The offshore banking business model and how it has evolved and changed over the last 5 years. This is the INTAX forum presentation given by Joy Godfrey, Director of Cititrust International Limited in Russia, 2013.

1. CITITRUST
INTERNATIONAL INC.
The
New Offshore Business Model
INTAX Forum – Moscow – September 2013

3. Little or no tax
information
exchange
British Virgin
Islands
Company +
Swiss bank
account
British Virgin
Islands/Belize
Company
+Russia
+Cyprus
Little to no
international
co-operation
The “pure”
offshore
approach

4. The United States
OECD Austria and Luxembourg EU
The British Virgin Islands
Swiss Cyprus
Automatic Information Exchange
The NewBanking Secrecy
Savings Directive
Multilateral Convention forComplianceExchange
Foreign Account Tax Automatic Act
The

5. Introduction of
restrictions into the
New thin
Luxembourg,
New transfer
capitalization
Cyprus and
pricing rules
pricing rules
Netherlands
treaties among
others

6. The implications of non-compliance
European Union legislation
Money laundering legislation

7. 


Increased real estate taxes
Increased information exchange
Considered in the UK Non-domicile



Has implemented FATCA
Reintroduced the inheritance tax
Increased compliance requirements



Banking secrecy
The Switzerland-Russia treaty
The Cyprus-Russia treaty

9. Confidentiality
The new Corporate Services Delivery Mechanism
Avoiding triggering anti-avoidance legislation
Legally compliant treaty positions
Employing tax offshore structures

10. Avoiding antiCost-benefit
Maximising
Standing up to
considerations
treaties to
avoidance
reviews from tax
reduce taxes
legislation
authorities

11. Confidentiality
- do you really
have it?
Belize Offshore Trusts
can be used to provide
confidentiality
Legal
Professional
Privilege (LPP)

12. 




Both countries host Canadian
Low tax jurisdictions
Westminster style constitutions
banks – Canadian Imperial Bank
Both countriesEnglish common
Canadian and have double tax
of Commerce (CIBC) & Royal
treaties
law persuasive
Bank of Canada (RBC)

13. Under the Luxembourg Barbados Double Tax Treaty withholding
Luxembourg withholding tax on dividend payments to the British
taxes paid to Barbados company in Luxembourg are: 0%
Virgin Islands and other offshore companies: 15%
Dividends - 0%
Interest – Withholding Tax 0%
Royalties – Withholding Tax 0%

15. The
Model
Luxembourg
 Full dividends and capital gains
exemption under Luxembourg
participation exemption regime
 No Withholding Tax on dividend
Belize IBC
payments to Barbados from
Luxembourg
Barbados Company
Barbados
 Full dividends exemption under
Barbados participation
Luxembourg Company
exemption regime
 Exemption of capital gains on
the sale of shares of Lux Co.
Russia
 No WHT on the dividend
payments to Belize IBC.

A Belize International Business
Company (IBC) forms a Barbados
Company

The Barbados company acquires shares
in a Luxembourg company

16. The
Model
The domestic US trust is US tax
compliant
 The structure works for US and
non- US citizens
US
Non-US
 The US domestic trust has
Beneficiary
Beneficiary
access to US double tax
treaties
 US Domestic Trust US courts
Asset protection of
 The wealth under the offshore
insurance contract can be held
Belize Offshore
using a zero tax vehicle like
Variable Insurance
Belize IBC
 Wealth is accumulated and
Belize in a
protectedIBCs zero tax
environment
 Tax-free distributions possible
5



A US company forms a tax
compliant US domestic trust
The trust acquires Belize
offshore life insurance

17. 5
The
Model





Belize IBC is zero tax vehicle
Barbados IBC is a low taxed vehicle
Barbados IBC is used to access the
Luxembourg-Barbados treaty
Luxembourg company is used to access
the Luxembourg-Russia treaty
The Mandatorily
Redeemable Preference
Shares (MRPS), if properly
drafted, is treated as debt
UK Company
for Luxembourg tax
purposes and treated as
equity in Barbados.

Dividends are treated as
interest expense

Dividends are tax-free in a
Barbados Branch
Barbados IBC

Treaty benefits from Russia
Operating Company
to Luxembourg apply
Luxembourg Company

18. The
Model
Double Taxation Treaty
Barbados/Luxembourg exempts
income attributable to the
Barbados branch.
UK Company
 In addition, assets attributable
to the Barbados branch are
exempt from net worth tax in
Luxembourg Company
Luxembourg
 Secured by an advance
clearance Branch
Barbados letter
 Interest income will be taxed in
Barbados branch when paid. No
Operating Company
taxation if interest income is
accrued




A Luxembourg company forms a
branch in Barbados
The UK company contributes
cash or receivables to
Luxembourg company for
shares which allocates such
assets to the Barbados branch
Barbados branch lends to the
group of companies

19. The





Model
Double Taxation Treaty
Barbados/Canada exempts
income attributable to the
Russian
Russian
Barbados branch
Company
Company
In addition, assets attributable
to the Barbados branch are
exempt from tax in Canada
Canadian Trust
Canadian banks in Barbados are
used to custody assets in
Canada
Barbados Branch
There is no capital gains tax in
Barbados
Assets
Assets are protected under
Canadian law
5

A Russia company forms a
Commercial Trust in Canada

The Barbados branch then
manages the assets of the
Canadian Trust

21. CITITRUST
INTERNATIONAL INC.
Belize City, Belize
+(501) 223 3738
services@cititrustintl.biz
www.cititrust.biz