Equities
Equity
investment is probably the most rapidly developing
offshore investment sector, not least because
of the explosion of interest in direct private
stock market dealing that took place in parallel
to the growth of the Internet.
The
first decision any direct equity investor ought
to make is where to base her trading. Probably,
few investors actively consider this question
until it's already too late, and the tax damage
has been done. That's understandable if investment
begins with a few thousand dollars or equivalent,
almost as a hobby, and gradually builds up. The
investment range we are dealing with here is bigger
(from $100,000 to $5m) and forethought is essential
if more than $100,000 is to be put into equities.
It
has traditionally not been all that easy to buy
foreign equities, but this has changed somewhat,
although not initially thanks to the established
stock exchanges and their parochial dealers. Perhaps
it is unfair to blame the dealers, because they
are hamstrung by regulation in the same way as
are other types of financial provider and intermediary.
As
is also the case with private banking and fund
management, this means that share dealing in high-tax
(= highly regulated) countries tends to be constrained
by regulation, and excludes shares offered on
unrecognised exchanges.
This
was the situation when the Internet began to make
it possible for an electronic dealing network
to bypass national regulatory regimes altogether,
and rapid growth took place in electronic share-dealing
networks which offer freedom from stamp duty (still
applied at 0.5% in the UK, for instance) and access
to a very wide range of international securities.
All
this to explain why investment into companies
listed offshore may be a major component of future
corporate financing, and can be used now to a
limited extent by investors who have the ability
to take in gross dividends without incurring further
taxation.
Anyone
can buy equities from anywhere, but if there is
to be an offshore dimension, then there are two
components that can be optimised: dealing costs,
and taxation.
The
choice of an offshore jurisdiction is in itself
a difficult, and to some extent a circular task.
You will not find it easy to distinguish between
the merits of different offshore jurisdictions,
or the facilities they offer, until you have got
to know them quite well. This is the point at
which you might think that an onshore adviser
in your own home country can help you - and it
may be so, but remember that only a very skilled,
knowledgeable and above all, objective, adviser
is going to be useful. Such a person is hard to
find.
There is a great deal of helpful
material on offshore equities in investorsoffshore,
and for that matter on our other sites as well,
so here are some links to relevant parts of our
own and other sites, listed below under various
subject headings:
Offshore Equity Investment
Introduction
To Offshore Equity Investment: a detailed
guide to the why, where and how of offshore equities.
Offshore Stock Exchanges
The Lowtax.net
jurisdiction section has detailed descriptions
of the stock exchanges in each of more than 20
key offshore jurisdictions.
The
LowtaxPro Offshore Stock Exchanges Report:
highly detailed information on stock exchanges
in the top 20 offshore jurisdictions. This is
a paid-for report, but you can see a contents
listing through this link.
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