If there is one common element amongst successful businessman is that of having a thoroughly fact-based business plan that is able to find the best paths towards wealth within the greatest financial environments out there.
Nowadays, any successful business plan must also account for the tax-related conditions of the places in which they operate, understanding there are plenty of opportunities out there to minimize such a spending.
That’s why thousands of businessmenand overall successful professionals entangled with the investment world are each and every year, more and more, going after these types of opportunities. The most compelling reason to do is? It is a perfectly legal business practice.
Such a mentality to maximize profits is only achievable under a goal-oriented way of living. Most people will prefer to spend their time looking for appealing offers at their nearest pizza places instead of deploying some extra energy into ways to avoid tax enforcement.
In other cases, maybe the reason for not researching a bit more about tax decrease opportunities is that of assuming that cost as a sunk one. It even might be that moving your business to another country, for example, it’s against the company’s nature.
The upside is that tax-related legislature is undergoing worldwide changes that more than often benefit those who seek for a smaller burden to carry. And in an era where the digital world allows for unquantifiable operational tools, “Living wherever I’d desire” is a thought that has never experienced a truest sense to it than now.
Let’s jump in on how this can be done:
HOW TO DRAW A LEGAL TAX-FREE BUSINESS PLAN
FINDING THE GREATEST TAX RATE FOR YOUR BUSINESS
Perhaps transferring your company to another country with a healthier tax system appears as an impossible mission. But rest assured there are many ways in which you’ll be able to do it and, if done right, even potentially pay nothing on tax-related costs.
FINDING THE GREATEST TAX RATE FOR YOU
The key here is understanding how one’s core must be fiscally addressed within a friendly tax regime. For that to be accomplished, you must first revise all the possibilities regarding offshore entities and its inner functionalities.
FINDING A GREAT BUSINESS CONSULTANT
If you want to increase the probability for success of your upcoming business plan focused on lowering tax-related costs, the first thing to do is to find a proper tax advisor. He will be able to guide you through the tides of international legislation and help you when picking the best option considering your situation.
OUT THERE, YOUR BUSINESS ALSO HAS VALUE
Most governments rely on the conventional knowledge of people for them to keep attached to a particular tax regime, overseeing the immense opportunities waiting outside its borders.
However, as we said before, thanks to the digital world there are countless ways to produce income regardless of your location in a given time. Common knowledge should be pivoted the other way around and be: “Wait a minute! If my business is valuable, how come other countries aren’t offering me a pathway into their economic system?”
And boy, oh boy, such a statement is absolutely true.
There are plenty countries out there eager to welcome you and provide you with an amazing business environment that surpasses each and every expectation you might currently hold.
But how are they able to attract foreign businessman, investors and entrepreneurs? How do they convince thousands of people to leave their homes and move?
Those questions have a pretty straightforward answer: through a myriad of tax benefits, a business environment with little to no regulatory burdens, and efficient institutions more than ready to offer capital holders with a strong system in which they can participate.
Once you’ve let that possibility enter your head, it’s time to look for the greatest countries out there currently offering these great benefits.
Luckily enough for you, that’s exactly what we enjoy the most at Centurion Capital: helping successful businessman, regardless of their current location or nationality, to overcome tax burden and construct a pathway towards real financial independence.
FINDING THE BEST TAX REGIMES
There is a high chance that if you are living in an awful tax regime, its consequences are pretty much up to you. You are deciding to remain put and pay X government with a high share of your hard-earned income. The upside is: you are in the right path to change that reality.
They’ve probably told you, or make you think, that your business, regardless of its nature, would be nothing without them. That you can’t leave home, that such a decision is both highly complex and antipatriotic, that this (your current law system and the consequences attached to it) is all you’ll ever get.
Fortunately enough, there is nothing furthest from reality. When planning properly, there are great chances of you eventually paying as little as 0% on income tax. Can you imagine the endless opportunities such a saving would mean in your life?
WHICH BUSINESS PLAN WILL FAIL AT REDUCING MY TAXES
A crucial disclosure must be made now: picking the greatest tax rates out there and fooling governmental authorities are two completely different ballparks. One is a perfectly legal method to pay less taxes, the other is an illegal way to skip with agreed fiscal responsibilities.
In that sense, one thing that you always have to keep in mind is that for your upcoming business plan to be successful it must be yours, and only yours. That means that looking into the tax strategies of large corporations won’t help at all. For starter, that is because probably you are not the owner of Google; but also because that would entice a greater legal effort. A much greater one.
Another action that many people confuse with that of getting tax benefits is opening an offshore bank account. Common knowledge would lead you to believe that only this is needed to skip taxes. However, that’s a misconception.
Sure, having one of these accounts can certainly help you safeguarding your money while allowing you to hold foreign currency in a different country and even, who knows, gaining access to greater interest rates. Nonetheless, it won’t add to your goal of decreasing tax burdens to a minimum.
That is because having your capital safe in a tax-friendly legislature has nothing to do with how you are currently being taxed by fiscal authorities. In other words, your home remains your home, and your law framework remains your law framework.
