International leasing companies

The establishment of international leasing companies is a very popular way of utilizing International (offshore) companies for tax planning, due to its fairly simple nature. A foreign leasing company is set up as an owner of assets, like cars, airplanes, trucks, various equipment or even real estate, which then leases to third parties. The main reason to establish international leasing companies is the possibility to qualify for a low tax rate or even full tax exemption for the profits that derive from the leasing, while if the chosen foreign jurisdiction has a low VAT rate, then the mother company may also enjoy significant benefits. However, there is yet another reason. Many companies want to separate the ownership of valuable assets from the operations these perform and this can only be achieved through the establishment of foreign leasing companies.

The chosen foreign jurisdiction for the establishment of international leasing companies should be part of a wide double taxation treaties network, thus reassuring the reduction or elimination of withholding taxes over lease or dividend payments –which is also important in the case of employee profit participation companies -, it should have low corporate income tax rate and finally not impose taxes over profits gained from the sale of shares.