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Offshore companies can still be used to own residential and commercial property in various countries. Although many countries nowadays penalise the use of offshore companies, it is worth noting that UK companies can provide "offshore" advantages as non-UK property-owning vehicles, and concerning UK property itself, although there are now UK tax penalties for offshore corporate ownership, these penalties are subject to reliefs for genuine property business.
Advice should be sought from a professional tax advisor in the country where the property is situated before incorporating an offshore company (such as a BVI or Jersey company) to acquire residential, investment or commercial property in the country concerned.
The following points may be noted:
- Some countries penalise the use of offshore companies to own real property e.g. France, Spain, Portugal, and most recently the UK.
- It is sometimes preferable to acquire foreign property via a local tax transparent entity with separate legal personality whose membership interests are then owned by an offshore company.
- UK companies can often be used to acquire non-UK property without local tax penalties. Such UK companies will often avoid UK taxation through tax credits and also provide the important benefits of corporate ownership e.g. perpetual succession, IHT benefits and confidentiality, with appropriate planning.
- The use of Cyprus, Dutch and Luxembourg companies can prove tax-efficient for commercial property transactions in many countries.
- The UK introduced important new deterrents to using offshore companies for the ownership of higher value UK residential property in 2012 and 2013.