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What ever your reasons for going offshore, you probably already know the long lasting benefits to you and the preservation of your wealth if used correctly. If you are unsure why you should be turning offshore (not Japanese as the famous 80’s hit infers) then you had better consider how this can help you when buying property both in Dubai and overseas, in protecting your family and guarding against unfriendly tax collectors.
For some real examples on how this form of financial planning can pay huge dividends for very little outlay, best you
We will look at two examples primarily but as you may appreciate there are many other permutations too extensive to cover in this article. What is crucial is that these issues are considered preferably before buying your property – putting the cart before the horse could cost you dearly in the future.
Buying property in the United Kingdom
Regardless of nationality or tax residency, if you have bought a property in the United Kingdom and you die, you are subject to Death Tax at 40%. Very few investors realise this and fail to make suitable steps to safeguard their investment. If the property were owned by an Offshore Company then the death of the individual becomes incidental since the Company is still alive thereby avoiding this tax. This is what is achieved in basic terms but the structure must be established correctly to achieve this. It is never too late to move your property assets into an Offshore Company.
If it is investment property i.e. property you are intending to rent out, then you may have the issue of rental income. Since this income is generated in the United Kingdom you cannot expatriate these earnings. However, if the property has a mortgage then this debt can be used to offset the income. If the property is also subject to management fees, these too can be used to offset this income. You could be the offshore management company to achieve this after taking into consideration your income tax allowance of £5035 thereby keeping your tax bill to a minimum.
If you are non-resident for tax purposes then you may realise that you pay no Capital Gains taxes when selling property. What happens when you go home though? Had you structured your property portfolio correctly then you could mitigate this 40% levy on any gain you make over £8500. The uses of re-financing and offshore structures will allow you to avoid this tax. When selling your property too, if your purchaser is happy to buy your company (which owns the property) then you avoid Stamp Duty (now Transfer Tax). Incidentally, a property worth more than £500k attracts a 4% Transfer Tax.
Before buying any more property in the United Kingdom it would be financially prudent to seek professional advice since you could protect your wealth dramatically if done properly. Many offshore banks will offer 80% LTV financing on UK property including Nominee offshore structure too.
Buying property in the United Arab Emirates
There is no income tax in the United Arab Emirates however there is still taxation, direct or indirect, to consider here. If you are resident for taxes in the United Kingdom, then you are still liable for Capital Gains taxes on Dubai property. Not declaring is not a form of tax planning so careful preparation is preferable. Similarly, if you are United Kingdom Domicile then you are still liable for Death Tax on your Dubai property and for that matter, on all your assets worldwide. Many other countries (too many to list) also employ similar estate taxes so make sure your purchase here is properly protected from the sticky fingers of your capital taxes office.
In the event of your demise, you will be liable to the forced heirship rules as laid down by Sharia Law (An-Nisa Chapter 4:7 onwards). Regardless of your own tax residency, domicile, religious beliefs – it is the law of the land. Just as in the case above in the UK, you will be levied tax in the event of your death regardless. An offshore structure can be implemented to ensure that your estate passes to those who YOU wish in a timely manner since, again, we use the premiss that the Company has not died thereby not triggering any such event.
As with Transfer taxes in the UK the United Arab Emirates too has a varied range of taxes depending on the developer you are with. Again, in order to avoid this fee (which is charged on the present value not original price of the property), in effect you sell the shares of your Company (which owns the property) to your prospective purchaser.
There is more information in the Offshore Company Information section of the website including a fee structure for the services Globaleye offer in respect of arranging suitable offshore company and Trust structures. For more info contact us today 8004558 (+9714 3979550) or email
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for an overview of how we can help you protect your assets.
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