Why do companies register offshore? The world-known multinational corporations do have the answer. It’s not for nothing that Google, Apple, Johnson & Johnson, Hewlett-Packard, Microsoft, and many others, have set up numerous offshore subsidiaries. They scale up by opening more and more representative offices in offshore locations. This is how they can expand their global presence, fine-tune their business processes, and optimize their tax liabilities in a justified, legitimate way.
Isn’t it time for you to start your own offshore company in 2023? How can your business benefit from offshore registration? What is the legitimate cost-effective way to form an offshore company and run it remotely? Let’s think about your reasons to form an offshore company.
The top reasons to form an offshore company are likely to become even more obvious and relevant, once you look at the definition, the virtues and advantages of offshore companies.
With your offshore business, you can tap new opportunities in different parts of the world at a minimal cost.
Why do companies register offshore? Read this article and book a FREE one-on-one session with our expert on offshore company formation and selection of offshore jurisdictions.
FREE EXPERT CONSULTATION
on which jurisdiction is best for
your business, preferred tax regime,
on which jurisdiction is best for your business, preferred tax regime, company structure.
Back to the Basics: ‘Offshore Company’, ‘Offshore Jurisdiction’
Many articles and websites in various languages provide definitions of offshore companies. However, there are a lot of deliberate and unintentional misinterpretations. There are also many too sophisticated definitions of this term. Besides, it is often confused with offshore (out at sea) exploration and drilling of oil and gas.
As a result, newbies to the subject believe that offshore company formation is illegal or foreign to their business concept. So, to dot all the i’s, let us recap the definition.
In the most basic terms, offshore company formation means that the founder opens a business in another jurisdiction and manages all its operations from his home country or any other location.
Thus, an offshore company is any legal entity, registered abroad to launch a completely new business or expand the existing business across many countries.
‘International Business Company’ (IBC) is another term for ‘offshore company’. Such words as ‘overseas/foreign/abroad’, when used contextually, are also synonyms for ‘offshore’.
A prerequisite for the company’s eligibility for all offshore benefits, including tax incentives, is the offshore company’s foreign source of revenue. Its income needs to be generated in any place other than the country of incorporation.
Incentives for offshore companies are available only in some countries that are called ‘offshore jurisdictions’. These countries depend on foreign investments. To attract investors, they offer very benign terms for offshore company formation.
Whether you form or buy an offshore company, you may be entitled to certain benefits. Almost all offshore jurisdictions offer similar perks: tax advantages, asset protection, access to advanced infrastructure and a business-friendly environment designed to promote certain business types and projects. Besides, they allow offshore companies to engage in some business activities that are banned, restricted, or qualified as high-risk in other countries.
The rule of thumb is that offshore companies cannot run locally-focused business. Otherwise, they will be shorn of their privileges.
For example, if you set up an IBC in Nevis, you will have access to the tax and other incentives in Nevis, as long as your company’s economic activities are conducted outside Nevis, while you can run it and do business from any other country.
Please note, that special requirements regarding the offshore company’s substance and licensing are country-specific and apply to companies operating in certain business fields.
Where to open a gambling business, an offshore bank, or get a Forex license? Browse our offers and learn how to register a certain type of offshore company on favorable terms – with the 360-degree support from our experts.
PROFESSIONAL SERVICES AND PRODUCTS
Virtues of Offshore Jurisdictions
Typically, an offshore jurisdiction differs from onshore countries by the following virtues:
- zero- or low-rate taxation of the locally incorporated offshore companies
- low costs of offshore company formation
- minimal regulations and requirements for offshore companies
- enhanced confidentiality and secrecy for offshore company owners and top executives
- attractive business environment and the ease of doing business (see, for example, how to set up a trust plus LLC combo in Nevis)
The aim of every offshore jurisdiction is to attract investors. To this end, they promote a variety of perks for offshore companies. When asked about the most advantageous jurisdictions for offshore company formation, experts always mention Belize, Marshall Islands, Seychelles, British Virgin Islands (BVI), Cayman Islands, Anguilla, Panama, Nevis and Bermuda.
As for the company data privacy guarantees, we need to mention that offshore company formation is subject to global political and economic trends. Over recent years, many offshore jurisdictions have had to join the automatic exchange of information. Therefore, the level of confidentiality in offshore jurisdictions has generally decreased, compared to several years ago.
