Offshore corporations explained

Offshore corporations under attack

Incorporation strategies for today

Alternative corporate tax havens

Offshore corporations in a changing offshore world. Alternative tax havens and offshore strategies. Offshore corporations in a changing offshore world. Alternative tax havens and offshore strategies.

United States

• Limited Liability Corporation (LLC)
• Not perceived as offshore company
• No US tax liability for non-residents

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with Michael Isaacson

It is of course the ultimate irony that the United States of America is one of the best tax havens in the world.

The United States, for instance, does not tax interest on bank deposits held by foreigners, nor surprisingly does it impose any reporting requirements with the exception of deposits held by Canadians. (This has been the subject of a three-year battle between lobbyists and the tax man on the Capitol Hill.)

The USA also provides us with an inexpensive corporate vehicle that is not only tax free -- it is a tax non-entity. It is the Limited Liability Corporation, or LLC for short.

A Limited Liability Corporation is a fusion of two distinct business entities: a limited corporation and a partnership. An LLC is similar to a standard corporation in that it provides the protection of limited liability to its owners. What sets the LLC apart from other corporate forms is how it is taxed.

Standard corporations are taxed separately from their owners at corporate tax rates. LLCs, on the other hand, are treated as partnerships (or sole proprietorships) for the purpose of taxation: income is not taxed at the business entity level at all. Instead, individual LLC members are expected to pay tax on whatever share of the LLC's profit is distributed to them.

As a consequence, foreign-owned and managed LLCs do not give rise to any US tax liability whatsoever.

American LLCs can be formed by persons of any nationality. One-person LLCs (sole director/owner) are possible.

LLCs are available all over the United States, but Delaware, Wyoming and Nevada are the three favoured states of non-Americans incorporating US LLCs. Delaware has perhaps the most flexible corporate regime of all the US states -- the state has made a business of incorporating companies since early in the 20th century.

Although an LLC must maintain a registered office in the state of incorporation, it can be managed and conduct business anywhere in the world. Of course, it is sensible for an LLC to refrain from doing business with companies or individuals inside the United States if it is to maintain the benefit of non-existent US tax liability.

An LLC can open a bank account anywhere in the world with relative ease; after all, its place of incorporation is the reputable United States and not some high-profile, "suspect" tax haven.


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