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How to Establish a Classic Offshore Company in 2023-2024

An offshore company is a legal entity registered in the country that differs from the place of permanent residence of its founder and shareholders. In simple words, an offshore business is any structure formed in a foreign jurisdiction where the owner is usually interested in tax incentives.

Classic offshore companies can now be set up only in the jurisdictions blacklisted by FATF and OECD, the main international regulators. This is not the best option as you will face a large number of restrictions and potential risks.

Classic Offshore Companies

The entrepreneur who sets the goal of developing a business abroad should start a company in a destination where the requirements of international laws are complied with and operational activities are possible. It does not mean that offshore companies can no longer be used – however, you have to take any steps only after a thorough preliminary analysis.

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If you are planning to start an international business structure, an offshore trust, a fund, a holding company, or a limited liability company in an offshore jurisdiction, you will need to correctly choose a country to carry out your business activities and protect your capital. Use the services of our experts who are competent enough to give you professional advice. The first session is free!

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Offshore Business: New Rules

More than 60% of international entrepreneurs preferred using classic tax havens earlier to set up their company as they wanted to take advantage of tax optimization, asset protection, and confidentiality of business owners and managers. However, the situation has changed: it is practically impossible to conceal the beneficial owner’s name today, and you can have zero taxes only if you fulfill a number of conditions.

Even the destinations that have recently been considered classic offshores (Marshall Islands, Belize, British Virgin Islands, the US states of Delaware and Wyoming, and others) are no longer regarded as tax-free zones where you can hide your identity and capital.

However, there still exist some legal ways of tax optimization, reduction, or minimization to zero. You can take advantage of these opportunities if you know the nuances of structure incorporation and correctly choose the country to form a business, trust, fund, or a classic offshore corporation.

It may seem at first glance that it is easy to register an offshore company. However, practice shows that entrepreneurs do not have sufficient legal and tax expertise to choose a particular country and a type of legal entity to register a business abroad. This fact creates a lot of obstacles not only in the process of structure formation but also later on.

How to set up an offshore company for intense business activities then? This predominantly requires understanding the essence of the procedure and taking into account all the legal and tax aspects. The founder should also be psychologically ready for the offshore business as he/she will face a lot of difficulties. The main focus to be taken care of in advance is financial stability as offshore company registration is not a low-cost project.

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How to start an offshore company in 2023? Where to open a bank account for international business? What are the best countries to register an offshore structure? Which states offer the maximum protection of the interests of beneficial owners and foreign investors? Book a session with our experts to get useful tips and detailed answers to all your questions!

How to Form an Offshore Company: Theory and Practice

Here are some steps you will have to take before you establish an offshore business.

1. Legal Framework and Offshore Norms

You should have a basic idea about an offshore company and problems related to it to minimize the possibility of receiving claims from regulatory authorities. It is excellent if you know how offshore companies work and have an idea about the countries blacklisted by OECD. It is essential in the 2020s to find the right combination of tax incentives and a high reputation of the country where the company will be registered and an account for financial transactions will be set up. It depends on the specific nature of your business, the composition of shareholders, and the profit you intend to obtain from the activity.

You should have a clear idea about economic substance and a controlled foreign company in terms of your responsibilities as a foreign company owner. It is also important to take into account the tax consequences connected with the place of legal entity formation and the country of tax residency.

2. Offshore Company Registrar is Important!

Engaging a professional offshore services provider is an efficient solution for foreign entrepreneurs. A good partner will not only provide the services stipulated in the contract but also find an optimal solution, collect the required documents, register an offshore company, and open a bank account. Professional assistants will also be useful to simplify administrative tasks management and help after incorporation.

The examples of obligations after starting a business include:

  • Company extension for the second and subsequent years
  • Submission of financial reports, annual tax returns, etc.

There are two popular kinds of offshore services providers: universal and specialized ones.

  • Specialized service providers concentrate on the services rendered in one country. These providers are physically based in this particular jurisdiction and may be licensed as a registered agent. It makes sense to cooperate with them if you know exactly in which country and why you start a foreign company.
  • Universal providers provide the services of offshore company registration in different countries. Check how experienced they are and use their services if you need to build a long-term offshore structure that you will develop for many years. Pay attention to the fact that universal offshore companies are not registered agents but they are engaged in close cooperation with the best of those wherever it is necessary to register offshore companies.

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We propose complex assistance to our customers which includes the registration of an offshore structure, choice of a country, opening an account, accounting services, dealing with customs and tax issues, and many other things. The geography of our portal’s clients encompasses all the continents, and we have our partners and agents there who can provide the services from the list of those accessible (see the Services section).

3. Offshore Business Financing

In addition to standard expenses on company registration in the offshore territory and business extension, be prepared to incur additional costs. Additional expenses may be required for the following:

  • Opening a bank account
  • Registration of corporate seals
  • Renting corporate or virtual offices
  • Ordering an apostille, audit, nominee services, escort, etc.

Sometimes these services are concealed from customers, but it will be impossible to carry out business without them. Therefore, it is important to foresee them in advance and develop a long-term plan for 5-10 years ahead.

Offshore Company Structure: IBC, LLC, Pte Ltd — What to Choose?

There are 3 main offshore company structures used in the international business:

  • International Business Company (IBC)/Business Company (BC)
  • Limited Liability Company (LLC)
  • Private Limited Liability Company (Pte Ltd).

Their characteristics are compared in the table below:

 Key characteristicRecommended countries
IBCAllowed to carry out international business (trade, investments).
Exempt from the local corporate tax if the IBC does not carry out business in the country of incorporation.
Quick registration.
Banking and corporate confidentiality on the highest possible level that allows to avoid being blacklisted by FATF and OECD.
Minimal requirements for reporting.
At least 1 director and 1 shareholder are required (these positions can be taken by the same person).
Nevis
St. Vincent and Grenadines
Marshall Islands
BVI
Belize
LLCThis is a hybrid between a corporation and a partnership.
Exempt from the local corporate tax on the assets or income received outside the country.
The members are not personally responsible under the debts and obligations of the business.
Members only instead of shareholders and directors.
Minimum requirements for reporting.
At least 1 member is required.
Belize
Cook Islands
Nevis
Separate US states.
Pte Ltd.Private business with the number of shareholders not exceeding 50.
Limited liability of shareholders.
It concludes contracts, acquires assets, and files lawsuits on its behalf.
Low tax rates / exemption from taxes on the income received abroad.
IPO is impossible.
More reporting requirements than in the case of an IBC.
Canada
Great Britain.

The corporate norms of many countries change on an annual basis. We strongly recommend consulting experienced specialists before you register an international company to make sure you have correctly selected the jurisdiction.

Choice of a Country to Register an Offshore Company

Here are the factors to take into account when you choose a country to incorporate an offshore company:

  • The jurisdiction should be ideally suited for a certain activity, development, and subsequent use of the profit. 
  • The choice will be determined by the reputation and the economic and political stability of the country where your foreign company will be registered. You should also take into account the geography of customers, partners and investors to find an optimal place to form a future structure convenient for all business participants.
  • A bank account and accessible currency are also important when you launch your business operations in the world market.
  • Sanctions and restrictions applied to your country. However, even in this case our specialists will help you safely start an offshore company, set up a trust, or establish a fund.
  • Tax incentives and their connection with the place of tax residency of shareholders, beneficial owners, and founders of the offshore company. In this case, you will need a complex analysis of all related countries, which is hard to do on your own. Use the qualified support of International Wealth experts!

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