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Offshore Company treatment
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petermeachem
- CVO Senior
- Posts: 253
- Joined: Thu Oct 09, 2003 10:32 am
Thanks Digger - how about starting an 'offshore owners appeal fund'? 
I did not even mention the fact that the Government assumes we are all renting and making a fortune (even if you live in Portugal permanently) and has therefore decided to tax all offshore owners for this 'income' - and it is not allowable to prove that you don't rent.
I decided my only option was to move to a 'white list' - the fun part of that being that Abbey National have now washed its hands of all Portuguese mortgages, so I have so far spent the best part of £5000 moving my mortgage to Banco Totta just so that I can now relocate the company somewhere else, and that is before I have even started on the legal fees for relocating the company :cry
Whilst I am aware that this does not effect everyone, the cavalier attitude towards non-voters shown by these taxes makes you wonder what or who the Government will target next in its endless search for tax revenues - perhaps it will assume that all villas owned by foreigners (onshore or otherwise) are rented, and impose an arbitrary income tax on them too - it is not beyond the bounds or possibility
I did not even mention the fact that the Government assumes we are all renting and making a fortune (even if you live in Portugal permanently) and has therefore decided to tax all offshore owners for this 'income' - and it is not allowable to prove that you don't rent.
I decided my only option was to move to a 'white list' - the fun part of that being that Abbey National have now washed its hands of all Portuguese mortgages, so I have so far spent the best part of £5000 moving my mortgage to Banco Totta just so that I can now relocate the company somewhere else, and that is before I have even started on the legal fees for relocating the company :cry
Whilst I am aware that this does not effect everyone, the cavalier attitude towards non-voters shown by these taxes makes you wonder what or who the Government will target next in its endless search for tax revenues - perhaps it will assume that all villas owned by foreigners (onshore or otherwise) are rented, and impose an arbitrary income tax on them too - it is not beyond the bounds or possibility
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Guest
Surely the offshore position applies to any offshore company and not just those owned by non- Portuguese? If so I do not see how it can be said that the Govt is targeting non voters. The move is part of a global strategy to clamp down on tax avoidance/evasion and Portugal has moved into line later than many other countries.
People have failed to do their homework on off shore for some time before the last crisis arose. The glint of non payment of Sisa tax seems to have blinded many to the inherent problems of offshore owned property.
The sale of the property by means of the transfer of shares was cheap and did not give rise to CGT or Sisa tax in Portugal but a UK tax payer is legally obliged to declare any gain on the value of the shares and pay the appropriate tax. Thus the capital gain is taxable and failure to declare this is tax evasion not tax avoidance.
The shareholder acquires the company's debts as well as assets and if the previous owners of the company have not paid all the company dues to the Portuguese authorities the new owners in effect pick up the debt. If the previous owners rented but did not pay tax in Portugal the IRS can come knocking on the door up to 4 years after the event.
The biggest inherent penalty is of course the potential GCT bill if everything goes pear shaped and the property has to be brought onshore. The capital gain is the difference between the price recorded on the deed when the company acquired the property ( often understated) and the current near realistic valuation that the Financas will apply to the property. Not unnaturally people selling offshore properties did not tend to point out this possible problem.
I have owned offshore because this was the only way the vendor would sell but I was aware of the problems and had done my arithmetic as to what the cost of coming onshore would be. I do have sympathy with people who had to buy offshore but even so there are many who sailed into the situation in woeful ignorance rather than as a measured assessment of the pros and cons.
People have failed to do their homework on off shore for some time before the last crisis arose. The glint of non payment of Sisa tax seems to have blinded many to the inherent problems of offshore owned property.
The sale of the property by means of the transfer of shares was cheap and did not give rise to CGT or Sisa tax in Portugal but a UK tax payer is legally obliged to declare any gain on the value of the shares and pay the appropriate tax. Thus the capital gain is taxable and failure to declare this is tax evasion not tax avoidance.
The shareholder acquires the company's debts as well as assets and if the previous owners of the company have not paid all the company dues to the Portuguese authorities the new owners in effect pick up the debt. If the previous owners rented but did not pay tax in Portugal the IRS can come knocking on the door up to 4 years after the event.
The biggest inherent penalty is of course the potential GCT bill if everything goes pear shaped and the property has to be brought onshore. The capital gain is the difference between the price recorded on the deed when the company acquired the property ( often understated) and the current near realistic valuation that the Financas will apply to the property. Not unnaturally people selling offshore properties did not tend to point out this possible problem.
I have owned offshore because this was the only way the vendor would sell but I was aware of the problems and had done my arithmetic as to what the cost of coming onshore would be. I do have sympathy with people who had to buy offshore but even so there are many who sailed into the situation in woeful ignorance rather than as a measured assessment of the pros and cons.
Guest - you are right in all your comments, and I am not suggesting for a minute that anyone attempts to use the offshore route to avoid paying the correct amount of Capital Gains tax upon sale (ie a tax on any profit made). I do however still think it is targetted at foreigners because, unless I am much mistaken, they are the vast majority of offshore owners.
I also bought offshore fot the same reason - that was the only way the vendor would sell and as previously stated all mortgage companies that I spoke to (though probably not ALL mortgage companies) insisted on this route.
Bica - if only we all had that much cash floating around. Also, even if we didn't, it is well documented good practice to ensure that a debt is linked to the asset which it covers, rather than (for example) our UK residence.
I also bought offshore fot the same reason - that was the only way the vendor would sell and as previously stated all mortgage companies that I spoke to (though probably not ALL mortgage companies) insisted on this route.
Bica - if only we all had that much cash floating around. Also, even if we didn't, it is well documented good practice to ensure that a debt is linked to the asset which it covers, rather than (for example) our UK residence.
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Old Guest