Portugal is a country known for its delicious gastronomy, sunny weather and cheap cost of living. This superb quality of life has attracted many...
After building successful businesses in collaboration with partners, some successful individuals are tired of paying high taxes and dealing with monstrous bureaucracies that hurt their pursuit of financial freedom and smooth operation. Others just want to start a new business venture abroad.
Plus, with the rise of online industries, emerging markets, and the possibility of working anywhere in the world, many entrepreneurs are questioning the need to stay in countries where the income and corporate tax rates are excessively high and business regulations are suffocating.
What’s the point of paying confiscatory taxes if you can go to a country where there are no taxes at all? Some are just happy with finding better tax regimes.
From vibrant Central American hubs of opportunity to offshore havens in Asia and Africa, you’ll discover the best countries to form a limited partnership in today's article. If you want to approach tax saving and asset protection differently, check out these countries where you can tap into a realm of unlimited possibilities.
Panama is indeed a strong economy and one that has a lot to offer a wide range of expats. Its a land of opportunity
PANAMA: THE HUB OF OPPORTUNITY IN CENTRAL AMERICA
Panama might not have the highest GDP in the Latin American and Caribbean region. Still, given its world-class infrastructure, privileged geographical location, and tax and business regulations, it's a land of opportunity.
According to the World Bank, Panama’s growth in 2021 and 2022 was 15.8 and 10.8%, respectively. Also, contrary to Western countries, its inflation rate has been modest (under 3%). Panama is indeed a strong economy with lots to offer to a wide range of expats, including those wishing to build limited partnerships.
Panama’s business regulation allows individuals to form limited partnerships (in Spanish, Sociedad de Responsabilidad Limitada) of at least two members and a maximum of twenty. This business structure offers much flexibility because it can be used to develop any commercial activity in Panama.
Thanks to its simplicity and quick formation process, limited partnerships in Panama have become the preferred choice for foreign investors seeking to expand into the country.
Here are some of the advantages of limited partnerships in Panama:
- No Mandatory Annual Accounting and Financial Statements: contrary to other business structures, with a limited partnership in Panama, you don’t have to prepare and file annual accounting and financial statements, reducing administrative trends and increasing the efficiency of business operations;
- Appointment of an Administrator: the partnership’s affairs can be managed by an administrator. In other words, you can delegate responsibilities and ensure efficient operations;
- Limited Reporting Requirements: Limited partnerships in Panama are not obliged to file annual returns, further simplifying administrative obligations;
- Flexibility in Decision Making: In limited partnerships with fewer than five members, there is no mandatory obligation to hold meetings. This helps make decision-making processes flexible and reduces administrative burdens;
- Limited Liability: In Panama's limited partnerships, the liability of partners is limited to their unpaid subscribed capital. Your personal assets are protected, ensuring financial security.
As you can tell, Panama’s limited partnerships come with a range of benefits that provide massive leverage, flexibility, asset protection and financial privacy.
The next country is also in the same region. It presents itself as a booming offshore destination for ambitious investors searching for privacy and tax advantages.
Related content: Panama Pacifico And the Colon Free Trade Zone
Like Panama, Belize is a stable economy with a very business-friendly environment, as well as being labeled a tax haven
BELIZE: AN OFFSHORE HAVEN FOR SAVVY INVESTORS
Belize is an English-speaking country in Central America that has gained popularity among business investors. This country might be a bit under the radar compared to other members in this list, but it has numerous benefits for those seeking to form limited partnerships.
Like Panama, Belize is a stable economy with a business-friendly environment. On top of that, it’s labelled as a tax haven, making it an enticing destination for a wealth of entrepreneurs.
Although the country does not offer limited partnerships per se, it does offer its own LLC, which is a blend of a partnership and corporation.
Here are some of the advantages of LLCs in Belize:
- Tax Optimization: Belize LLC enjoys a favourable tax policy, exempting it from local taxes such as income tax, business tax, withholding tax, and more. This tax advantage allows you to increase profits and preserve your wealth. Plus, foreign-sourced income is tax-free;
- Massive Privacy: Belize LLCs maintain confidentiality, with information about the identity and register of persons involved not made publicly available. This privacy protection ensures a secure business environment and protection against lawsuits;
- Asset Protection: Belize laws provide robust asset protection, safeguarding LLC’s wealth from being seized to satisfy the debts of individual members. This shields the company's assets and preserves financial security;
- Member's Liability: Belize LLCs limit the liability of its members to the amount they contribute to the company, shielding personal assets from potential business-related risks or obligations;
- Simplicity & Flexibility: Belize LLCs remove the need for annual accounts, auditors, returns, financial statements, tax filings, or annual general meetings, streamlining operations and saving time.
Similar to Panama's limited partnerships, Belize's LLCs come with benefits such as privacy, a favourable tax regime, and ease of management.
The next member of the list is considered by many one of the freest economies in the world. Indeed, its per capita income and its business-friendly environment attract multiple foreign workers and investors. Now, it’s time to explore what Asia has to offer.
