Offshore-e-com.com Favicon OFFSHORE-E-COM.COM
LOWTAX JURISDICTIONS

Andorra
Anguilla
Aruba
Australia
Austria
Bahamas
Barbados
Belgium
Belize
Bermuda
Botswana
British Virgin Islands
Brunei
Bulgaria
Canada
Cayman Islands
Cook Islands
Costa Rica
Cyprus
Czech Republic
Denmark
Dubai
Estonia
France
Germany
Gibraltar
Greece
Grenada
Guernsey
Hong Kong
Hungary
Ireland
Isle of Man
Jersey
Labuan
Latvia
Liberia
Liechtenstein
Lithuania
Luxembourg
Madeira
Malaysia
Malta
Marshall Islands
Mauritius
Monaco
The Netherlands
The Netherlands Antilles
Nevis
New Zealand
Panama
Poland
Portugal
Qatar
Ras Al Khaimah
Romania
Russia
Seychelles
Singapore
Slovakia
Slovenia
South Africa
Spain
St. Kitts
St. Vincent & The Grenadines
Switzerland
Turks & Caicos Islands
United Kingdom
United States
Vanuatu

CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
HOME | CONTACT | ABOUT | LEGAL | PRIVACY & COOKIES

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

 

 

- Electronic Products Consumer Case Study
- Physical Products Business to Business Case Study
- Physical Products Consumer case Study
- Offshore Banking and Financial Services Case Study
- Offshore Corporate Functions Case Study

Company A is based in the UK and has been selling computer software to businesses for a number of years using a mail-order catalogue and a small direct sales force. It has successfully set up a UK web site that allows the purchase and shipping of software to customers' homes and businesses. The web-site has started to generate significant quantities of non-UK orders from around the world.

Company A's Internet host, Netsource Ltd, who handle most of the administration of the site, have pointed out to the company that some of their competitors have begun to supply software in digital form. They recommend that Company A does the same. The company's auditors, MacFarlane & Roberts (MFR), a medium-sized firm of accountants and consultants who have specialised in IT and e-commerce, are asked to advise; they agree that there will be substantial cost savings on packaging, warehousing, shipping and handling, but suggest that the new operation should be set up offshore. They recommend the Cayman Islands, where they have a branch.

Netsource worry that the Caymans don't have sufficiently advanced telecommunications facilities to handle the high-bandwidth requirement for complex software downloads, but are rapidly reassured by MFR. Netsource also point out that digital delivery is probably the whole future of software distribution, so that Company A should be prepared to move their whole business offshore eventually. MFR say that, if so, then the Caymans operation should be set up as a separate entity to minimise any entanglement in UK taxation. Company A agrees with this advice, and its shareholders decide to incorporate SoftDown Ltd in the Caymans with MFR's assistance.

MFR also recommend an ISP in the Caymans with adequate facilities where SoftDown's dedicated server can be co-located. Netsource are asked to supervise technical aspects of setting up and running the web-site, since initially Company A does not plan to have an office or staff in the Caymans. Company A allocates project responsibilities as follows:

  • Formation of SoftDown Ltd as a Caymans exempt company (it will pay no taxes, but there are some quite small annual fees) - MFR (Caymans) Ltd
  • Negotiation of licensing deals and technical data specifications with software suppliers; discounted prices are to be agreed for digital products; licensing will follow standard procedures - Company A
  • Installation of server and systems (front-end catalogue and ordering facilities with multi-currency secure payment processing package; software database and distribution system) - Netsource with Caymans ISP.
  • Open bank accounts; establish credit-card merchant IDs and authorisation procedures - MFR
  • Installation of software into the database - Netsource with Caymans ISP

The advice of MFR is that SoftDown Ltd as a Caymans company will have no need to charge VAT in the EU or sales taxes in the US (see our Tax Law section for an explanation of this point).


 

STRATEGIC PARTNERS
  Lowtax.net
  Tax-News.com
  Expat Briefing
  LawAndTax-News.com
  OffshoreTrustsGuide.com
  TreatyPro.com
  Global Incorpoation Guide [GIG]

IMPORTANT NOTICE: Important Notice: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments. All rights reserved. 2017 Wolters Kluwer TAA Limited