An increasing number of specialists engaged in tax planning think that in some situations it is neither right, nor advisable to use Companies Incorporated in classical off-shore centers to earn, for example, various incomes from “on-shore” countries having different restrictions on payments to off-shore companies.

In connection with the fact that within the period of 1988 to 1994 there was no possibility to incorporate non-resident companies in UK, to minimize taxes new solutions were found. In particular, the use of a company registered in UK for conducting operations in favor of an off-shore company the name of which was not disclosed. All operations and actions were made on behalf of the UK company, the gross income from the operations of the off-shore company was coming on the banking account of the UK company, and further they were remitted in favor of a third party as instructed by the off-shore company. The UK company is not obliged to pay taxes, except cases when any fee is set as the remuneration for such operations.

The opportunity to conduct such operations is in the fact that pursuant to the effective legislation of UK, the UK non-resident must pay the income tax only with regard to the income earned in the territory of UK. Such income includes only the following: dividends paid be UK companies, interest from borrowers being UK residents, royalties and the income from trading activities of a non-resident company in the territory of UK. If the income does not fall under any of these categories, there is no obligation to pay taxes in UK, despite the fact that the company is conducting operations through the nominee resident of UK.

It is preferable that the UK nominee company is controlled and managed not from the territory of UK and have directors who have their permanent residence outside UK. No activity in the territory of UK should be conducted, and all contracts signed by the UK company in favor of the non-resident company should be concluded outside UK.

As regards the VAT, if the UK nominee company renders services to any third party outside UK, rendering of services is not subject to VAT. These services include: advertising, consulting, legal and accounting services, engineering, transfer or assignment of intellectual rights, supply of staff, banking and insurance services, transportation.

If the UK nominee company delivers goods to any third party outside the European Union, such delivery is not subject to VAT if two requirements are complied with: such goods are neither imported to or exported from UK