Related content: How You Can Get Residency In Belize That Works For You
Singapore is committed to transparency and business, offering a variety of commercial vehicles, including limited partnerships
SINGAPORE: THE ASIAN TIGER WITH TAX ADVANTAGES
It comes as no surprise to find Singapore on this list. This city-state was once one of the poorest countries in the world. Under Lee Kuan Yew’s rule, the country embraced economic openness to attract capital, which granted it quick growth in a matter of decades.
Singapore is also one of the least corrupt countries in the world, which facilitates doing business. This small country takes an active approach to promoting investment by offering a diverse range of incentives, both tax and non-tax related.
Additionally, incentives are available to encourage companies to establish their global or regional headquarters in Singapore, facilitating technology and knowledge transfer while enhancing its reputation as a services hub.
As an economy committed to transparency and business, Singapore provides investors with an array of business vehicles, including limited partnerships.
Here are some of the advantages of limited partnerships in Singapore:
- Perpetual Succession: The Singapore Limited Liability Partnership Act explicitly states that any changes in the partners of an LLP do not affect its existence, rights, or liabilities. This perpetual succession ensures that the LLP can continue its operations seamlessly, even in the event of partner changes or transfers;
- Fewer Compliance Requirements: Singapore LLPs have reduced compliance requirements. LLPs do not require a company secretary to hold annual general meetings and fulfilling certain filing requirements, including tax returns. This simplifies administrative obligations and eases the burden on LLP owners;
- Ease of Management and Decision Making: LLPs provide flexibility in management, allowing partners to define their roles and responsibilities. Put simply, LLPs allow for a clear division of authority and decision-making power among partners;
- Separate Legal Entity Status: Limited liability partnerships (LLPs) in Singapore enjoy the status of a separate legal entity. This sets them apart from other forms of partnerships, providing distinct advantages. Therefore, it can own property, enter into contracts, and sue or be sued in its own name. This ensures that the LLP's liabilities and obligations are separate from those of its partners.
The country's commitment to combating corruption and its proactive approach to promoting investment through diverse incentives further solidify its reputation as a global business hub.
The next list country on our list is also technically in Asia, particularly the Middle East. Not only is it a prosperous economy, but also one of the safest countries in the world. It’s an alluring destination for those looking for a higher income and paying no taxes.
Related content: Permanent Residency In Singapore
In addition to the favorable business environment, the UAE is committed to diversifying its economy and securing its long-term position
UAE: THE OASIS OF TAX-FREE BUSINESS
The United Arab Emirates is one of the tax-free countries par excellence. Like all the countries in the region, it was built upon oil and has attracted much interest from investors and specialized professionals. Almost 90% of the UAE population is immigrants from all over the world.
The UAE has become a hub of entrepreneurship, where affluent individuals go to protect their wealth thanks to the country’s favourable tax regime. From the modern metropolis of Dubai to the cultural treasures of Abu Dhabi, expats are drawn to the UAE for its high standard of living, diverse job prospects, and world-class amenities.
The country's commitment to innovation, business-friendly policies, and top-notch healthcare and education systems further enhance its appeal. It has earned its reputation as a land of opportunity and innovation, and as such, it offers multiple business vehicles to optimize tax savings and business operations. Among those are LLCs and Simple Limited Partnerships, the latter being the most similar to what we’re exploring in this article.
Here are some of the advantages of Simple Limited Partnerships in the UAE:
- Pass-through Taxation: A Simple Limited Partnership does not pay taxes on its income. Instead, the profits and losses of the partnership flow through to the individual partners, who report them on their personal tax returns. And as you may already know, the UAE does not have an income tax on individuals;
- Protection Against Unauthorized Activities: If a limited partner engages in administrative activities beyond their authorized scope, they may be held responsible for all the obligations resulting from such actions. This protects the partnership and its members from unauthorized actions;
- Consensus-Based Decision-Making: By default, resolutions in a Simple Limited Partnership require consensus from all partners and limited partners unless otherwise specified in the partnership agreement. This ensures that all members have a voice in the decision-making process;
- Possibility of International Tax Planning: The UAE's tax regime, particularly in certain Emirates, offers an attractive environment for international tax planning.
On top of its business-friendly environment, the UAE is committed to diversifying its economy and ensuring its position in the long term. Therefore, establishing a simple limited partnership could be an excellent choice to minimize your tax bill and easily access other markets.
The next country, or rather a jurisdiction, might come as a surprise. Now we’re focusing on one of Singapore's neighbours. Despite not being a major expat destination, its tax regime and low cost of living make it an enticing option for foreign investors.
Related content: Residency In The UAE: How To Easily Move To The United Arab Emirates
Labuan offers a tax regime with low fees and taxes for companies, including limited liability companies
LABUAN, MALAYSIA: A TAX-EFFICIENT ASIAN DESTINATION
Labuan, Malaysia, presents a captivating destination for businesses and individuals seeking a tax-efficient and business-friendly environment. Operating as a federal territory, Labuan boasts a unique regulatory framework that sets it apart from other jurisdictions.
