It is not too difficult to set up an offshore cryptocurrency company as many jurisdictions such as Hong Kong, Bulgaria, Estonia, the BVI, etc. allow working in this industry. In some cases, you do not even have to apply for a license to engage in this type of business. The main advantages of setting up a crypto company in an offshore jurisdiction are low or zero taxes and enhanced confidentiality of the company owners’ personal information. Only the electronic wallet owner’s information becomes public while no others have to be identified. Thus, an offshore crypto company offers maximum possibilities at low costs.
If you register an International Business Company (IBC) in an offshore jurisdiction, you will have the right to operate in any country that does not prohibit crypto operations. At the same time, no taxes are payable in the country of the company domiciliation (if you choose the right one). The company remains operable by paying a fixed annual fee.
List of offshore jurisdictions for cryptocurrency operations
Since the first Bitcoin transaction was made in January 2009, the number of cryptocurrencies has grown significantly. Today, there are over two thousand tradable cryptocurrencies and new ones can be introduced at any moment.
The main advantage of digital money is that it does not depend on any national state nor national currency. Economic and political changes in a certain country will have little effect on Bitcoin, Ether, or any other cryptocurrency.
It has to be admitted that crypto operations are prohibited in some countries such as China and Vietnam, for example. In other national states, all the relative legislation has been passed and all the necessary crypto mechanisms have been put into place. There is a third group of countries that do not recognize cryptocurrencies as a means of payment but do not prohibit their circulation either.
There are several jurisdictions that look especially attractive for launching a crypto business there. There include the following ones:
- Georgia in the Caucuses – since 2019, cryptocurrency operations are VAT-exempt.
- Estonia – a jurisdiction very friendly to crypto businesses.
- Switzerland (the canton of Zug) – an ideal place for a family office.
- Malta – a country with an efficient financial market.
- Gibraltar – special incentives for startups engaged with monetary technologies.
- Singapore – precise crypto business regulations and three classes of crypto licenses.
Your ultimate choice of the jurisdiction will depend up the amount of capital that you are going to invest, your requirements to the banking system in the country, the intended form of company ownership, and many other factors such as the possibility to carry on a stable business (Jersey looks inviting in this respect).
Besides, many offshore jurisdictions offer tax exemptions to the companies engaged in digital asset business – no personal income tax, nor VAT, nor corporate tax are levied. In Georgia, for example, the company can have 100% foreign capital and individuals gaining profits from crypto-related activities are not subject to the personal income tax in the country. No tax is also payable when digital assets are converted into Georgian laris (the national currency in the country) or in any other currency.
How you can use offshore jurisdictions to minimize taxes
We have been keeping track of the latest development in the crypto business but this sphere of business is still very young and tendencies are only being formed at the moment. It is very hard to make up a sure plan of going into crypto operations in an offshore jurisdiction and each case has to be treated individually.
Please note that our advice on cryptocurrency business is based on the experience of our clients.
You are welcome to apply for a personal consultation on setting up a crypto company in an offshore jurisdiction. We will be happy to help you choose the best country to open a company and a bank account for you crypto operations.
The main advantages of going into the crypto business include the following ones:
- The opportunity to make Bitcoin investments without worrying about the fait currency exchange rates;
- The possibility to use digital money when paying for products and services with POS terminals or making bank transfers;
- Lack of state control over crypto-related activities (with the exception of the countries where such activities are prohibited);
- Easy conversion of digital money into fiat money without paying any taxes in the country of the company domiciliation;
- The possibility to use Free Economic Zones in countries with well-developed blockchain technologies.
Almost all offshore jurisdictions put forward one important requirement: do not do any business on their territories and do not offer any services at the local markets.
Please keep in mind that in some countries, there is still no understanding how cryptocurrencies should be classified and how this type of assets has to be taxed. You are welcome to seek our advice on choosing the right jurisdiction for your offshore crypto company.
Advantages of setting up an offshore crypto company
Crypto traders can gain maximum advantages from setting up a company in an offshore jurisdiction. The key advantages include the following ones:
- Efficient asset protection;
- A high level of beneficial owners’ confidentiality and separation of company assets from personal assets;
- Tax incentives: some states consider cryptocurrencies financial instruments but they do not consider them moneys;
- A simple procedure of setting up an account with payment systems including those domiciled with the EU;
- Several forms of company ownership available: the choice will depend on your business goals.
