Taxation of Offshore trusts and Hybrid Companies

Taxation of Offshore trusts and Hybrid Companies Offshore trusts and companies is a constantly developing area. There are always new techniques and entities that are being developed or brought into tax planning. Segregated cell companies are a good example of this. They've been around for a few years but it's only in the past couple of years that their use in terms of asset protection and offshore tax planning has really became apparent (members can check out Using an offshore segregated company for more on this). Another example are Hybrid companies. These are often used as an alternative to a trust in tax planning and are particularly useful where you're based in a civil law jurisdiction that doesn't recognise the concept of the trust. Essentially they're a cross between a company limited by shares and a guarantee and allow for the separation of control from people intending to benefit from the assets (ie similar to a trust where the trustees control and the beneficiaries 'benefit'. The problem with any of these entities is obtaining details on the UK tax treatment. Many websites explain generally how the entities work but very few go into any details. I've therefore wrote an article for members explaining what these Hybrid companies are and importantly how they'll be viewed from a UK tax perspective. If you're a member you can view it here - UK tax and Offshore Hybrid companies The Offshore hybrid company is used as an alternative to the trust, but regular readers will know that trusts have some pretty wideranging anti avoidance rules than can apply. The Hybrid company will therefore need to be considered in light of the trust busting rules as well as the provisions that apply to companies. Generally though the same types of individuals that can use offshore trusts tax efficiently can also use the hybrids.