Why register a company in an offshore jurisdiction? Large corporations, such as Microsoft, Apple, and Google seem to know the answer to the question as they have a lot of offshore subsidiaries. The main opportunities offered by offshore destinations include a legitimate way to reduce the tax burden, quick business expansion, and optimization of business processes. Want to set up an offshore company by trusting the choice of transnational corporations? Let’s take a close look at offshores in this post as they continue to successfully attract investors through appealing offers for offshore company formation. You can click on the link to discover more details!
What is an Offshore Company?
Let’s look at the main misconceptions connected with offshore companies:
- They are sometimes confused with offshore exploration and extraction of oil and gas. An offshore company is not the one that engages in this industry, though – it is a much broader term!
- Journalists want to make attractive headlines, which results in the strong association of offshore companies with scandals and illegal practices. This is not true as an offshore company is an instrument that can be used in a legal or illegal way.
An offshore company is simply a legal entity that its owner forms outside the country of his/her legal and/or tax residence. It can also be called a foreign or overseas company, or a company set up abroad.
An offshore company takes advantage of all the benefits offered by the country where it is formed if it generates 100% of its profits outside the offshore jurisdiction.
The country that is referred to as an offshore jurisdiction is not always an island – it is simply a destination that offers attractive conditions for investors from abroad who wish to start their businesses.
Offshore jurisdictions offer some typical advantages, such as pro-business laws, reliable asset protection, low or zero tax rates, high confidentiality requirements, access to well-developed infrastructure, and so on. In addition, it makes it possible for high-risk or restricted businesses to develop, including gambling, forex, or crypto businesses, by offering easy-to-obtain licenses.
Benefits of Offshore Destinations
Let’s take a closer look at the main takeaways:
- The cost of offshore company formation is usually quite affordable.
- Offshore companies typically benefit from low or zero tax rates on the condition that they do not generate any profits within the country of registration, including by cooperation with local companies.
- There are usually minimal reporting requirements you will have to meet – no need to file financial reports or have them audited, for instance, or the possibility to keep the company documentation in any country (not just in a local office).
- Offshore countries create an appealing business environment and simplify doing business as much as possible.
- Company top executives and owners can keep their identities secret (to the extent possible, of course, as absolute anonymity is impossible – there is at least one person, usually the registered agent, who knows the beneficial owner. However, this information is not publicly disclosed unless there is a serious reason to provide it, like a request from law enforcement agencies).
If you asked us to mention the best offshore jurisdictions, we would opt for Seychelles, Cayman Islands, Anguilla, Nevis, British Virgin Islands, Bahamas, Panama, Marshall Islands, and so on.
Offshore Company Establishment: Rationale
Let’s look at the main reasons why entrepreneurs set up offshore companies – some of them may seem critically important to you:
- Access to the best international banking services. It is important to look for the right bank before you set up a company as not all banks agree to work with offshore companies. However, there are many of those that welcome offshore businesses and provide top-notch services to them. It is true that opening an account for an offshore company with a European bank may be hard, but there is a way out – welcome to our portal (follow the above link) to discover it!
- Endless business opportunities. No matter whether you are a transnational corporation or a freelance programmer based in an offshore jurisdiction, the geography of your customers is subject to no restrictions at all! You can register intellectual property and carry out business activities that are not allowed in your country of residence (such as gambling).
- Straightforward incorporation procedure. You can register an offshore company online using a power of attorney and the services of a registered agent. Hard copies of documents are no longer required – and though this does not guarantee full confidentiality, it is still very convenient.
- Low capital requirements. There are many offshore jurisdictions where you can start a company with a capital of 1 dollar or euro!
- Low maintenance costs. The general administration expenses may be very low – especially if the jurisdiction does not have economic substance requirements (such as a local office). You are generally not obliged to submit annual reports and so on. There is often only one requirement you will have to meet, and this is the annual extension fee.
- Tax optimization. Setting up a company in an offshore jurisdiction does not automatically mean you will not have to pay any taxes at all (even if you generate 100% of your income abroad), but you will be subject to really small amounts in the majority of cases (and sometimes to a complete zero!).
- Confidentiality. It differs from jurisdiction to jurisdiction, but it is on average higher than in your home country. You can have more privacy by using nominee service which is allowed in the majority of offshore jurisdictions.
- No reporting requirements. Keep in mind that while you are not obliged to submit the reports to local authorities, you still have to keep your accounting properly to comply with FATF recommendations.
- Asset protection. There are jurisdictions where your assets will enjoy bulletproof protection as these countries do not recognize the decisions of foreign courts. These are first of all Nevis and Belize, and you can read more about them on our portal (use the above link and search for articles on these destinations).
- Online business. You will not have to leave the comfort of your home – a laptop will be enough to run your offshore business and engage partners from different countries!
Interested in offshore company formation? You can follow the link above to read more or ask your questions using an online chat.