As we discussed in our previous article on setting up international corporate structures, there are a number of benefits that you can receive by establishing a corporate structure on an international level.
But how do you know which type of corporate structure is best for your situation?
There are distinct advantages for each type of corporate structure, so let’s talk about the various types of structures and their applications.
The Value of an International LLC
Probably the most familiar international corporate structure is the International LLC, or limited liability company. Through an International LLC, you are literally limiting your liability to the value of the company itself.
This is a great way to separate yourself and your personal assets from the assets or value of your company.
The Applications for an International LLC
For the most part, an international LLC is recommended for those who want privacy. This structure offers a high level of anonymity, but it is best for smaller, passive investments.
An LLC might be the right choice if you have a rental property overseas, if you're receiving regular interest dividends from a large investment, or if you hold agricultural land.
It is possible to take it one step further by starting with a self-directed IRA, or individual retirement account.
Your IRA can then own a newly established LLC, giving you an incredible level of flexibility and control over your investments. While you must appoint a custodian for the IRA, you'll be in a position where you can call the shots on what happens in and to your LLC.
The Benefits of an International Business Corporation
While an LLC can work well for passive income, you might be more interested in establishing an ongoing business.
In that case, an IBC, or International Business Corporation, could be a better fit.
Like any business, an IBC might have shareholders and a board of directors. An IBC will have built-in asset protection, and incorporation is straightforward and surprisingly quick in a jurisdiction like Belize.
As a bonus, reporting requirements for an IBC are limited or even nonexistent, granting business owners, directors, and executives more freedom and privacy.
Once again, the goal of an IBC is asset protection. Establishing an IBC typically means lower taxes, and it also means there is an added level of protection between the owners of the business and any legal issues that arise.
Private, individually-owned assets are a completely separate entity, giving peace of mind to everyone involved with the IBC.
Exploring International Trusts
A final option for an international corporate structure is an international or foreign trust.
In this case, the person who establishes the trust essentially loses legal control over the assets held within that trust. Instead, a trustee acts in accordance with your original wishes in order to protect, save, or grow certain assets.
This is the ideal structure if your plans are long-term, or if you're most interested in protecting assets for future generations.
A foreign trust wraps up your assets and protects them from things like legal action or high tax burdens. Those are obvious advantages, but the drawback is the loss of immediate control.
Depending on your goals and your estate planning needs, you can choose between revocable and irrevocable trusts. Both have advantages, but it is up to you to determine which best meets your timeline and your financial objectives.
Everyone comes from a unique situation and is in a different place in life.
Whether you have property or investments around the world, you're focused on how to become more tax efficient, or you're relocating a business, setting up an international corporate structure can be invaluable. It benefits all types of individuals and companies, delivering impressive results around the world.
Contact Georgetown Trust to get more information on international corporate structures and if one is right for you.