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Home > Offshore Services > Offshore Company Formation > Company Formation Benefits > Investment in Property & Land
Using Offshore companies to invest in property or landBuying real estate in another country, whether a property to use as a holiday home, as a buy to let investment or for other commercial purposes, is inevitably a complex matter. Property law varies dramatically from country to country and both land and buildings attract many different forms of taxation. Some of the forms of tax, which will be encountered:
Taxes imposed on property are not as easily avoided as those charged in respect of investments such as shares or cash. Many Governments have also hit on the notion of charging owners a tax on non-existent revenue, for example as a benefit in kind where no actual rent is paid. In addition to taxation, the investor must bear in mind that, on death, it is the local law which determines who will inherit the property. An investor from a common law country, for example, may be surprised to learn that his right to bequeath his property freely, as he sees fit, is severely restricted by the civil law code in continental Europe and by the Sharia law of Moslem countries. For reasons such as these investors have long purchased their properties through offshore companies. An offshore company cannot avoid taxes, which are imposed directly on the land or buildings, but it can help in mitigating exposure to capital gains taxes and taxes payable on death. The company can have an offshore banking account which will earn interest free of tax on accumulated rents and realised profits. As the investor owns shares in the company, rather than the property itself, it also ensures that he can be sure that his chosen beneficiary actually inherits. Some governments impose discriminatory taxes against companies incorporated in low tax financial centres and it is important to take advice before forming a company to acquire property. For more detailed information on specific subjects please click on the links below:
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