Use of Offshore Corporations to hold bank deposits and U.S. real Estate

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There one main reason to hold United States bank deposits and U.S. real estate investments in foreign corporations: estate planning. Once use of a foreign company to hold deposits or real estate is determined; the British Virgin Islands appears to offer the best of cost, stability and efficiency.

 

A.    Estate Planning

Accounts and real estate which are held in one person’s name are subject to United Stated probate in the event of the owner’s death. This can result in lengthy delays in distribution to heirs, considerable expenses and often the requirement for foreign legal documents and court orders. Corporations do not die and trust agreements for the shares, or bearer share certificates, will provide continuity in the event of the owner’s demise.

 

B.   Choice of Jurisdiction

Formation of a United States company to hold deposits would result in taxation in the United States since such corporations are United States citizens. Foreign corporations enjoy the same tax benefits as foreign individuals – no taxation of bank interest and no estate taxes. Although a corporation formed in almost any country outside the United States can provide the above benefits, in our experience that the British Virgin Islands (BVI) offers more benefits than most jurisdictions.

 

The British Virgin Islands are constitutionally autonomous of the United Kingdom but are governed by England as to external affairs, defense, internal security, civil services and court administration. This results in stability and similarity to the American legal system and makes it easy for bank officers and other Americans to understand and work with such companies. Some of the benefits of the BVI corporations are:

  1. There are no taxes on earnings outside of the BVI.
  2. There are no minimum capital requirements.
  3. Only one shareholder and one director are required.
  4. No public record is kept on the identity of shareholders or directors.
  5. New corporations may be formed in two to three days, existing “shelf” corporation can be delivered in hours.
  6. There is no requirement for an annual accounting or filing of tax returns with local governmental authorities.