Labuan offers an attractive tax regime with low tax rates for companies, including limited liability partnerships. This creates a tax-efficient environment, allowing businesses to maximize profits and minimize tax liabilities.
Additionally, Labuan has positioned itself as an international business and financial center, providing a wide range of financial services, including banking, insurance, fund management, and trust services.
Labuan operates under a robust regulatory framework, ensuring transparency, investor protection, and compliance with international standards.
Here are some of the advantages of Labuan LLPs:
- Powers of a natural person: A limited partnership has the legal status and powers of a natural person. This means that it can own property, enter into contracts, and engage in business activities just like a person would;
- Perpetual succession: Any changes in the partnership's composition, such as partners joining or leaving, do not disrupt its existence, rights, or liabilities. This allows the partnership to continue operating seamlessly and without any interruptions;
- Commonly used for joint venture business: Limited partnerships are often used when multiple parties come together to start a business. Each party's liability is limited to the amount of money they invest and the terms agreed upon in the partnership agreement;
- Limited liability of partners: Partners in a limited partnership have limited liability, which means their personal assets are protected.
Labuan enjoys a strategic location with excellent connectivity to major Asian markets. Its proximity to regional economic powerhouses such as China, Singapore, and Indonesia makes it an ideal hub for international trade and investment.
The next and final country on our list is an African island nation you might have never heard of. Off the coast of Madagascar, this hidden paradise offers way more than stunning beaches and a laid-back lifestyle.
Related content: The Basics Of How To Get A Second Passport Or A Second Residency
Mauritius has established itself as a global financial center, with its robust financial services sector
MAURITIUS: AN AFRICAN GEM FOR TAX OPTIMIZATION
Mauritius is a thriving economy with great allure for expats seeking new opportunities. The country's economy has experienced significant growth and diversification, transforming it into a dynamic and competitive business hub.
Its strategic location has contributed to its economic success. Situated in the Indian Ocean, the island nation serves as a gateway between Asia and Africa, attracting businesses looking to tap into both markets.
Furthermore, Mauritius is renowned for its robust financial services sector, including banking, insurance, and offshore services. The country has established itself as a global financial center, attracting professionals in the finance and business sectors.
Mauritius also offers a favourable tax environment, with competitive tax rates and various incentives for businesses and investors. The country has implemented double taxation avoidance agreements with numerous countries, providing tax benefits and facilitating cross-border trade and investment.
Here are some of the advantages of Mauritius Limited Partnerships:
- Tax-free income from foreign sources: Non-resident partners are only subject to tax on income sourced from Mauritius. Income derived from sources outside Mauritius is considered foreign source income and is not liable to Mauritius tax. Partners who are not tax residents in Mauritius are not subject to taxation by Mauritius;
- Versatility in Use: Whether you're looking to establish a fund, create a holding vehicle, engage in trading activities, set up a special purpose vehicle, or plan for family wealth, the Partnership can cater to your specific needs;
- Flexibility in Structure: By providing a customizable framework, the Mauritius Limited Partnership enables partners to collaborate effectively and efficiently in managing and conducting their business activities;
- Migration Options: The Mauritius Limited Partnership can adapt its legal structure to changing business needs and explore opportunities in different jurisdictions while maintaining compliance with the respective legal frameworks.
Mauritius is a hidden gem in Africa with a solid financial services industry and strategic location. Its Limited Partnership comes with massive tax benefits and flexibility in use and structure, making it an enticing option for many investors.
Related content: How To Get Residency In Mauritius
Each of the countries mentioned in this article offers unique perks that cater to the needs of expats and entrepreneurs alike
Exploring unconventional choices when forming a limited partnership can lead to significant tax savings and asset protection for businesses and individuals. Each country mentioned in this article offers unique advantages that cater to the needs of expats and entrepreneurs.
Panama provides a favourable business environment for limited partnerships, Belize offers tax optimization and asset protection through its LLC structure, Singapore stands out as a global business hub with tax advantages for limited partnerships, and the UAE attracts expats with its tax-free environment and flexible limited partnerships, Labuan, Malaysia offers low tax rates and strategic connectivity for limited liability partnerships, and Mauritius showcases a thriving economy and tax optimization benefits for versatile limited partnerships.
When considering the formation of a limited partnership, it is essential to assess the tax benefits and asset protection offered by each country. By choosing the right jurisdiction, expats and entrepreneurs can optimize their tax liabilities, protect their assets, and secure their new lives abroad.
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Written by Mikkel Thorup
Mikkel Thorup is the world’s most sought-after expat consultant. He focuses on helping high-net-worth private clients to legally mitigate tax liabilities, obtain a second residency and citizenship, and assemble a portfolio of foreign investments including international real estate, timber plantations, agricultural land and other hard-money tangible assets. Mikkel is the Founder and CEO at Expat Money®, a private consulting firm started in 2017. He hosts the popular weekly podcast, the Expat Money Show, and wrote the definitive #1-Best Selling book Expat Secrets - How To Pay Zero Taxes, Live Overseas And Make Giant Piles Of Money, and his second book: Expats Guide On Moving To Mexico.