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No one likes to pay income taxes. Many people rationalize that their government misspends their tax funds or are corrupt or that taxes should only be paid by the very rich. International tax planning involves strategies to reduce or outright eliminate the payment of income taxes and other taxes. International tax planning doesn’t mean illegal tax evasion. There is a big difference between tax evasion and legal tax avoidance. Evasion means lying, hiding, fraud, perjury, and other illegal ways to hide income which is a crime in most countries. Legal tax avoidance is using international tax planning methods to legally avoid paying taxes. International tax planning usually includes the use of offshore corporations to be created in countries who do not tax their corporations doing business outside of the country. All of the earned income and passive income (like bank account interest) are tax free. Products or services being sold by these corporations to other countries makes them “offshore” corporation in regards to generating income. Offshore corporations also get their name because they exist away from the client’s home country. Private foundations can also be used with international tax planning because the few countries having laws creating them allow them to own the shares of all of the offshore corporations and act as an estate planning vehicle. Private foundations are perpetual meaning they can exist forever. A good international tax planning strategy sets up a private foundation to own all of the assets and allows immediate control once the founding client is disabled or passes away. Each beneficiary can have his or her heirs take their place when they are disabled or are deceased. This will go on for generations. So, international tax planning also involves estate planning. Besides eliminating income taxes and providing estate planning, international tax planning can also involve asset protection. The client’s assets are protected because they will be owned by the offshore corporations which are owned by the private foundation. The client basically owns nothing under this aggressive international tax planning system. Asset protection protects assets from the troubles in which the individual client can get into in the future. If all of the assets are owned by legal entities then the client is merely borrowing or renting them. If the client gets sued for malpractice, negligence, or a fatal accident none of the assets will be subject to a court ordered seizure unless a specific asset was used during the negligent act such as a vehicle causing a fatal accident. In that case, the offshore corporation owning the vehicle can be sued along with the client if he drove the vehicle. However, all of the other assets owned by different offshore corporations not involved with the accident will be free from the court’s judgment against the client and the offshore corporation owning the vehicle. Asset protection is a side benefit of aggressive international tax planning. In conclusion, international tax planning can eliminate taxes; provide global estate planning, and asset protection. For free information about Asset Protection and International Tax Planning visit this Panama law firm's website: http://www.panama-offshore-services.com/ © COPYRIGHT 2013 Steven Rich, MBA
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