight as to why Belize might be useful
( I keep reminding everyone, that I am not endorsing any of this, pure information purposes only)
Why Offshore Would Be Considered
1. Tax Minimization
- A Belize Offshore Company is not subject to any taxes in Belize regardless of where its income is earned.
2. Asset Protection
- A Belize IBC can provide insulation against frivolous lawsuits separating ownership from personal individual liability.
4. Special Features
- No information pertaining to the identity of directors &/or shareholders need be filed on public record. An Offshore Company’s Register of Shareholders is available for inspection only by shareholders or by order of the Belize Courts at the request of any shareholder.
- No public filing requirements except Memorandum & Articles of Association.
- No need for annual returns or audited accounts thereby saving fees.
- Bearer shares may be issued.
5. Great Flexibilities & Easy Maintenance
- An offshore company can hold and maintain accounts with banks in Belize or anywhere else in the world.
- An offshore company can hold shares in other offshore company and act as a director as well.
- An Belize Offshore Company can be used for numerous purposes such as:
- Maintaining offshore bank accounts
- General commercial trading
- Financial management
- Holding investment securities offshore
- Leasing of assets
- Corporate trustee
- Share ownership in other companies
- Ownership of intellectual property
- Real estate ownership
- Transfer pricing
- Ship ownership
- No exchange control restrictions.
- Efficient and simple incorporation for fast reaction to instant planning needs.
- Minimal capital requirement.
- A offshore company may have only one director and one shareholder. Corporate director(s) are allowed. Directors need not be resident in Belize.
- No requirements for a local director or secretary.
- No requirements for an annual general meeting.
- Meetings of directors &/or shareholders may be held in any country, at any time. Directors &/or shareholders may attend meeting by their proxy.
Pro & Cons Article
Advisor.ca is a good publication that I have some confidence in
This is the first installment, I will add more as I continue research on this topic, please add your comments that can help us better understand the challenges and advantages , it's not all about taxes