However, offshore company structures have been controversial due to the associated implications. These risks have led to changes in the law to regulate the practice of owning property through a limited company.
While offshore structures can provide certain benefits, those holding Portuguese property assets in grey-listed or blacklisted offshore jurisdictions face significant risks and challenges. And it’s not only where the actual company is domiciled that’s the issue; if an offshore company is served by Officers who are based in these types of jurisdictions, they too may face a tough time. We explore the implications of holding property assets in these jurisdictions and the benefits of re-domiciling companies to more favourable locations.
The Perils of Grey and Blacklisted Jurisdictions
The Financial Action Task Force (FATF), an international watchdog responsible for combating money laundering and terrorist financing, classifies countries with strategic deficiencies in their anti-money laundering (AML) and combating the financing of terrorism (CFT) measures as grey-listed or blacklisted. Grey-listed countries have committed to addressing identified deficiencies, while blacklisted countries pose a significant risk to the international financial system.
For expat property owners with connections to grey or blacklisted jurisdictions, the implications can be far-reaching. One such implication is increased scrutiny. Regulators, banks, and other financial institutions often cast a watchful eye over transactions involving high-risk jurisdictions. This can result in more thorough investigations, transaction delays, and additional documentation requirements.
Reputational damage is another outcome of holding property in grey-listed or blacklisted jurisdictions. The stigma of association with a high-risk jurisdiction can tarnish the reputation of both individuals and companies, making it difficult to attract investors or establish partnerships.
Tax headaches and legal woes could also be on the cards. Governments may impose higher tax rates or special reporting requirements on those connected to grey or blacklisted jurisdictions, potentially increasing the tax burden on Portuguese property assets. Non-compliance with international regulations, such as those related to key AML and CFT laws, can result in legal penalties for individuals and companies connected to high-risk jurisdictions.
The final and by no means last implication is higher financial hurdles and additional red tape. Banks and financial institutions may be more reluctant to provide services to those connected to grey or blacklisted jurisdictions due to increased risks of money laundering or other financial crimes.
Transfer to favourable jurisdictions
If you want to mitigate the risks associated with grey and blacklisted jurisdictions, re-domiciling companies to whitelisted jurisdictions can be an attractive option for those hoping for an easier life. Companies in more reputable, whitelisted jurisdictions generally enjoy fewer restrictions and greater transparency and compliance, making them more appealing to investors and business partners. Domiciling your offshore company within whitelisted jurisdictions can also reduce the levels of regulatory scrutiny, resulting in smoother transactions and fewer compliance-related delays.
The Importance of Trusted Fiduciary Providers
Re-domiciling a company from a high-risk jurisdiction to a more favourable location can be complex and time-consuming as it requires extensive knowledge of international laws, regulations, and best practices. Seeking the guidance of a trusted firm with expertise in re-domiciliation can help navigate this intricate process, ensuring compliance with all applicable regulations and a smooth transition to the new jurisdiction.
For more information visit: https://www.gibro.com/services/company-re-domiciliation
The hidden perils of holding property assets offshore
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