Asset protection does not only remain topical for many people, but is also becoming more and more acute every year. However, there is only a handful of solutions that have remained effective and predictable over time. For example, although offshore asset protection trusts are excellent estate planning and tax mitigation tools, in some business activities foreign LLCs and their subsidiaries are still a better path to choose – for example, LLCs are really useful for US customers, because they are transparent for taxation purposes. And Nevis and its LLCs are definitely among the best to choose from, with their excellent reputation around the world as powerful wealth protection tools at reasonably low costs.
The Nevis LLCs are perfect for individuals or small groups planning to protect their assets from creditors, excessive taxation or confiscations.
Why LLC is the Best Asset Protection Tool
The appeal of an LLC (including a Nevis LLC) stems from the fact that in other countries it is treated as a partnership, which makes it transparent for tax purposes, while still providing its members with limited corporate-style protection from liability. The big advantage of LLCs is that it is much better understood by clients around the globe than some of the more freshly concocted structures offered by various offshore financial centers.
The LLC is a hybrid type of legal entity that combines certain traits usually associated with corporations, and other traits normally associated with partnerships. It offers a great deal of flexibility, with an emphasis on freedom and enforceability of contract. It has been said that whereas IBCs and corporations must be registered according to specific laws, LLCs allow you to write your own corporate law. Unlike corporations which have shareholders, the owners of LLCs are known as ‘members.’
This is important, because the members combine the best features of both worlds:
- transparent taxation (the taxes are not paid by the LLC, but by the member themselves, according to the tax rate in the country of residence);
- limited liability (the limit is set according to the volume of investments);
- flexible ownership and management structure;
- personal asset protection.
Instead of directors in an IBC, an LLC is headed by employed managers. While a manager is typically also a member, under the LLC acts of most jurisdictions, a manager need not be a member. The management structure of a corporation usually consists of two levels of decision-making (board of directors and executive officers), while LLCs in Nevis and other countries can be operated with only one level of decision-making, i.e., managers. Thus, the LLC tends to be a more flexible and understandable business entity.
While corporate statutes are generally written to accommodate the needs of businesses with large numbers of passive stockholders, LLC acts are generally written with the small businesses or individual entrepreneur in mind.
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Nevis LLCs: the Advantages of the Leader in Offshore Asset Protection
The Federation of St Kitts and Nevis is a member of the British Commonwealth, a democracy based upon the British Parliamentary system. It is a popular tourist destination, but its significance goes far beyond that. This country with an area of just 261 square kilometers is an extremely attractive and noticeable point on the map of the offshore world. This attraction is based on two factors: it is a developed offshore business center, where companies and trusts are registered and bank accounts are opened; in addition, it has the oldest and most respected citizenship by investment program.
The Federation St. Kitts and Nevis has also been consistently judged to be among the world’s freest nations by Freedom House. Nevis is exceptionally stable politically. Both political parties are centrist and do not have substantial ideological differences. Both fully support the financial services sector on which the island’s economy depends. The largest government expenditure in the country is on education; Nevis has now achieved a literacy rate of 97%.
A few key facts about why Nevis LLCs are the most advanced asset protection tool:
- the reliability of a Nevis Limited Liability Company (LLC) members is limited by the amount of their capital they invest in the company;
- since an LLC is a flowthrough entity, members are responsible for filing an annual return individually in their tax resident jurisdiction reflecting their respective financial involvement in the LLC;
- provided no business is conducted within Nevis, there are no St. Kitts and Nevis tax liabilities;
- high flexibility and customization create the opportunity for achieving a high degree of anonymity for owners;
- outstanding asset protection from creditors or confiscation;
- various tax liabilities are reduced or eliminated – income tax in St. Kitts is officially 0%, and no taxes on capital gains, wealth and others exist there.
Most offshore companies pay very little, if any, taxes. As said above, St. Kitts and Nevis is a low-tax (0% tax) jurisdiction. There is a possibility that your company many not be subject to any taxation whatsoever, but that is a question you would need to ask a competent tax advisor, since some countries tax their citizens on their income worldwide, regardless of their residency status. Since laws, rules, rulings, regulations, statutes and codes are constantly changing and evolving, we recommend that you seek professional tax advice from our experts to find out specific tax liabilities of your home jurisdiction. Contact us now at firstname.lastname@example.org or use the contact form below.
