What is Required to Set Up an Offshore Company?

Offshore company registration is a service that we deal with every day here at Offshore Pro Group. Despite negative publicity in recent years, that is generally politically motivated, there are many good and legitimate reasons why thousands of our clients over the  years have set up Offshore Companies. In this article, we will go into more depth on the topic of Offshore Company Registration. 

Today, offshore company registration and formation is primarily focused on security and asset protection as well as on protecting the personal data of the ultimate beneficial owners. What do you need to protect your business from? Maybe a hostile takeover or an aggressive environment in your home country. Making your property safe in the event of divorce or legally avoiding forced heirship regulations could also be valid reasons for an offshore company registration. In some countries, with high levels of crime against wealthy people, keeping information private can literally be a matter of life and death.

Registration of a foreign company

Important note! It is rather easy to set up an offshore company, but yet it is not always needed. Each client case should be considered on the individual basis only, and the right structure requires a profound study of many aspects.

Should you need to get the most effective offshore business structuring, do not hesitate to contact our experts. We can help you register a new company or buy a ready-made offshore business in the most suitable jurisdiction. 

Offshore Company as a Valuable Business Instrument 

The first advantage is that a company registered in an offshore jurisdiction allows you to open an account with an offshore bank. This is an excellent opportunity to get access to the stock exchange and to invest a variety of innovative projects, many of which may not be available in your country of residence due to restrictive investment promotion or currency control legislation. At the same time, you will protect the beneficial owner’s assets in the event of divorce, asset freezes during a lawsuit, etc. 

You definitely need to establish an offshore company for the following reasons:

  • you are interested in investing in other foreign companies preserving your privacy;
  • your goal is to minimize the fiscal burden and operational costs (only a small state fee is paid offshore);
  • your business needs strong legal protection of assets;
  • you have a need to transfer your property to the next generation without additional fees and charges;
  • you need to enhance the safety of your capital and property held in a trust or an investment fund. 

Depending on the jurisdiction, new and ready-made offshore companies may receive additional benefits. Countries with low income tax are very interested in foreign investment, so they build up strong protection of corporate rights in order to attract business persons from other countries. 

In addition, your money kept in offshore accounts could allow you to avoid unnecessary publicity in certain life situations. 

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We would like to kindly ask you to keep in mind that no corporate account can be opened without providing comprehensive details of the company’s beneficial owners. Please do not hesitate to seek assistance from our experts in order to set up an offshore company in full compliance with the laws of the countries of incorporation and your tax residency. 

Initial assessment of all the possible advantages and disadvantages of such a solution is crucial. An offshore company could become a valuable business instrument, or it could work the other way around. So, this decision needs thorough consideration.

Our experts can help you set up an offshore company via simple step-by-step process:

1

Consult our expert regarding your circumstances, and if an offshore company could be a solution for your needs.

2

Select your bank accounts in advance if required.

3

Take into account the substance rules and the book-keeping requirements.

4

Study the opportunity of company re-domiciliation to another jurisdiction for the future in advance.

5

Develop your detailed plan and goals establishing and operating an offshore company.

6

Make a list of documents you need for starting a regular business or a high-risk business.

The tax transparency in most countries means that the beneficial owners’ data is disclosed anyway. For example: to the registered agent that must be involved in setting up a company in accordance with the mandatory requirements. Therefore, your offshore bank account will not remain a secret like in the old days. Exceptions are made for the jurisdictions where no automated exchange of tax information among the countries is in force at the moment, but it may be implemented later. Should you need an alternative option, you could pay a closer look to neobanks’ corporate services and VIP payment systems.

Ready Made Offshore Companies or Registration of a New Firm? 

Frankly speaking, buying a shelf company is always more expensive, and often less flexible, than simply forming a new offshore company. But does it make sense to buy a ready-made shelf company? 

Our practice shows that ready-made offshore companies do not always meet your business goals. In addition, the offshore account in this case will have to be transferred according to the same complicated banking procedure as at the initial opening. The bank will change signatories, which means that you will have to undergo all KYC and AML procedures over again. That said, you do have the advantage that the company will have legal existence today – even yesterday – so that means you can immediately sign that urgent contract in the name of the company.

The second important point is that a ready-made company may have a date of incorporation and a name that will not suit you. THis too can be solved, by changing the name of the company at a later date, but of course it involves extra costs and paperwork. Given that offshore company registration cost is not very high compared to mid-shore and onshore, give some thought to whether it makes sense to start your own business with a specific incorporation date, a suitable structure, and a name chosen by you. 

Please keep in mind that in order to establish a legal entity in an offshore jurisdiction you might need to open an account with an offshore bank. This is not obligatory, and may not be necessary if your goal is just to hold shares or property for example. However, for most business situations, an offshore bank account is required. 

