Operating offshore with crypto-currency? The alternative that is already here!
September 22, 2017
Nowadays, it is no news that many developed countries are trying to fill up the gaps in national budget by levying heavier taxes on businesses and individuals. This has led to the constant and effective development and modernization of the offshore industry. Many are familiar with the traditional company incorporation in various jurisdictions. It helps to protect the assets and minimize the tax expenses. However, crypto-currency is dramatically growing as an alternative mechanism of offshore tax optimization.
The offshore banks and jurisdictions have long been under the control and monitoring of the international authorities because of the fear of their possible use as tools for tax evasion. Crypto-currency definitely has a huge advantage here, as there is little to no transnational legislation that puts its finger on the inventions’ use. The world of crypto-currency is an area without specifically determined borders and concrete approach of institutions, and has not yet been completely understood and studied. Therefore, those who will decide to become the first to use it to help their businesses might get the maximal benefit.
There are numerous alternative choices in the space of crypto-currency, such as Etherium, Ripple XRP, Litecoin, and so on. Their amount equals to tens and hundreds. At the same time, not all of them are a stable and reliable investment source.The title of most popular crypto-currency with no doubt goes to Bitcoin, as it has found widespread use among people all over the world. Our team wants to focus on introducing and deepening your knowledge about it and explain the advantages and downfalls of its use for tax optimization.
Primarily, it is necessary to note that Bitcoin may be perceived as electronic cash. You receive a wallet and are able to spend the earned Bitcoins in online stores and services. It is also important that there is no centralized office or computer that would control and regulate it. Bitcoin is considered the most independent currency existent, as it follows no Central Bank’s or governmental orders, it is difficult to trace, and the profiles of users are nearly impossible to hack. The currency cannot be printed on regular banknotes, is stored on the electronic wallet, and has to be mined or earned in order to multiply. Its amount is limited – 21 million Bitcoins; and they can only be created in the existing framework of rules. Nowadays, 11 million Bitcoins are at use worldwide. Meanwhile, the specific system implies that the currency cannot be subject to any modifications, as this would require a simultaneous change of the initial program’s code on millions of computers. Another highly important factor is the anonymity of the currency. Although, many state that this is not exactly true. Indeed, each transaction conducted with the currency is recorded, but the names of those who are carrying it out – no. Therefore, the information about the transaction is available, but the confidentiality of the buyer and the seller is preserved. It works in the same way as if you would send an email each time from a new mailbox. No tax authorities will be able to investigate such operations or get information on your electronic wallet. Moreover, you will not have to pay for the Bitcoin transfer, and will be able to send funds to partners, family and friends without paying expenses on commission. As a bonus, you are able to gain profits on Bitcoin’s growth rate: in the last few years crypto-currencies have been and keep on significantly increasing in price. The option of manipulating the currency’s rate by any of the users is, however, completely eliminated.
What is most fascinating is that, unlike all the other forms of currency, Bitcoin allows you to trade on the global market with no limitations. For example, a transaction between you and your business partner in Jamaica will not go through any bank and or other third-party. It will instead go directly to the other person, no matter what the geographic location is. The only means necessary for the operation are computer or smartphone with an Internet connection.
Nevertheless, we find it our duty to provide information on the drawbacks of crypto-currency. Despite all the advantages, an offshore account or business entity are the well-known and widely-used mechanisms, while the global use of Bitcoin is still a distant reality. Also, the offshore banking is considered more secure due to the risk minimization of personal data theft in the cyber-space or disclosure to the authorities. Meanwhile, it is quite challenging to find an expert consultant who will be familiar with the nuances concerning crypto-currency operations, while there are many firms that specialize on offshore jurisdictions. Lastly, there is still a fear that use of crypto-currency will be banned and outlawed in certain states or groups of states (such as EU).
There are many ways for tax optimization and successful funds investment nowadays. It is up to you to choose an offshore bank account, investment in precious metals, crypto-currency, or another option. Regardless of your decision, we are always here to professionally consult you and discuss the issues you are concerned about. Do not hesitate to contact us in case any further questions appear!