A Few Techniques The Rich And The Famous Do In Avoiding Taxes
You've possibly read in the newspapers of various celebrities and successful business who manage to avoid or at least substantially minimize their UK taxes whilst a significant proportion of common people are paying nearly 50% of their income in tax. Well, there's nothing to stop you using a few of these techniques to slash your UK taxes also, depending in your circumstances.
Here's some of the techniques that the Rich & famous use:
Take full advantage of your offshore status People like Mohammad al Fayed make tremendous use of their non UK domiciled status. If you are an international national and were born overseas (typically your father will have been a non UK domiciliary at the date of one's birth) you can avoid paying any tax on your overseas income and investment gains. The main condition to that is you must keep the income or proceeds outside the UNITED KINGDOM. As you can expect though you'll find ways about this to enable a few of the proceeds and income to be brought in to the UK without any taxes.
Take full advantage of your spouses offshore status. If you are lucky to have a spouse that is either non UK resident or non UK domiciled you can use their offshore status to your advantage. And this Philip Green did (the billionaire owner of BHS). His wife is a resident of Monaco and he ascertained that she extracted returns from her UK companies without any UK (and overseas) taxes. This saved him paying UK taxes of around 200Million which he could have otherwise had to pay if he'd extracted the returns.
Using a tax efficient holding company. Famous bands just like U2 as well as the Rolling stones utilize some of the best offshore tax companies in order to avoid paying tax on high of their income. U2 for example used to fall from the Irish tax regime that had a longstanding tax exemption for artists. When this loophole was tightened up, they changed their holding company to the Netherlands to take benefit from tax free royalties. There are lots of other countries that could also provide tax efficient holding companies like Spain, Denmark and Cyprus.
Using tax efficient trading businesses. Multinationals like Coca Cola make good use of a chain of offshore companies so they could redistribute profits in the group to lessen the total 'effective' rate of corporation tax. (It is actually reducing this particular effective rate that is the main focus of countless in property tax lawyers lives! )
Actually transfer overseas Celebrities such as James Frank, Michael Schumacher and Boris Becker have all changed offshore to be sure they have only limited UK tax obligations. They've based themselves in Switzerland and are local residents. The beauty of Switzerland is the 'fiscal deal' which allows the tax liability to be fixed with an artificially lower amount.
So there you have it: some ideas to get you thinking about how you can use the offshore tax planning techniques of the rich and famous.
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