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What Counts In Choosing An Offshore Jurisdiction

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A private client lawyer sets out the questions he has about what he looks for in an offshore jurisdiction; the trends that are unfolding and the centres which are making most headway.

What sort of considerations apply when choosing an offshore
location? Some might respond that tax, regulations and ease of
doing business are likely to be uppermost in mind, but it can be
more complex than that. How politically stable are such places?
Is the government honest? And – in light of the COVID crisis –
how rational and efficient is the system at handling viruses
and the associated restrictions? Are travel connections quick and
pleasant? Are there good schools and healthcare facilities and is
the location a fun and interesting place in which to
live? 

There’s a lot to take on board. To explore how to frame these
questions is George Merrylees, partner at Wedlake Bell, the
London-based law firm. The considerations are, by definition,
global and we hope that the article will stimulate debate across
our different editions. 

The usual editorial disclaimers apply and we invite people to
jump into the debate. Email tom.burroughes@wealthbriefing.com

Many international private wealth practitioners have tried, and
often successfully, to undertake a comparison of offshore
jurisdictions. I will leave such a task to those who have global
offices with boots on the ground.

As my firm is a single office based in central London with
international affiliations, I will look at the world of offshore
jurisdictions through the lens of a London private client
lawyer, which is, after all, all I can really do. The questions I
will address in this article are threefold:

(1) What factors motivate me to choose an offshore
jurisdiction; 
(2) what trends am I seeing; 
(3) which offshore jurisdictions are charging further
ahead; and what factors motivate me to choose an offshore
jurisdiction?

Like many of my London colleagues, I am guilty of having a short
list of favourite offshore jurisdictions. This is compounded by
the fact that I know what I know, and I don”t know what I don’t
know. But beyond that, I am surely influenced by experience,
personal relationships and, possibly, the unconscious bias of a
London practitioner who usually favours the Channel Islands.
There is, of course, no logical reason for this if my clients
come from outside the UK and, in some cases, have no link to the
UK at all.

In my experience, the perfect solution is often not possible but
I have met too many clients who end up putting their family
wealth out of reach due to the structures they have used. This
might be on account of the tax, the regulations, the overheads or
the lack of foresight as to jurisdictional requirements that have
been ignored.

So what would I say is my approach when it comes to choosing
offshore jurisdictions? I can honestly say that, through trial
and error, I have learned to recommend offshore jurisdictions
that offer culturally intelligent solutions. 

In my opinion, and to avoid the problems I have mentioned, a
culturally intelligent approach requires that the structures:
•    should be as easy to understand and use as
possible by both the family members and any interested tax
inspector; 
•    should be portable in that they can follow
the family through the changes in their tax status. If such
changes jeopardise the structures, then the structures should be
easy to dismantle/restructure; 
•    should work efficiently and effectively
across borders from a tax and compliance perspective; 
•    should be cost effective; and 
•    should be tax efficient but not at any cost.

An equally important consideration is the team of advisors with
whom the family have to work in relation to their structure. In
my opinion this is absolutely linked to choice of
jurisdiction. 

I consider the fiduciary provider to be an integral part of the
professional team that services the client. After all, the
fiduciary might very well turn out to have the longer
relationship with the client as the client moves from one
jurisdiction to the next. So it is vital to me that I introduce a
high calibre fiduciary team to the client and their family and
that such team has the required expertise to accompany them in
the long term. I take the same approach when I involve foreign
lawyers on a client matter. It is for this reason that I will
gladly go to a less established jurisdiction if I know that I am
not compromising the professionalism and technical ability
of the fiduciary service provider. 

The types of question I will ask myself when choosing an offshore
jurisdiction can be summarised as follows:

1.    Which jurisdictions offer the correct structures
to hold the assets owned by the client?
2.    How do the jurisdictions relevant to the
client and his/her family interact or simply, react to the
offshore jurisdictions and to the entities that we will consider
setting up to hold the assets? 
3.    What is the relevant expertise I am looking for
in the fiduciary provider? This will usually relate to the tax
situation, the complexity of the client’s affairs, international
compliance as well as to the assets; 
4.    Is there a language requirement? and
5.    Will the client get on with the fiduciary
provider? 
 

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