Today, it is increasingly common to see structures where the company and its account are opened in different countries. Here you will also need expert assistance since certain jurisdictions do not open accounts to companies from other tax havens. For example, Belize might not accept a company registered in Panama. 

In practical terms, the establishment of an offshore company can be divided into three main stages as follows:

  1. Choose a jurisdiction, a name, a legal form.
  2. Submit a business plan, personal documents, and KYC form (due diligence) Obtain a Certificate of Incorporation, open a corporate account, obtain additional documents.

Most of the ‘classic’ offshore jurisdictions allow establishing a new legal entity within a few business days. Clients should however be aware that this period may become considerably longer due to the need for translation and apostilling of documents (an English translation is required in most cases), courier delivery and banking verification procedures. 

Important Stage: Offshore Bank Account   

As for the possibility of opening an offshore account, today the situation is ambivalent. Certain countries completely refuse to work with companies from offshore jurisdictions, while others are more supportive of such business and are willing to provide corporate banking services. 

Having just a single company offshore does not necessarily imply better banking opportunities. Many EU banks try to apply restrictive regulation to businesses from zero-tax jurisdictions. For example, a company from Labuan will have fewer banking opportunities than a company from Cyprus or the UK. It will be even more difficult to use any money from the offshore accounts of a legal entity registered in Peru or Nigeria without restrictions. 

If you wish to obtain more benefits and advantages of corporate banking, you could consider incorporating a company in Marshall Islands, Nevis, Cyprus or BVI. There are many other jurisdictions around the world that welcome offshore companies, but to really recommend the best jurisdiction for you we will need a detailed analysis of your current business. 

Important note. Most banks prefer to work with offshore companies whose operations do not involve high-risk businesses. Coaching, consulting, international trade, and software development are more likely to be approved than bitcoin operations, financial leasing, or monetary intermediation.

KYC Obligations

As we pointed out earlier, this step is part of the mandatory requirements list for setting up an offshore company. The KYC verification is necessary to limit the illegal use of offshore banking services, and all company formation agents and  financial institutions are required to carry out KYC in order to accept new clients.

Please note that the list of documents to be submitted for such verification may vary depending on the country. We will now present the standard package required for most purposes:

  • notarized copy of your ID (current passport);
  • original or notarized copy of the document confirming your actual address of residence (utility bill);
  • detailed description of your company’s business.

In cases where one of the shareholders of an offshore company is a legal entity, the following notarized copies must be provided additionally:  

  • Certificate of Incorporation or another similar document confirming the company’s standing;
  • Memorandum and Articles of Association;
  • Register of Directors and Shareholders. 

The documents provided to us are not kept in our office and cannot be disclosed to third parties. All information will be known to our employees only together with the registered agent in the jurisdiction chosen for establishing the company. Our data is filed offshore under attorney-client privilege. Many offshore countries do not keep public registers of beneficial owners, but the official person providing company registration services must have the relevant information.      

Choose the Right Offshore Company Structure 

Before asking what you need to register an offshore company, it would be good to first determine your personal and business goals. In particular, you should decide on the following points:

  • What is your company’s core function?
  • Do you personally plan to work in a specific jurisdiction?
  • Would you like to have easy access to your company’s incorporation country?
  • Do you need to live in close proximity to your company’s incorporation country?
  • Is this jurisdiction good for a specific type of business?
  • Are there any particular incentives or benefits for your type of business there?
  • What is your tax residence country or countries?
  • What country’s requirements does the offshore substance comply with?
  • Does your business need a qualified accountant for book-keeping and preparation of reports?
  • Does your country of residence have laws on controlled foreign companies? 

Of course, this list of questions is not exhaustive, but the answers to them will help you choose the best jurisdiction to start an effective and dynamic business. At this point, no offshore company can be a shell, and in most cases it needs full-fledged accounting. But owners of such companies can still save significantly on audits and annual maintenance. 

Important note. If your business requires a mandatory license, no bank will open a corporate account to your offshore company without this document.  

When it comes to accounting and reporting, it is important to consider how tax returns and other reports are prepared in the country of the company’s incorporation. Certain countries have their own standards, others have signed up to the International Financial Reporting Standard (IFRS). In any case, you can always contact our experts to order the services of a qualified accountant. In most cases the cost of a professional’s work depends on the annual number of transactions and general requirements of a certain jurisdiction.  

To set up an offshore company, it is not enough to have information about tax rates and the availability of double taxation agreements with other countries. As you can see, it is a whole range of measures aimed at detailed study of numerous corporate and personal peculiarities. If you want a brief answer to the question of what is required to register an offshore company, here it is:  please contact our responsible and reliable experts to build the best offshore structure. Once again, we would like to draw the attention of our readers to the point that certain groups of companies would benefit much more when taking advantage of low-tax countries than others. Please feel free to contact us and find out how you can benefit today.

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