Offshore Company Formation For Your Business

Take Advantage of Local Laws in Foreign Jurisdictions

INTRO

What is an Offshore Company?

An offshore company formation is an entity formed outside the country where its main operations are carried out. The term ‘offshore’ means that the company acts as a non-resident where it is formed or incorporated. Another prominent feature of an offshore company setup is that usually the company’s members and directors live outside the country where the company is incorporated giving the entity a non-residential status.

An offshore company definition, however, is not definite, as it largely depends upon the purview of the entity’s activities and the jurisdiction which the business entity was incorporated. Many countries omit the word ‘offshore’ entirely from the company ordinances even though the entity might function similarly to a company, such as Malta, Cyprus, Scotland, or England.

Herein is what makes the offshore formation service industry so confusing; as many modern financial centers like Luxembourg, Cyprus, and Malta have international business entities that enjoy many of the same benefits in regards to tax benefits and corporate flexibility as traditional Caribbean tax havens even though they are in Europe.

There are, however, some distinguishing features which separate traditional offshore jurisdictions from modern ‘onshore’ financial centres, namely: fewer reporting requirements, public registries that are not open to the public, and generally as a whole tax havens offer more tax reduction possibilities.

Despite these differences, many of the same financial activities and offshore corporate services can be found in both types of offshore jurisdictions such as the creation of Captive Insurance funds, Hedge Funds, Bank Accounts, and Mutual Funds to name a few.

Differences Between Domestic And Non-Resident Companies

There are no clear-cut boundaries between onshore and offshore , as offshore financial services and corporate laws can be found in modern onshore financial centers. The state of Delaware in the United States, for instance, is one of the most historically significant corporate tax havens in the world, and yet know one knows about it.

Its simple legal structure and favorable corporate tax laws were shaped in the early 20th century to make it attractive and easy to form and manage a corporation.

As a result as of today, around 60% of the companies on the Fortune 500 list are incorporated in Delaware, making America one of the largest tax havens in the world.

Panama has taken its inspiration from US corporate laws, originally modeled after Delaware’s in 1927, that have evolved to include progressive business regulations from Lichtenstein creating an offshore financial centre that has parts of both worlds. Many nations aim to attract foreign businesses and investors by making corporate and tax laws friendly to non-residents individuals and international corporations.

Offshore jurisdictions offer tax-exempt status to foreign companies provided they restrict commercial activities outside the jurisdictions’ borders and do not engage in any type of business exchange with local residents. Additionally, many offshore jurisdictions’ corporate laws are written to ensure client confidentiality, the details of which are not usually made available to the public, phishing creditors, or intrusive foreign parties.

This is not to say that your details will never be shared, as it depends on whether the country is party to any TIEAs that are signed with your primary country of residence, which facilitates automatic tax information or are a signatory of the CRS. Both of which make it much more difficult to remain anonymous.

Though places like Panama and Nevis both known for the banking secrecy laws and fierce asset protection clauses, they will not share your details or make you report anything to your own country, however, the issue is the country where you reside which may require you to report your foreign income, assets, or companies.

In this situation, the only way to fully release yourself from the bondage of your home countries reporting and taxation requirements is to move residence and become a primary tax residence of a country that does not tax foreign earned income.

Confidentiality And Asset Protection: The Hallmarks Of Offshore Jurisdictions

Confidentiality, in today’s offshore industry, does not mean complete anonymity as it used too, it means that your assets, and business structure are not open to the public and are not shared or given out to curious organizations, creditors, lawyers or whoever comes asking. If you are trying to hide your money from your government. Let me stop you, as you should always follow your country’s tax laws.

If your country is a member of the Common Reporting Standard (CRS) or has any Tax Information Exchange Agreements (TIEAs) with the offshore jurisdiction where your company is held then it is likely that your government already has access to your tax information.

Confidentiality in offshore companies is not about hiding from the government, it is about having privacy so that unscrupulous people, unwarranted lawsuits, threats, spouses, legal disputes etc. will not have access to your company nor your assets.

Despite the changes in the international system forming a properly structured offshore company with a bank account there still are tax advantages, levels of security and asset protection when properly designed are not found in any local domestic company.

Why Offshore Company Formation?

Anyone stands to benefit from incorporating offshore. If we remember that offshore companies aren’t necessarily about getting established in some fancy Cayman Islands International Company (although in reality, the Caymans are a lot less fancy and exotic then the name implies).

If you are an American and you form a company in Cyprus, that is considered an offshore company. A foreign company established in a country other than the country of your residence, for all intents and purposes is considered an offshore company.

The confusion that comes for most people is because there is such a tight association with the term offshore companies and illegality. Whether it’s money laundering, tax evasion or straight-up drug dealing, the media has done a great job in misinforming people.

Offshore Companies act like any normal company but are held for taxation purposes outside the financial system where it is formed thus giving it certain benefits. Companies formed offshore are often used by anyone who owns a global, internet-based, digital, or services company. It can also act as a holding company for assets or bank accounts, for holding physical property, intellectual property, patents, or investments as well as many other financial and investment-related activities.

