The Law Office of Hale Stewart

International Taxation

International Taxation Attorney in Houston

While the only limit to the use of offshore jurisdictions is the practitioner's imagination, there are several "traditional" ways companies have used these low-tax countries.

Self-insurance: Companies that have higher insurance costs have often set-up their own insurance company offshore. In essence, the company winds-up paying themselves for insurance coverage with the advantage of having control over the insurance funds after paying the premiums.

Treasury operations: Placing all a company's treasury operations in an offshore jurisdiction allows the company to utilize the low tax rates of these jurisdictions to the company's advantage. This allows companies to use increase their overall return on invested funds.

High cost operations placed in an offshore jurisdiction: Many larger companies now place their high-cost operations in an offshore jurisdiction. This allows the US company to have a high tax deduction for the service and it transfers the revenue to a low tax jurisdiction.

While extremely beneficial from an operations perspective, all of the above operations require detailed and complicated planning. But, if you could take money and put it into a no tax jurisdiction, would you? Call my firm at 832-330-4101 to schedule your complimentary half-hour consultation.

The OECD and international taxation

Starting in the late 1990s, the OECD (Organisation for Economic Co-operation and Development) engaged in a very serious campaign to limit the impact and availability of offshore jurisdictions. The OECD reframed the debate claiming these jurisdictions engaged in "unfair tax competition." The reason is large industrialized countries were seeing their tax base move offshore and they needed to do something to stop it.

Then tragedy struck. With the terrorist attacks of 9/11 the OECD countries now had a very strong argument to use against these tax havens. Bank secrecy laws aided terrorists. Therefore, the veil of bank secrecy had to be lifted to prevent these jurisdictions from attracting illegal funds. This argument worked. Offshore jurisdictions are now signing "mutual assistance treaties". These essentially prevent an individual or company from hiding money offshore to evade taxation. While the ground rules of each jurisdiction vary, the bottom line is clear: the age of banking secrecy is over.

That does not mean there are not legitimate ways to use these jurisdictions to your advantage. In fact, there are plenty of ways to do so. For example, one jurisdiction has an asset protection trust which is immune to judgment. This is a great and legitimate way to protect your assets. Other jurisdictions have low or non-existent corporate taxes. Many companies set-up offshore branches to take advantage of this tax arbitrage.

The Law Office of Hale Stewart can discuss with you the various methods for using multi-jurisdictional taxes to your advantage. I may advise you, as a high net worth individual, to create a non-revocable trust off shore. Your income will not be distributed until after your death. It is also a great way to mitigate tax liability while keeping all funds available to your family after your death.

There are myriad numbers of other ways to use these jurisdictions to your advantage. Call The Law Offices of Hale Stewart at 832-330-4101 to discuss these advantages with a lawyer and find out more about international taxation.

The Law Office of Hale Stewart is located in Houston, Texas and represents clients throughout the Gulf Coast and Bay Area, in cities such as Houston, Beaumont, Bellaire, Clear Lake, Conroe, Cypress, Cypress Fairbanks, Humble, Kingwood, Memorial, Montrose, River Oaks, Sugarland, The Heights, The Woodlands, West University and throughout Harris County, Fort Bend County, Galveston County, Liberty County and Montgomery County.