Offshore companies for Portfolio Investment

An investor in shares and bonds will generally have a portfolio, which is diversified by industry, currency and country and as such will hold assets in a number of locations around the world. Each of these countries may impose a variety of taxes such as witholding tax, income tax, capital gains tax and estate or inheritance tax.

Maintaining the records necessary to monitor the portfolio and from which to prepare tax returns may be a complex and time-consuming exercise. Much of this work can be undertaken by holding the portfolio with a nominee such as a bank or broker but there is another problem, which is often overlooked.

If the investor should die holding investments in his personal name there may be protracted and expensive processes before the executor can deal with the assets. Even where a bank or broker is involved as an intermediary it will insist on observing the formalities in the country of the branch concerned and such institutions have been known to require that, in addition, foreign taxes are paid.

Fortunately there is an easy solution. If the assets are held by a suitable offshore company, which is professionally managed offshore, the problems of unnecessary tax and of record keeping are both overcome. All that is necessary is to structure the shareholding in the offshore company, by placing it in trust for example, as this will also enable it to pass to a chosen beneficiary in due course, without further formality.

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