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How to Repatriate Funds?

Q:- OK. I have set up my offshore structure, and I have tax-free money accumulated in my offshore bank account.
How can I spend, repatriate, these funds?

A:- Simple:

The way to repatriate small increments of funds is through a corporate Debit Card. The customer can use the card to withdraw cash from any ATM or for any purchases, like any other debit card. The advantage to this offshore corporate Debit Card is that it does not require a large security deposit as for a credit card, and the transactions at ATM's, banks, or merchants are not traceable to the client, as the only information revealed through the transaction is the corporations information.
Obvious, a corporate credit card is available.

For Large Amounts, by a "Back to Back" Loan.

A situation where an investment organisation, such as an investment trust, deposits sterling with a UK bank which subsequently arranges with a foreign associate bank to lend the equivalent amount of foreign currency to the investment organisation. The purpose of this transaction is to hedge against currency fluctuations affecting the portfolio.

A ‘Back to Back’ loan is very simple and relies on the client depositing a sum of money in the participating bank, then borrowing back that same amount of money (less any fees). The deposited funds are invested by the bank themselves either in a ‘straight’ deposit account accessible only to the bank themselves or possibly by the purchase of an interest bearing CD (certificate of deposit) in another bank. An equal sum is then made out to the client, either directly or via an intermediary company, as a flexible loan for him to do what he chooses with. The participating bank will earn its fees on the difference between the interest rate paid on deposit and the interest charged on the loan, often called the ‘spread’.

After we'll incorporate your company and open an offshore bank account, you will have to contact your banker.

Why a ‘Back to Back’ Loan?

Why would anyone want to borrow against money they already have though? There are several reasons but we’ll just outline two of them.

  • You may already have offshore funds that have accumulated through a number of corporate activities using offshore companies. Your ‘home’ Government, particularly its Tax Authorities, are of course completely unaware of these funds, but you’d like to be able to bring it back into the country without causing too much attention. How? A ‘back to back’ loan of course. Your own funds are deposited with the participating bank and the resulting loan is made payable to you or your ‘onshore’ company – the net result is that the funds flow back onshore in a perfectly legal manner. OK, there’s more to it than just that – little things like the actual terms of a loan agreement, repayment periods, what happens to the actual funds you ‘repay’ etc, which your lawyer will need to discuss with your banker, but in essence it enables legal onshore access to offshore funds.

  • Alternatively somewhat the reverse may be the case. You already have ‘onshore’ funds but want it to seem that your new ‘onshore’ project is actually financed and run by an offshore company with no connection to yourself. How? Again a ‘back to back’ loan. This time slightly more complex since you must firstly and quite openly place your onshore funds into an offshore investment – all quite legal if properly declared. Once these funds are offshore, they then form the deposit for the ‘back to back’ loan payable to the offshore company who are financing ‘your’ onshore project. Again there’s much more to it than just this...

Loan Periods & Terms.

Because you will be responsible for setting up your own loan terms, either directly or via an intermediary offshore company, you can pretty well make your own arrangements for repayment.

The bank will not be overly concerned – after all, they’re 100% covered by the deposited funds – so any ‘default’ as such is a simple termination of the arrangement. Interest (the spread) will be usually be paid annually in advance and they will be profiting for as long as the arrangement is in force.

Since in 99% of cases the ultimate loan agreement is between an intermediary loan company established just for this purpose and yourself, the loan can be 1 year, 5 years, 10 years …… even 50 years if you choose.

The rate of interest fixed between yourself and the offshore company can be 7%, 8%, 10%, even 15% if you choose. There can be monthly, quarterly, annual interest payments, in advance or in arrears. The capital can be repaid evenly throughout the term, with a ‘holiday’ in the early years, even postponed until the end of the loan period.

Just use your imagination and you’ll see how valuable and flexible such a ‘back to back’ loan can be, we’re sure we don’t need to spell out all the details, just read between the lines.

Any Other Benefits?

Back to Back’ loans can have a number of additional benefits, but in some areas we’re entering that legal ‘grey’ area that hovers between money laundering and tax evasion. What you do and how you do it is between you, your conscience and your taxman – we will gladly put the possible scenarios together, but we cannot openly advise that you break any laws, nor openly condone your doing so.

Let’s just say that in many countries, the USA including, interest payments on loans for property purchase, even from offshore, are fully allowable against income tax, sometimes at your highest marginal rate. If your ‘onshore’ loan agreement states that you’re paying 8%, you will be getting tax credits on that and could well come out with a profit on the deal courtesy of your taxman!

Another benefit is since any property you ‘purchase’ with the loan will, under the terms of the agreement with the loan company, be acting as security for the loan, it cannot be seized or repossessed by anyone else, especially if the loan is always ‘kept topped up’ to 100%.

Just use your imagination and you’ll soon see the benefits.

What Are The Requirements?

Really just the one – that you have a sufficiently large sum of money, which must obviously be unencumbered by any attachments or liens, to start with to make the exercise worth while for the participating bank. What are we talking about? Well, certainly not less than US$200,000 and preferably in excess of US$500,000. Remember though, whatever structure we arrange, your security deposit will always be direct to the participating bank, NOT to us!

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Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.

Please go to our Uses of offshore Companies Page where you will find interesting information on the benefits of using offshore companies and trusts for business and personal use, links to information on other locations and details of our products and services.



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