THERE ARE LEGAL WAYS TO OVERCOME TAX BURDENS
The only way towards a real financial independence is directly linked with legal honesty. If you’ve read any piece published at Centurion Capital, you know that are way of working is that of following thoroughly the legal conditions of our clients’ countries. We will never cut corners to get you, us, or anyone, a financial benefit.
That being said, it is of outmost importance that you realize how critical is to thoroughly understand the legal situation you are about to introduce yourself when seeking friendlier tax regimes.
For your new plan to succeed, you must take into account the difference between personal tax and business tax, and how each of them directly affects the other. In other words, you must bear in mind that one thing is where you home is and another thing is where your company currently making revenue.
SAY GOODBYE TO PERSONAL TAX BURDEN
If the first thing that comes into your mind when thinking about tax decreases is moving your company to Dubai (known for having great tax benefits) while you still live in Germany, let us tell you that this is not how any of these things work.
Even more, doing such a thing will only leave you with plenty of useless paperwork. For example, US Citizens will have their businesses registered as Controlled Foreign Corporations. This means that these businesses will have to comply with CFC Rules that will enforce those earnings to be cut as they “qualify” to be named part of the US trades and economic system.
Other high-tax countries like Italy, France, the UK, Australia or Canada have similar legislative burdens on their citizens, and their companies as well. This ultimately means that the only way to say goodbye to those taxes is moving out of the country.
You’ll still be able to go back, visit friends and family and go to your local sports team games anytime you want. It only means you have to prove to authorities that you’ve left the country for then be removed from its tax system. In some cases, you’ll be able to spend as much as 182 days a year in your former home.
LEAVING THE BUSINESS TAX BURDEN BEHIND
Now that we’ve gone through the main elements concerning personal tax, let’s jump in to a more complex issue: business tax. And one thing you must not forget: it all will depend on your fiscal residency.
Let’s say you are the owner of a US-based company but aren’t a tax resident of the country. In that case, when redoing your tax strategy, you could transfer your business to another country and that would be it! However, if you are indeed a tax resident in the US, when moving the company you’ll have to redo the registration as to comply with its tax legislation.
There are several conditions you must consider when making this decision:
Is your company single-handedly being managed by you/a couple of people?
Does your business allowfor your departure?
If both answers are yes, then it’s all done for you to welcome a friendlier tax regime.
However, if your business entirely depends on daily and local operations within a particular country that happens to enforce high taxes, then another approach should be considered. A financial advisor would probably tell you that, if the company is doing well, then paying taxes might be the smartest thing.
FINDING GREAT TAX REGIMES
Two different kinds of opportunities lie in front of us: zero-tax or low-tax ones and tax-residency benefits.
For zero-to-low tax regimes, you should bear in mind that it isn’t always as easy as it sounds. You are going to have to transfer your company, along with its assets, to a friendly tax regime while spending the minimum amount of time possible in your former nation.
Also, the lowest taxes aren’t always offered by the greatest countries. That’s why picking Belize, Cayman Islands, or the Seychelles could seem as a right call right before actually understanding their living conditions.
No surprise, therefore, that most Centurion Capital clients often pick countries such as Singapore, Hong Kong, Thailand, Switzerland, or Georgia, which offer great lifestyles along with friendly tax regimes.
You could also go with a country that welcomes wealthy individuals like Italy. There, you’ll be offered with a HNWI flat tax of no more than 100,000 euros to be payed annually, no bureaucracy attached. Want to know is this actually works? Ask Cristiano Ronaldo, who left Real Madrid for Juventus Turin in the seek of Italy’s magnificent HNWI tax legislation.
In any case, having an actual tax residency is going to be necessary. To ease such a process, you should play it as straightforward as possible. Spend at least 3 months in the same location, rent or purchase real estate, get a residence or work permit and even a driver’s license. All of that will add to your case.
This process can alsobe strengthened through the consolidation of local offices with actual employees working there, as you’ll be giving authorities no reason to believe you are fooling them.
If you consider yourself to be a visionary, you probably want to find out more about the endless possibilities being mentioned in these lines. You have to remember that most countries out there are doing it all to make their systems attractive for businesses either by tax exemptions or other financial benefits.
If your desire is to acquire as much information as possible about residency permits, second citizenship, setting up offshore companies or opening up offshore bank accounts, don’t hesitate to contact our team at Centurion Capital. Our team will aid you at decreasing as much as possible all the tax burden you are currently carrying. And don’t take such a task for granted, as tax law is not precisely an easy ocean to surf. Remember, your path towards financial independence is right around the corner!
Warning: The content of this article does not constitute legal or tax advice. It is provided for general informational purposes only and not for the purpose of offering any warranty or guarantee. As laws change frequently, personalized professional advice is absolutely necessary.
Article written by: Fabrice Barra is a cosmopolitan entrepreneur, lawyer, fiduciary and author, one of the world’s leading experts on offshore strategies, corporate haven, international investments and global mindset lifestyles. He is the personal trusted advisor of well-known entrepreneurs, UHNWI, Forbes Global 2000 companies, professional sportsmen, aristocrats, celebrities, investors, people with a net wealth of 7- to 8- or more figures, and he has access to a network of influential people around the world.