Increasing globalization has made setting up an offshore company even more practical and easier to implement. Offshore zones of the world are still the ideal option for optimizing your tax payments, saving on audits and diversifying your assets. Of course, the specific privileges of a company registered in one of the world’s financial centers are determined by the specific jurisdiction. For example, St. Lucia offers the best conditions for establishing an offshore bank, trusts are of interest in Nevis, and you will make the best of the intellectual property holdings in the British Virgin Islands.
The idea of offshore zones is that non-resident companies have a legal right not to pay taxes in the jurisdiction of incorporation if their economic substance is performed in another country. The main obligation of offshore companies is to pay a fixed state duty. In order to establish a company you will need a registered agent, an office and the minimum capital, the size of which is determined by a particular country.
Please feel free to contact our experts to make sure that your offshore company taxes will allow legal reduction of your overall operating costs, and increase business profitability.
Offshore Zones of the World: History and Present
Historically, the first offshore entities, namely the British colonies that gained independence, were forced to look for effective ways to attract foreign investment to their own economies. In order to maintain their wellbeing, they became havens for a variety of tax-free companies.
Today, the list of offshore zones is much more extensive. Jurisdictions that do not impose taxes on non-resident businesses include many island nations, the Caribbean countries, the archipelagos of the Indian Ocean and the Pacific, and some mainland jurisdictions. Of course, the laws of these countries have undergone significant changes. Merely ten years ago it was possible to open an offshore company with your passport only, which is absolutely not the case in today’s environment.
The new mechanisms of fighting terrorism, money laundering and tax base erosion have greatly contributed to the key changes in the laws and rules of national regulators. At the same time, taxes of offshore companies can still be kept at zero level and there is no mandatory audit that is required, for example, by mid-shore jurisdictions (Cyprus, Malta, Gibraltar, etc.).
If we consider the list of offshore zones in general, we can distinguish three main groups of countries:
Jurisdictions with zero taxation of non-resident businesses.
Countries with the lowest corporate tax rates.
Jurisdictions with special taxation regimes for certain types of business activities.
Offshore zones of the world, as a rule, offer the strongest protection of corporate and personal data which allows foreign investors and international businessmen to protect themselves and their assets from raiders, aggressive local environment, economic turmoil, political fluctuations, and gold-digging relatives.
To build the most effective business structure using an offshore company, you can order an expert consultation via online chat or any convenient messenger.
Your Own Offshore Project: Privileges of Tax-Free Jurisdictions
Let’s assume you have a brilliant idea, you have studied the market very thoroughly, and you are confident about the potential of your project. At this stage it is very important that your startup does not fail. As a rule, three out of four ill-conceived business ideas fail in the first year. And very often it is because of the wrong jurisdiction.
Offshore zones of the world are very often used for headquarters location, which is something that founders of large corporations, startups and other business structures usually do not talk about. Of course, you have the right to start your business anywhere, like Jeff Bezos who founded the famous e-commerce colossus Amazon. His work started in the ordinary garage of a rented house.
However, the key point is the legal documents of your business. With no proper paperwork you will get no access to quality service at the largest banks of the world, no possibility of setting up an offshore company and meet all the local legal requirements.
Studying the list of offshore zones, you should already decide on the future legal form of your company, explore the tax conditions, including taking into account your own tax residency (or the latter of all the beneficial owners, if you have several founders).
Let’s have a look at why many multinational corporations, startups, and large conglomerates pro-actively engage offshore companies in their business structures. The key advantages of such a solution are as follows:
- Zero tax rates
- High level of capital and property protection
- Protection of personal and corporate information at the state level
- Stable legal system
- Anonymity of beneficial owners
- Possibility of the project internationalization
- No currency control
- No need to perform audits
- Elimination of risks
- High-quality banking service
The list of offshore zones can become an aid in finding the most favorable option when searching for a fair tax policy.
Important note! We recommend that you primarily order the selection of an account with a payment system or a bank whose services will meet your business expectations and priorities. This will make launching your business in a foreign jurisdiction much easier.
Taxes of offshore companies generally equal to zero in the jurisdiction of incorporation. However, if you need to sell your goods and/or services in the local markets, your business will have to comply with certain requirements, after which it will be considered a resident company and pay taxes at the rates established in the country.
