Offshore Tax Planning for Project Financing

19 Jan

Offshore Tax Planning for Project Financing

Historic structures: transfer pricing, diverted profit tax, carried interest no longer function for offshore tax planning.

Investment vehicles require a look at what the future is to be.
Governments and governance look through everything. Everything is considered a tax avoidance scheme except that which is formally recognized and registered as not.
Excluded does not mean to include it just in case.

Practical application examples of asking the right question:

1) Direct investment in Real Estate projects are subject to capital gains tax.

2) Providing project financing via a Clean Nominee Bank Account, pension fund structure, is entirely different than a direct investment into real estate. In other words, it depends on how the pension fund, which owns the finance company, is providing project financing. For example a profit share of a development is legally different to the sale of those properties by that pension fund.

Project financing is not a gain on real estate it is a gain on having put up the money and Double Tax Agreement* specifically deals with capital gains with exception.

* see s.323 Tax Exemption from FIRPTA for U.S. property exemption

Knowing the right questions for offshore tax planning and the right structure are reasons tax attorneys with experience need to be engaged.

Offshore tax planning photo credit: sun-dazed on / CC BY-SA

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