Offshore Glossary:
50+ Terms in Plain English

Anti-Money Laundering. Regulations requiring businesses to verify customer identity and monitor transactions to prevent money laundering. All offshore structures must comply with AML regulations.

Annual Tax on Enveloped Dwellings. UK tax on residential property worth over £500,000 held through a company. Ranges from £3,800 to £269,450/year.

The natural person who ultimately owns or controls a company or trust, regardless of whose name appears on official documents.

British Virgin Islands. Premier offshore jurisdiction. 0% tax on all income. 400,000+ registered companies. Strong corporate law since 1984.

Tax on profit from selling an asset. Rates vary: US 0-23.8%, UK 10-28%, Germany 26.375%. Many offshore jurisdictions charge 0%.

Citizenship by Investment. Programs offering citizenship in exchange for economic contribution. Available in Caribbean nations, Malta, Turkey, and others.

Controlled Foreign Corporation rules. Tax rules that can attribute offshore company income to shareholders in their home country. Major consideration in offshore planning.

Court order directing that distributions from an LLC be paid to a creditor. In some jurisdictions (Nevis), this is the SOLE remedy — creditors cannot seize LLC assets.

Asset protection trust formed under Cook Islands International Trust Act 1984. Gold standard for asset protection. No US court has ever successfully pierced one.

Common Reporting Standard. OECD framework for automatic exchange of financial account information between countries. 100+ participating jurisdictions.

Your permanent legal home — distinct from residence. Determines estate tax treatment in many jurisdictions. Non-dom status provides significant tax benefits in UK, Cyprus, Malta.

Investigation and verification process. In CBI programs, background checks on applicants. In banking, verification of identity and source of funds.

Trust designed to last for multiple generations without triggering estate tax at each generation. Offshore dynasty trusts can last in perpetuity.

Estonian digital identity program. Allows non-residents to form and manage EU companies remotely. Not tax residency — a common misconception.

Electronic Money Institution. EU-regulated entity authorized to issue electronic money (wallets, prepaid cards). Requires €350K capital and PSD2 compliance.

Tax on the transfer of wealth at death. US: 40% above $13.61M exemption. UK: 40% above £325K. Proper planning can legally reduce to zero.

Tax imposed when leaving a country's tax jurisdiction. Applies to unrealized gains. US, Germany, France, and Norway have exit tax provisions.

Foreign Account Tax Compliance Act. US law requiring foreign banks to report accounts held by US persons. Key compliance requirement for US-connected offshore structures.

Report of Foreign Bank and Financial Accounts. US filing requirement for persons with foreign financial accounts exceeding $10,000 aggregate. Penalties for non-filing: $10,000+.

Foreign Earned Income Exclusion. US tax provision allowing Americans abroad to exclude up to $126,500 (2026) of earned income from US taxation.

Legal entity without shareholders. Used for charitable purposes, asset holding, and governance. Swiss, Liechtenstein, and Cayman foundations serve different purposes.

Transfer of assets made with intent to defraud creditors. Transfers made after a claim exists or is foreseeable can be unwound. Timing is critical.

Designated area within a country offering special tax and regulatory treatment. Dubai has 30+ free zones. Common for offshore company formation in UAE.

Global Intangible Low-Taxed Income. US tax on certain CFC income. Affects US shareholders of foreign companies. Can be mitigated through proper structuring.

Generation-Skipping Transfer Tax. US tax on transfers that skip a generation. 40% rate. $13.61M exemption (2024). Dynasty trusts use GST exemption strategically.

Company that owns shares in other companies rather than conducting operations directly. Provides liability isolation, tax optimization, and simplified management.

Irrevocable Life Insurance Trust. Trust that holds a life insurance policy outside the insured's taxable estate. Key component of the Rockefeller Waterfall strategy.

Private benefit flowing to insiders of a tax-exempt organization. Prohibited for 501(c)(3) organizations. Excessive compensation to founders is the most common form.

Tax regime offering reduced rates on income from qualifying intellectual property. Ireland: 6.25%, Cyprus: 2.5%, Netherlands: 9%.

International Business Company. Company type in offshore jurisdictions (St. Lucia, BVI, Belize) designed for international business. Typically exempt from local taxation.

The territory or country whose laws apply to a particular structure. Choosing the right jurisdiction is the most important decision in offshore planning.

Know Your Customer. Identity verification procedures required by banks, exchanges, and financial institutions. Essential for all offshore account openings.

Markets in Crypto-Assets Regulation. EU regulatory framework for crypto businesses. Requires CASP authorization for all crypto services in the EU.

Limited Liability Company formed in Nevis (St. Kitts and Nevis). Strongest LLC protection globally: $100,000 creditor bond, 1-year limitation, charging order sole remedy.

Non-Habitual Resident. Portuguese tax regime offering 0% tax on most foreign-source income for 10 years. Popular with digital nomads and retirees.

Non-domiciled status. Available in UK, Cyprus, Malta. Provides significant tax benefits on foreign income and dividends. Doesn't require leaving the country.

Broadly, any structure or account in a foreign jurisdiction. Not inherently illegal — simply means "not in your home country."

Tax exemption on dividends received from qualifying subsidiaries. Available in Netherlands, Cyprus, Malta, and other holding company jurisdictions.

Tax concept where business activities in a country create a taxable presence. Threshold: typically a fixed place of business or dependent agent.

Payment Services Directive 2. EU regulation governing payment services. Requires authorization for payment initiation, account information, and money remittance.

Local representative required in most offshore jurisdictions. Maintains the company's registered office and handles government correspondence.

Common law rule limiting how long trusts can last. Does NOT apply in offshore jurisdictions — allowing truly perpetual dynasty trusts.

Real business presence in a jurisdiction: employees, office space, decision-making, and genuine economic activity. Required for offshore structures to withstand scrutiny.

Agreement between two countries to prevent double taxation and reduce withholding rates. Critical for optimizing cross-border income flows.

Tax system that only taxes income sourced within the country's borders. Foreign-sourced income is exempt. Used by Panama, Hong Kong, Georgia, and others.

Rules governing the pricing of transactions between related entities. Intercompany charges must be at arm's length — reflecting what unrelated parties would charge.

Legal arrangement where a trustee holds assets for the benefit of beneficiaries. In offshore planning, trusts provide asset protection and estate planning benefits.

Virtual Assets Regulatory Authority. Dubai's dedicated crypto regulator. Provides specific licensing for all virtual asset activities in Dubai.

Virtual Asset Service Provider. Entity providing crypto-related services. Most jurisdictions now require VASP registration or licensing.

Court action that disregards a company's separate legal identity, making shareholders personally liable. Prevented by proper corporate formalities and genuine substance.

Tax deducted at source on cross-border payments (dividends, royalties, interest). Rates: 0-30% depending on jurisdiction and treaty. Proper structuring minimizes withholding.