In order to ensure that the development of your startup is not affected by any major political risks and economic climate, do consider the list of offshore zones. It includes jurisdictions with a stable legal and political system, appropriate regulations and infrastructure to attract foreign investment.
The list of offshore zones: reputation, restrictions and constraints
Zero tax offshore companies bring many benefits to businesses engaged in e-commerce, international trade (export/import), work with the intellectual property rights, in consulting, and IT. You can pay no offshore tax if you do business solely outside of your company’s country of incorporation. Hence, the decision of placing headquarters or head office in an offshore country is so popular.
Against the background of various multiple advantages including maximum asset diversification, protection of investments and interests of foreign businessmen, one should take into account possible reputational constraints.
In order to choose the right jurisdiction from the list of offshore zones, please do consider the following points:
- The main reason for establishing a company offshore is the opportunity to use a particular system of law.
- Companies from BVI, Singapore, Cyprus, Gibraltar, USA and St. Lucia enjoy the lowest level of reputational risks.
- When establishing a business in a low-tax jurisdiction such as Cyprus, Malta, etc., within the EU, your company may receive a pan-European VAT number.
- An offshore account can be opened with European payment systems (the exception is only made for classic EU banks).
- First of all you should explore the possibilities of opening business accounts for an offshore company, and only after that you can start choosing the jurisdiction.
- Certain types of transactions between related parties may be regarded as dubious operations that involve banking restrictions.
In turn, the taxes of offshore companies are paid according to the tax rules of the jurisdiction where the substance is performed and the company is considered a resident. If the economic presence of your startup is determined, say, in the UK, and the country of incorporation is the Marshall Islands, it is important to consider in detail all the possible benefits of such a decision.
Important note! Non-resident offshore companies cannot use the double taxation agreements and participate in the public tenders.
On the other hand, the list of offshore zones does not limit foreign businessmen in their choice of jurisdiction for an easier launch of the startup or commercial company. A certain offshore project may require special infrastructure and governing law, which, unfortunately, may not exist in the home country. A striking example of this is the work with crypto currencies and Forex brokers. At the moment, the list of countries where crypto-assets are not regulated in any way is still quite extensive.
Important note! The EU and FATF black lists of so-called non-cooperative states may differ significantly from the list of offshore zones according to the Central Bank of your home country. Please check the status of a particular country or territory as of the current date.
Each offshore project has to be detailed, and in order to establish a company you will have to collect all the necessary documents and develop a business plan. That is, the mere idea is not enough to start a company in a foreign jurisdiction. In addition, you must be prepared to provide information on the company’s beneficial owners to our experts for them to be able to prepare the paperwork for the banking institution and to the registered agent. This information is securely protected by trade secret laws.
Other benefits of the offshore zones of the world
Decent business conditions, absence of complicated bureaucratic procedures at the initial stage, lower operational costs due to zero taxation and absence of audit requirements are the main but not only advantages of using an offshore company in your business structure. Arrangements with offshore companies give the maximum degree of asset security and high level of data protection that can be used separately.
Despite the many new rules and requirements imposed by national regulators to make the businesses comply with international norms, the list of offshore zones remains quite extensive. Most jurisdictions have managed to retain their right to closed registers of ultimate beneficial owners with virtually no changes to the minimum authorized capital requirements and the number of participants.
We are ready to provide you with a short list of offshore zones that would be ideal for a particular business project. Please note that the selection is carried out on the individual basis only, and only after a thorough analysis of the client’s business case.
Please note that you should prioritize the payment system or bank pre-selection. These institutions must be ready to accept your business and issue a pre-approval. This service will considerably increase your chances to open an account with the best classic banks or VIP payment systems should you have a complete set of documents for the company. Today it is absolutely impossible to establish an offshore company using your passport only, much less become a client of a payment institution. In any case it is necessary to prepare comprehensive and detailed information on the company, its beneficial owners, suppliers and other key points of business. Our experts will help you to gather the right documents, choose a fin-tech company or a bank, and set up an organization in the jurisdiction most suitable for your type of business.