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on which jurisdiction is best for
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on which jurisdiction is best for your business, preferred tax regime, company structure.
Today, a Nevis LLC is one of the top choices of the best international asset protection lawyers and entrepreneurs around the world. Nevis has gained an international reputation for financial privacy and asset protection because of its progressive and debtor-friendly laws. For example, it has strict confidentiality laws that forbid any disclosure of directors and shareholders of LLCs incorporated there except under court order. Whilst the LLC itself is registered, there is no public record of its members or managers. Furthermore, no annual or other reports by members need to be filed with the Financial Services Department of Nevis. The entity’s records may be maintained anywhere in the world.
As we said above, a Nevis LLC is usually managed by the manager, not by the members. The LLC operating agreement can require a unanimous vote to change the manager. Also, two managers can be appointed to support the interests of two member parties. In this case, the managers split the control 50-50, since each of them holds 50% of the vote. Thus, neither party can make changes to the company or set up arrangements single-handedly, without the consent of the second party. This feature provides an additional way to safeguard your business interests.
A Nevis LLC incorporates the most protective features of an offshore trust and a limited partnership into one flexible corporate entity. It does not require minute books, annual director or member meetings, or compliance with other typical corporate formalities. If your LLC is controlled by a Nevis-based manager, that provides the best asset protection. A properly engineered Nevis LLC will delegate all important duties to this managing director, who works in the capacity similar to a managing member. When you invest your assets and become a member of the LLC, your rights are similar to owning any other business anywhere in the world, however, you no longer directly own the contributed assets. This transfer of control is exactly the feature that helps to protect the LLC’s assets from foreign court orders. A non-Nevis court cannot order the repatriation of the LLC assets, because they are controlled by the manager. Moreover, a Nevis manager is not subject to any foreign jurisdiction. For example, if a person was sued in the US, their creditors would be limited to a charging order against the LLC interest, which would mean that the creditor would only have the right to claim profits or liquidation distributions due you from the LLC. The creditor us unable to seize the membership interest. The creditor has no right to vote or exercise your other membership rights, such as the right to inspect books and records. Since the manager of the LLC is required under Nevis law only to recognize a creditor’s charging order obtained through the Nevis courts, a court order from another country to transfer or seize your LLC interest can be totally ignored. In the worst-case scenario, the Nevis manager of your LLC would withhold profit distribution that may be arrested by the charging order creditor. If you are an LLC member with a minority interest, and if withholding distributions would create a conflict of interests with the other members, you can secure your LLC interest via another Nevis LLC that belongs to you. You will be able to transfer the LLCs distributed profits there. A debtor-member of a Nevis LLC can access funds other than distributions of profits. The charging order would not apply to such payments as salaries or loans made to you by the Nevis LLC. Under certain circumstances, Nevis law and tax regulations in the US and other countries impose income tax liability on a charging order creditor for LLC profits attributable to the debtor-member (the move known as “a poison pill”). In this situation, the creditor may incur a tax liability in your home country even if they recovered no money or assets from the LLC.
If a Nevis LLC member has an existing creditor, the Nevis LLC ordinance specifically permits the member to transfer their assets to the LLC, and this transfer will not constitute a fraudulent conveyance in case the debtor-member’s interest is proportionate to the capital they contributed in the LLC. When you invest in a Nevis LLC, your money will not be considered a fraudulent transfer, it will be classified as a fair value exchange, which is expressly exempt from the Nevis fraudulent transfer statutes. A promise of a future investment by a current or future member of an LLC can be used for proportionate measurement under Nevis law. Owing to this, a debtor-member can own a small interest in the LLC subject to the charging order, although this member originally made an investment that constituted all or most of the LLC’s assets. This dilution strategy allows to further discourage a creditor from obtaining a charging order. This is one of several features unique to the Nevis LLC.
Whatever financial situation you are in, you can legally and ethically invest in the Nevis LLC, which will become an effective tool for protecting both your privacy and your assets owing to the minimal financial reporting requirements and the opportunity to transfer asset management responsibility.
There is no doubt that the most reliable way to find out all the intricacies of a foreign legal and financial systems is to take personalized advice on your situation from a professional with vast experience in this area. Contact our portal for an individual consultation today!