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Nowadays, for success in any field it is not enough just to be a professional and to carry out your work efficiently. Lawyers need to be able to demonstrate their…

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Stop judicial investigation of the requirements of the Code of Criminal Procedure
According to paragraph. 3 h. 1 Article 280 of the Code of Criminal Procedure of Ukraine, pre-trial investigation may be stopped after informing the person of suspicion if there is…

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Risks of assessing civil contracts as labor relations
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Offshore companies as an asset protection tool have not disappeared

What is important for the owner of any asset? The optimal taxation of such an asset over the time it has been held and partly the desire to keep its name from the general public. Offshore companies inherently have such functions – with their help tax optimization and asset protection are achieved. An offshore is also commonly associated with maintaining the anonymity of the ultimate beneficiary.

Since December 2012, EU officials at various levels, heads of financial departments of individual European states have announced an intensification of the fight against offshore companies, in particular in the Eurozone. Under pressure from the EU, they expressed their readiness to revise the national rules for the provision of information about the owners of bank accounts in countries such as Austria, Luxembourg and even Switzerland. In particular, for almost half a year Switzerland has had a law on the provision of information on accounts of foreign taxpayers. Already in May, it became known that the G5 countries (Great Britain, France, Italy, Spain, Germany) will have access to information about account holders, balances and financial transactions in banks of offshore companies such as Fr. Jersey, about Maine, Bermuda and Cayman Islands.

In our opinion, the assertion about the impossibility of using offshore companies to protect assets and optimize taxation in the future is erroneous. Of course, where previously it was possible to secure capital when creating a legal entity, for example, through reorganization in the form of annexation or through direct use of one offshore company, today you need two, three, or even a whole chain of companies. But offshore companies, as an asset protection tool, have not disappeared, except for the slightly increased administrative costs of this tool.

Of the significant innovations that the EU is developing today in the context of the global recession, it is worth paying attention to those that will allow us to fight one of the main functions of asset protection – optimal taxation. In particular, in the near future, laws may appear in the laws of EU countries according to which fiscal authorities have the right to bypass chains of artificially created corporate structures or contractual chains, if there is reason to believe that their main and obvious goal is to save on taxes. In practice, this threatens that fiscal authorities at a level with the current powers of the courts alone will be able to assess the economic nature of any relationship for tax purposes.

In our opinion, this is a magistrally wrong vector of state-company relations. Each company has the right to study, analyze and use all legal ways to reduce costs (in particular tax), protect assets. This is the company’s responsibility to the owners. Therefore, the use of other jurisdictions to protect assets cannot be a basis for allegations of tax evasion. One thing is clear for sure: any radical changes regarding the possibility of using certain offshore jurisdictions are preceded by an active PR company of the authors of these changes. This time is enough to navigate the situation and, if necessary, carry out asset restructuring in favorable jurisdictions.

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