The benefits gained will be determined primarily on what one is hoping to achieve. While nearly everyone is hoping to reduce their taxes. It might not necessarily work for everyone to go from paying 40% taxes to 0% overnight. Though anyone can start a company offshore , not everyone receives the same benefits.

Individuals choose offshore companies for any number of reasons. Foreign jurisdictions provide a level of asset protection and security not normally found in traditional ‘onshore’ jurisdictions. This is because offshore financial centres have supportive corporate laws and liberal regulations that give space for companies to exist without restrictive requirements, high overheads, and onerous disclosure policies.

Such countries have protective legal systems that enable asset-sheltering to non-residents clients who bring their capital into the country. Asset protection gives foreign investors the security needed to securely invest in a foreign country. As a result, many foreign banking and financial systems have created a set of strong legal codes to ensure the industry.

These include ease of incorporation procedures, management flexibility, financial accounting discretion, and nominee services, to name a few. In the next section, we’ll discuss these in more detail.

What Type Of Businesses Benefit?

It really depends on what your business is, where you reside and what you hope to achieve by going offshore. Some individuals who are to benefit the most from a foreign-based company are those with business and financial activities in:

Companies that are established in an overseas country or conduct business outside the borders where one resides are best suited for international companies as well as businesses with a global or non-localized structure such as internet-based service industries as well as services providers and consultants, brokers, and currency traders.

Online businesses and anything not dependent upon physical infrastructure works best as it gives the individual more room to change locations and not be dependent upon the country of residence to define their tax burden.

For instance, even though you are a citizen of a high tax country, if you hold a UK passport, live in Thailand, have an online e-Commerce business where you take online payments processing in a third country, you could incorporate a business and have an offshore bank in Hong Kong where you would be able to minimize your overall tax burden much more than if you lived, worked and had your company all in the UK.

The defining feature for most people, if they desire to become completely tax-free, will be dependent upon your country of residence. While most people may not be ready to move to a different country to escape taxation, it may not be as difficult as it may seem.

For today’s entrepreneur, to best take advantage of your financial freedom, the most reliable strategy is to create a global mindset, by creating an offshore lifestyle maximizing your international leverage by diversifying your residency, company and accounts across multiple jurisdictions.

Advantages Of Incorporating Offshore

An offshore company has a variety of uses and benefits for clients wishing to engage in international financial trade and investment activities. Depending on the specific offshore jurisdiction companies that are formed offshore may have the following features and advantages:

What Is An Offshore IBC (International Business Company) ?

What Is An Offshore LLC (Limited Liability Company)?

An International Business Company (IBC) refers to a type of offshore structure, which engages in international business activities in trade or investment and remains exempt from local corporate taxation, provided that its revenues does not come from local sources.

A Limited Liability Company (LLC) is a company that provides limited liability to its owners and partners. It is a hybrid business entity with a flexible arrangement, allowing power and responsibilities to be named and distributed through its charter.

There are many benefits of an Offshore LLC which are given due to its pass-through tax structure, making it particularly attractive for investment purposes or for shared business ventures.

There are, however, some important questions you should ask yourself when setting up your offshore company.

Once these 3-steps have been completed, we will contact you to establish whether or not there are any additional requirements, documents or signatories needed to successfully file your application with the appropriate jurisdictional Registry.

Forming an offshore corporation is not as complicated as it is often made out to be. In fact, the offshore corporate services industry is often not only easier to establish a company but often is quicker, less hassle with rates even comparable to that of many modern financial centers. To form a company the entity must draw up and submit:

The Memorandum of Association represents the companies external affairs and complements the Articles of Association which represents the internal dynamics and structure of the company including the by-laws, purpose of the company, organization of its members including the Director, Shareholder, and Secretarial duties, as well any financial obligations, share capital, meetings, and any day-to-day tasks.

These documents are sent off to the appropriate jurisdictions’ Corporate Registers Office.

z2Any additional requirements of a newly formed company post-incorporation are dependent upon your needs and wishes, which may include the appointment of the company’s first director, the first meeting and appointment of company officers, registration of directors (in which nominee services may be used), issuance of company shares, and the opening of any international bank account.

Offshore Formation With Bank Account (Corporate Or Business Account)

Opening a corporate account for your offshore company is quickly becoming standard practice these days as many foreign jurisdictions are making it more difficult to open a personal account without a local company.

A business or corporate account actually gives you more advantages than a normal personal account and if properly paired with a multi-jurisdictional corporate structure, can be used efficiently to take payment processing from places such as Stripe and Paypal from pretty much anywhere in the world without running into difficulties.

Being able to receive funds from clients and customers is perhaps the most important and the most difficult piece of the offshore puzzle. Making sure that corresponding banks will accept transfers, that your banks will continue to allow large transfers using these mediums while following all of the rules making sure you have fulfilled all of your obligations is why we are here, to help you make sure you have a solid plan in place.