Georgetown Trust Blog

How to Use Your IBC as a Deferred Income Structure

Posted by Georgetown Trust on May 28, 2015 3:42:45 PM

Offshore_Investments_in_Belize

Whether you are collecting large Social Security payments monthly or cashing in a substantial IRA, there are plenty of downsides to receiving large amounts of cash in a short amount of time. Receiving too much income at once may push up your tax ceiling, forcing you to pay more than your fair share on investment profits or retirement funds.

Plus, you may not wish to have all of your assets at once, as receiving percentages over time can offer greater long-term security and help you better budget for the future. If you wish to establish a deferred income structure, an International Business Company, or IBC, in a destination like Belize could be the answer you're looking for.

Establishing an IBC

If you're interested in pursuing an IBC as a deferred income structure, the first step is to understand what an IBC is and how to open one for yourself. An IBC is a company established by an offshore resident that can do business around the world but can't collect money and services directly from Belize residents.

If you plan to do business domestically within Belize, then your business would be local rather than international.

Establishing an IBC involves showing proof of financial solvency as well as how large of an investment you can bring into Belize. Once the IBC is established, you won't need to hold an annual general meeting or even disclose financial records, both of which are issues elsewhere around the world. Once your IBC is officially established within Belize, you can begin using it as a deferred income structure. 

Reaping Tax Benefits from Deferred Income

Whether you live in North America or Europe, you already know that your annual income is taxed based on your total earnings and holdings for the year. If you earn $40,000 annually in investment profit, for example, you might be taxed at 15%. If you earn upwards of $100,000 or more, your tax percentage will also rise significantly. In order to limit your taxable liability, using an IBC can help.

By depositing assets into your IBC, you can free yourself from high tax rates. However, you can still control your assets, invest them as needed, and pay yourself a salary in the amount that best suits your needs. This helps you control your personal income taxation and since the IBC is free from business taxes, you will undoubtedly come out ahead financially. 

Preparing Financially for a Secure Future

Deferred income does more than simply limit your tax liability. It can also be a way to better secure your financial future. Rather than risking your net worth to legal action, court freezes or even banking instability, an offshore IBC in Belize means that your assets are protected.

 When you want to withdraw monthly or annual salaries, you can do so with the knowledge that you, and only you, are in control of the business. You can set up a perpetual payment that falls within your preferred tax bracket and ensures that you can receive an income for the rest of your life.

In addition, an IBC can act as a deferred income structure even after you're done by providing for a dependent or a charitable organization of your choosing.

An IBC is a fantastic deferred income structure that lets you take advantage of the tax-favorable jurisdiction of Belize and make the most of your investments today and in the years ahead.

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Topics: International Business Companies