Because of the growing trend by many of the world's largest companies to hire contractors and consultants, tax authorities around the world are looking for ways to maintain revenues by taxing contractors as individuals even though they may be using a company to carry out their work. If a contractor is working abroad why shouldn't he or she have the comfort of the using the protection offered by a Limited Liability Company.
Furthermore wouldn't it be necessary and prudent for say a UK born contractor to chose to locate his head office in a low tax or tax neutral country like Gibraltar if he is to compete on price with an Asian contractor located for example in Dubai.
We at Keylink Consultancy LLC have incorporated a significant number of Gibraltar companies for contractors who have worked, or who are working, in Oman, Dubai, Saudi Arabia, China, India, Libya, Germany, Holland, Australia, and other countries.
The use of an offshore company has the following benefits for a contractor. The contractor's employer pays the offshore company directly for services and not the contractor, personally. Therefore the contractor is not be liable to pay income tax on the whole contract amount even if he were liable to pay tax on world-wide income. Usually any income remitted to the contractors ordinary place of residence is subject to local income tax less any tax allowances.
Many tax authorities treat dividends more favourably and the contractor may be able to pay himself in dividends, an amount of which, may be taxed at zero or reduced rates. A Gibraltar Corporation as a European Union member can pay or receive dividends from another EU country, free of withholding tax.
Any accrued income within the contractor's offshore company can be utilised in a number of ways, such as investing in a pension and paying for holidays. Contractors are paid more than salaried employees to compensate for lack of pension and holiday benefits.
If a UK contractor has the intention of working overseas on a permanent basis and/or has already worked overseas during a number of years on several different contracts, the contractor may benefit in using an overseas company.
Contact us for more information about uses of companies located in a tax neutral jurisdictions. We can also arrange for you to meet a representative in London, UK. Please send us an e mail on the contact page to arrange an appointment.