Some disadvantages of working in the crypto business in an offshore jurisdiction
There is no uniform policy in regard to cryptocurrency operations, which entails certain drawbacks. The key drawbacks include the following ones:
- The need to exchange cryptocurrencies into fiat money to make regular payments as far from all organizations and state bodies will accept payments in a cryptocurrency;
- A limited choice of banks as banks classify crypto business as high-risk business and far from all banks will provide services to a high-risk company;
- A high level of cryptocurrency volatility: the rates rise and fall rapidly and it is hard to tell how much the Bitcoin or Ether is going to cost at a certain moment in time;
- The confusion in the classification of digital assets may lead to some extra taxes – both for the company and for the owner.
Please also bear in mind that some national states require that you declare having a foreign company to the tax authorities in your home country.
Acquiring a cryptocurrency license in an offshore jurisdiction
If you would like to set up a crypto company in a foreign country including classic tax havens, you have to realize that you will need a license in most cases. The kind of license that you will require depends on the country where you want to open a crypto company as the regulations vary from one state to another. If you want to trade cryptocurrencies for personal needs, no license is going to be required most of the time. However, if you plan to make an ICO or involve third parties in the exchange operations, you do need a license.
Our experts provide legal assistance in acquiring cryptocurrency licenses in offshore jurisdictions.
CFC regulations related to offshore crypto companies
There are offshore jurisdictions that have public registers of company owners and those that do not. There are countries that automatically exchange non-residents’ financial information with the tax authorities of their home countries and those that do not. There are jurisdictions that require keeping financial records and filing annual reports and those that do not.
However, you have to find out about the CFC (Controlled Foreign Company) regulations applicable in your home country. You certainly do not want to be fined nor go to jail for tax evasion. We will be happy to tell you what CFC regulations your country has if you tell us where you come from.
Other benefits that offshore jurisdictions offer to crypto companies
When choosing the offshore jurisdiction where you can open a crypto company, you should think beyond the tax benefits that are available there. The general attitude of the country’s authorities towards crypto business, the corporate legislation in effect there, and the availability of the business infrastructure are also important. Luckily, most offshore countries welcome all sorts of innovations and modern technologies so you are likely to find the local authorities quite friendly to your crypto business in the country.
A serious advantage of the enterprise that we are promoting here is that your home bank account number, nor your social security account, nor any other identification information will be added to your crypto company account. Many national states are competing with each other in the development of the crypto sector. Gibraltar is rivalling Malta, Estonia is rivalling Switzerland, and Georgia is trying to match Jersey in attracting foreign crypto investors. Naturally, each country will have its own pluses and minuses.
One danger to watch out for, for instance, is the possibility to become subject to double taxation when setting up a crypto company abroad. In some national states, cryptocurrencies are regarded as financial instruments and simultaneously as monetary assets. This may make you taxable in both categories.
We highly recommend involving qualified experts in preparing a business plan for your crypto operations in an offshore jurisdiction. You have to scrupulously study the crypto-related legislation of the country that you are considering.
Please bear in mind that different offshore jurisdictions offer different levels of confidentiality protection, they have different legislations, and provide for different business opportunities. We will be happy to assist you in choosing the best country for your crypto company as well as setting up an account with a bank that is tolerable to high-risk businesses and that will agree to provide banking services to your company.
Another important point to remember is that many international entrepreneurs engaged in crypto business like to set up more than one legal entity to carry out the business operations. They often register an LLC and an IBC or an IBC and a trust or an IBC and a fund, and so on.
If you have any questions related to the opportunity to set up a crypto company in an offshore jurisdiction, please do not hesitate to contact us by email, telephone, or our online chat. We will provide the first consultation free of charge.
What benefits can I acquire by setting up a crypto company in an offshore jurisdiction?
The first important benefit is the protection of your personal information confidentiality and your assets. The second benefit is the opportunity to lessen your tax burden as offshore jurisdictions offer tax incentives to foreign investors. In addition to that, the Bitcoin (or any other cryptocurrency) is not pegged to any national currency.
What drawbacks will I find if I set up a crypto company in an offshore jurisdiction?
Cryptocurrencies are highly volatile and it is hard to predict how much the Bitcoin, Ether, and so on is going to cost in a while. The second problem is the small choice of banks that will be prepared to take a crypto company onboard. At the same time, our experts will gladly help you to set up a bank account for your offshore crypto company.
What is the best jurisdiction to set up a crypto company?
The most popular jurisdictions among crypto business people are Malta, Gibraltar, Switzerland (the canton of Zug), Nevis, Georgia, Singapore, and Estonia. Jersey, Armenia, and Cyprus are also rather popular. The choice of the jurisdiction will largely depend on your personal situation and your business objectives.