However, not all offshore jurisdictions have already embarked on their promises. Besides, there is still an option to hire a professional director. In other words, by an offshore business incorporation, you can still enjoy a certain level of confidentiality. With the right strategy and the right approach to offshore company formation, it is possible to ensure maximum privacy and profound asset protection.
Offshore company formation is not as easy as it may seem. With our expert support and facilitation, you can select the right offshore jurisdiction and have all the keys to your success in your offshore company formation.
Rationale for Offshore Company Formation
An important part of your business planning is the specification of your business purposes for offshore company formation. A great idea is not enough for your success. You have to ask yourself many questions and consider many pros and cons.
Offshore company formation can be a perfect vehicle in a variety of business fields:
- global (international) business,
- e-commerce or web-based businesses,
- advisory and counseling services,
- forex and stock trade,
- venture investments, especially in R&D and breakthrough technologies
- foreign property acquisition
- gambling business
- trusts, foundations, holdings protecting assets from foreign court proceedings, greedy relatives, creditors.
The incentives offered by most offshore jurisdictions are the perfect solutions on your way to realizing your business aims and objectives. They are often the main reasons why investors choose to incorporate their companies offshores.
The top 10 reasons to form an offshore company are:
- Unlimited geography of clients and endless business opportunities. This applies both to large corporations entering the global market and to private investors. For example, freelancers, programmers, IT consultants and digital nomads, all professionals from all over the world can freely create their own brands by means of their offshore company. They can register intellectual property and attract new clients and partners. They also can engage in business activities that are banned in their home country (Forex, brokerage, mining, gambling industry and others). The unlimited access to the world market is an obvious unconditional advantage of offshore companies.
- Access to advanced banking infrastructure of financial centers. This benefit of offshore company formation is very attractive. While many European financial institutions refuse to open an account for offshore companies, or refuse to serve nationals from certain countries, many banks in other parts of the world will welcome virtually any offshore company. It is important to negotiate with the chosen bank well in advance. You should obtain the bank’s preliminary approval from the very start of your arrangements. The Pre-Approval service is a strong part of our support to clients. Please look up our menu of services of offshore company formation + a corporate bank account set up with one of the world’s best financial institutions
- Easy offshore company registration procedures. Offshore entities can be opened remotely via a registered agent or proxy. Also, many jurisdictions allow recruitment of professional directors. This does not guarantee 100% confidentiality, but helps to maintain sustainable business.
- Low operating costs are a big advantage. You can run your offshore business from home – online. So you do not need an expensive office in the country of incorporation. While many countries require the proof of substance for the locally registered entities (office, staff. accounting, reporting, etc.), offshore company formation is subject to minimal requirements. In most offshore jurisdictions, you are not obligated to file an audited account, and many of them do not levy corporate tax, their taxes are very low or zero-rate, and the overall administrative costs of offshore company formation are very reasonable.
- Low capital requirements for offshore company formation. They can be tiny. This is a solid advantage for international investors into offshore business.
- Tax planning is a great incentive and one of the top reasons to form an offshore company. According to tax legislation in tax-haven jurisdictions, you do not need to pay any corporate tax on your profits. You will pay taxes subject to your status of a tax resident and the source of income. In 2023, offshore companies can decide in which country they should pay taxes, taking into account their country’s regulations on CFCs, double tax treaties, and applicable international agreements. We advise choosing the offshore country for offshore business registration thoroughly. The legitimate purpose of your offshore company formation should justify your means, ends, and results.
- No requirements for reporting. This is a much appreciated incentive provided by some offshore jurisdictions. However, to comply with the FATF Recommendations – the global standard on combating money-laundering and terrorist-financing, you will still need to maintain some basic bookkeeping.
- High level of privacy, confidentiality, and security. This reason for offshore company formation is of paramount importance for many, especially when it comes to protecting one’s wealth and/or family assets. However, the degree of security depends on the offshore jurisdiction’s provisions and specific circumstances.
- Asset protection under an offshore company, trust, foundation or holding company is a safe route for HNWIs wishing to protect their capital and/or business from external encroachment. This includes the customization of terms for succession, inheritance, family settlements. These are more advantageous via a Trust rather than outright via the Will. If this benefit is imperative to your success and is the main reason for your offshore company formation, you should consider the most advantageous offshore jurisdictions, including Nevis, Cook Islands and Belize. As for 2023, asset protection remains particularly relevant for HNWIs from sanctioned countries.
- Online-based offshore business with an account in a foreign bank, is a new dimension of your freedom. Only sky is the limit. You can run your business from any location in the world. This is a significant advantage and way to reaching out for more contracts, partners, and customers.
