Do I Need a Bank Account For My Foundation?

The most common structure we are asked to form is an IBC (ie a Tax Free Offshore Company) + a Tax Free Private Foundation Combo. When advising on the formation of such an entity often we are asked Do I need a bank account for my Foundation?


In most cases your Foundation shouldn’t need a bank account right away. Why? Because usually the money flows in and through the company (see below which explains how/why).


The Company usually only pays a dividend to your Foundation:


(a) If the Company carries litigation risk and you want to park some money safely away from creditors/lawyers; or


(b) If you want to buy an investment; or


(c) If you’ve retired or moved to a tax free jurisdiction and you want to start drawing some Distributions from the Foundation


Offshore Company (IBC) Cash Flows


For most clients the money flows in and through the IBC/Tax Free Offshore Company.


Typically there are 6 ways that clients will access money via/from the IBC:


1. Set yourself up as an arms’ length consultant and have the IBC pay you consulting fees periodically. This means you should only have to pay tax on what the company pays you (and even that tax you should be able to minimise as a lot of what otherwise-might-be personal expenses could be written off as business costs, eg home office, utilities, car, phone, electrical/office equipment, stationery, computers travel etc etc etc).




3. Use an anonymous debit card and withdraw cash from automated teller machines. This can still work in some places though it should be noted that some of the bigger countries now have the ability to trace and connect one to such withdrawals (+ technically this is income that should be declared at home).


4. Have your IBC buy Bitcoin and then make a transfer of Bitcoin to yourself (you would need to firstly set up a Bitcoin account). You can then buy valuable goods and services using Bitcoin and none of these purchases should be seen by your local authorities.






(a)   Expatriate your home country and become “non-resident for tax purposes”, shift to a country which has no income tax and/or CGT (eg Panama, UAE, Monaco, etc etc etc) and draw down the capital from your offshore entity (and bank the money tax free); or




(And provided you have successfully become a non-resident for tax purposes of your home country, there’s nothing stopping you from changing your mind a year or 2 later about the expat life and returning to your home country with a bunch of tax free dollars in your back pocket).


Local laws can have an impact. Hence it would be wise to seek local legal/financial advice before committing to establish a Corporate Structure such as that described above.



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