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Newsletter | Articles Nominee Structures The concept The nominee structure is a simple set-up where an onshore company acts as nominee for an offshore principal. This avoids the problems often faced by companies trading internationally. It offers an onshore face with all the offshore benefits. Nominee structures provide a high level of credibility but in truth are complex, and formation costs are naturally greater than for simple companies. This structure can be used internationally for trading or the supply of services. How it works The offshore company is the principal in all transactions and the nominee company contracts for business and acts on its behalf. All invoicing and accounting, as well as advertising, marketing and promotion, is done in the name of the onshore nominee company. A carefully drafted agreement between the companies must be prepared. Additionally, a trust can be used to own the structure and provide an extra layer of confidentiality. The structure will typically have three bank accounts: An onshore account in the name of the nominee company (as invoices are in its name, for handling the main trading receipts) The offshore account in the name of the offshore company, for receipt of proceeds The nominee company also has an account in its own name to receive fee income, out of which all tax liabilities are met. The onshore company represents the offshore principal in all its business dealings and this company is all the public sees. No offshore invoices appear in the client’s records or with the end customers. Goods are purchased and transactions are invoiced by the nominee company in its own name and the bulk of the proceeds are transmitted straight to the offshore company – these monies are only received by the onshore company on behalf of the offshore company, not in its own right. The client is only aware of dealing with a normal company in a mainstream onshore jurisdiction. There is no necessity to declare the relationship. The nominee company receives a fee for services paid by the offshore principal either as a straight payment or as a deduction from the trading income. The nominee company accounts show only its fee income and its expenses. The main trading income does not form part of the accounts as this is only handed on behalf of the principal. Tax will be paid on the small amount of profit declared by the nominee. The fee level paid by the offshore company to the nominee will be chosen carefully, taking into account transfer pricing rules and volume of trade. Approximately 5 to 10 per cent of gross margin would normally be suitable. The onshore nominee company can register for VAT in the UK, facilitating trade within the European Union. What ILS can provide: Invoicing VAT registration and compliance Accounting services Banking facilities Telephone, fax and email Physical office facilities Representation Distribution of marketing materials For more information contact Stephen Colderwood.