Private Web-Based Sessions on Offshore Company Formation
Having defined the purpose, aims, objectives and reasons for your offshore company setup, you will focus on the selection of the jurisdiction.
By and large, when choosing the most appropriate country for offshore company incorporation in 2023, you should consider not only offshore jurisdictions (like Nevis, Belize, USA (some states), Seychelles, the British Virgin Islands, Hong Kong, Panama, Cyprus, etc.).
Midshore and onshore jurisdictions may also offer low-rate taxation and other perks. Besides, some of them have designated offshore zones offering benefits in terms of taxes, customs duties, and amenities. You can look up our articles on offshore zones in the UAE, Turkey, the UK, Georgia, and the like that may suit your purposes.
For more information and forecast on popular offshore and low-tax countries in 2023, please scroll our recent articles.
Apart from your aims and objectives, you should consider vital practicalities. For example, it is important to investigate the opportunities for a corporate bank account setup. This objective is rather challenging if you act on your own.
When registering an offshore corporation, you should check well in advance your company’s prospects to be welcomed and served by financial institutions in particular countries of your interest. This PRE-APPROVAL service is available as part of our turnkey packages.
Where, how, why are offshore companies formed? You are welcome to book a free online session with our seasoned experts. This is your chance to discuss all the nuances and our relevant services in-depth with us:
- offshore company formation or acquisition
- domiciliation matters
- offshore bank account opening
- preparation of a full set of corporate documents
- use of professional services and licensed agents
- tax optimization and tax reporting
- linguistic, notary and accounting services
- registration of trust structures and foundations
- other services.
Please refer your questions to us and requests for customized services by contacting our experts at firstname.lastname@example.org or in messengers given at the top of this page.
Is it legitimate to form an offshore company?
The answer to this question depends entirely on how you use the company.
If you register an offshore company for tax evasion and fraud, it will definitely be illegal in any business field and in any country. We do not support such schemes.
We offer help and services only to customers wishing to form offshore companies to expand their business globally. If in doing so they can optimize their taxes and costs by taking advantage of the legitimate incentives available in the country of incorporation, this business is deemed perfectly legitimate, and we are too happy to share our expertise and support.
What is the difference between offshore and onshore companies?
An onshore company is a business entity that conducts its business in a jurisdiction of its incorporation. Unlike offshore entities, most onshore companies are not entitled to special tax benefits.
To be entitled to tax and other incentives, offshore companies need to conduct their business only outside the country of their incorporation.
Fees for opening and maintaining onshore companies are much higher than those for offshore companies.
Information about onshore companies is publicly available. Offshore companies have much more privacy and security.
Which offshore business can be most beneficial?
The following fields of business activity can be most advantageous for offshore companies:
– Online businesses
– Consultancy and advisory
– International trading
– Forex and stock trading
– Ownership of intellectual property
– Software development companies
– International based company
– Offshore savings and investments
– Overseas Holding Company
Offshore companies that do not need a specific physical address, can be run remotely, and can provide their services from any part of the world. This is one of the reasons why such offshore companies reap the most of all benefits and are entitled to all incentives available in offshore jurisdictions of their incorporation.
Are the benefits of offshore company formation equally available to all offshore business owners?
Not all founders who register an offshore company receive the same benefits. It depends on one’s citizenship, residency, and the tax law in the country of tax residency.
Supposing some EU citizen permanently residing in, let’s say, Dubai, decides to set up an LLC on the island of Nevis with a corporate bank account in Antigua and Barbuda. This offshore company owner does not need to pay income tax at all on the revenues received from this offshore business. Instead this person will be liable to pay only the tax for whatever income generated in Dubai.
However, laws of some countries – both of your residence and of your company incorporation – can be less benign. Therefore, one should be very thorough in selecting the jurisdiction for an offshore company formation after the analysis of the relevant legislation in all countries involved.
You are welcome to discuss your specific circumstances and objectives with our experts and refer to our customized advice on offshore jurisdictions and on other matters.
What is the best offshore jurisdiction for a holding company to be formed in 2023?
It depends on your business and the structure of your company.
For years, such jurisdictions have been the Marshall Islands, the British Virgin Islands (BVI), and the state of Delaware in the United States. These are the best places to register a company which will both develop its business and set up a holding company.
The United Kingdom, Madeira, Hungary, Malta, Cyprus and Ireland are examples of the best countries to do business in the European Union.
All things considered, 2023 can be the right year for your offshore company formation.