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Property Owning Companies

There are often great advantages in using an offshore property holding company for the purpose of holding an overseas property. Indeed, we offer low cost specialist structures, such as the “French-Property” Ownership Structure and the “Portuguese-Property” Ownership Structure, which we operate in conjunction with lawyers in France and our sister office in Portugal. Advantages of offshore property ownership include avoidance of inheritance tax, avoidance of capital gains tax, ease of sale which is achieved by transferring the shares in the company rather than transferring the property owned by the company and reduction of property purchase costs to the onward purchasers. Taking the example of investment in property in the United Kingdom by an offshore company, use of an appropriate offshore vehicle can offer relief from income tax, capital gains tax and inheritance tax. It should be remembered, in particular, that when a nonresident company disposes of a property investment, no capital gains tax is charged and holding through an offshore company, through at Foreign Tax-Free Trust, removes the application of inheritance tax which would apply if a non-domiciled investor held a UK property in his personal name.

Tax Planning Consequences

It is important to note that you cannot simply open up an offshore trading company and “pretend” to make money offshore. Any income through investment would have to be actually “sourced” outside of the United States (either through the IRS tax sourcing rules, or various tax treaties) to receive tax beneficial treatment. In addition you must make sure that your structure does not run afoul of the IRS Controlled Foreign Corporation Laws and that your structure is not deemed to be a Foreign Personal Holding Company.

 

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