Registering an offshore company and running a business? A lot hangs on choosing the right jurisdiction. After all, each country and territory has its own individual peculiarities that should be taken into account when looking for a place to establish a legal entity.
The local business environment can both strengthen the position of your company and contribute to the accumulation of wealth – or completely the opposite, making the economic operations inefficient and unprofitable. The most important thing when choosing a jurisdiction for a company to be established is to first decide for what purposes you need it.
Potential Business Goals
It is common to search for a jurisdiction to register a company for the following purposes:
- Asset protection;
- Personal data security;
- Successful access to markets in other countries;
- Obtaining residency or citizenship
- Fair taxation;
It is very good when a single jurisdiction meets all the above criteria. But the reality is usually far from that. For example, certain jurisdictions offer better asset protection, while others have lower taxes. In addition to that, one should not forget about such important factors as banking, the cost of incorporation and maintaining a company offshore, complexity of registration and remote management, economic stability and availability of infrastructure, geographical remoteness.
It is possible to make the right choice upon analyzing and comparing the costs of registering a business with the objectives to be achieved.
What is the Best Offshore Jurisdiction for Business?
If you are looking for a jurisdiction to register a company in order to optimize your international operations, it is advisable to analyze the following:
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on which jurisdiction is best for
your business, preferred tax regime,
on which jurisdiction is best for your business, preferred tax regime, company structure.
The Government List of Offshore Countries and Territories
The lists of offshore jurisdictions are available in every country. They will help you choose a jurisdiction with a favorable tax regime and a high level of data security to register a company. Typically, these lists include the jurisdictions where the corporate income tax rate is 5% or more lower.
Some countries may have a list of offshore jurisdictions that includes 50 countries and territories, and others may list 80 offshore jurisdictions. This demonstrates different approaches of government agencies to selecting offshore jurisdictions. However, there may be similar ones in each, including Andorra, Antigua and Barbuda, Bahrain, Cayman Islands, Mauritius, Nevis, Montenegro, Seychelles, Delaware (USA).
Offshore Rankings 2020
The world has a lot of rankings. And it makes sense that there is a ranking of offshore jurisdictions, compiled by InternationalWealth and our colleagues at the Offshore Pro Group. It is a very young ranking (it was only launched this year) but it can already be used for analysis and selection of jurisdiction for company registration.
Here are the top 10 offshore jurisdictions for 2019 according to InternationalWealth:
Position Countries and territories 1 Marshall Islands 2 Nevis 3 British Virgin Islands 4 Cayman Islands 5 Switzerland 6 Luxembourg 7 Jersey 8 Singapore 9 Bahamas 10 Hong Kong
It should be noted that some of the above mentioned top ten jurisdictions are not on the offshore lists of many countries, e.g. Luxembourg and Marshall Islands, which is actually whitelisted by the EU. Switzerland is only on some lists, while the Netherlands may only be represented in the lists as an overseas territory, and Singapore and Hong Kong are not always mentioned.
Attention! Switzerland is actually a federation where each canton has its own tax code and rates. Therefore, when planning to register a company in Switzerland, you should carefully explore the business conditions in each canton. For example, Zug is ideal for start-ups and it also has one of the lowest corporate income tax rates.
It is possible to select the best jurisdiction to register a company in 2021 upon analyzing and comparing the government lists of offshore countries and territories to the rankings. You will find the jurisdictions with a minimum tax burden and regulatory scrutiny.
More Taxation-Related Rankings
The Paying Taxes 2020 is a more recognized ranking (compiled by the World Bank and PWC). It shows the ease of paying taxes based on four indicators: total tax burden and rate, time to comply with all fiscal requirements, number of payments and post-filing index, and provides a guide on prestigious jurisdictions that offer a low fiscal burden.
Top 10 jurisdictions in terms of ease of paying taxes according to the Paying Taxes 2020:
Position Countries and territories 1 Bahrain 2 Hong Kong 3 Qatar 4 Ireland 5 Mauritius 6 Kuwait 7 Singapore 8 Denmark 9 New Zealand 10 Finland
Disadvantages: Paying Taxes 2020 does not include territories such as Bermudas, the Cayman Islands, the British Virgin Islands and many other popular offshore jurisdictions which narrows the choice of the best jurisdiction for company registration.
What is the Best Place for Fast Company Registration in 2021?
Tax optimization plays an important role when choosing a jurisdiction to register a business, but equally important is the possibility to set up a legal entity. After all, if it takes several months to register a company, then why go offshore?
The following ranking can be used to analyze this parameter. It is also compiled by the InternationalWealth and the Offshore Pro Group.
Here are the Top 10 jurisdictions in terms of speed of incorporation by Doing Business 2020:
Position Countries and territories 1 Marshall Islands 2 Nevis 3 Belize 4 Singapore 5 Serbia 6 USA 7 Canada 8 UK 9 Estonia 10 Sweden
The above ranking is not a benchmark when choosing a jurisdiction to register a company since it analyses the economy according to various parameters that describe the ease of registering an offshore-oriented business and running it from outside the country of incorporation. However, many of these parameters are not of interest to business persons who only need to ensure asset protection and optimized taxation. Therefore, it is possible to incorporate a company offshore, for example, in Marshall Islands, and receive an apostilled set of documents the same day.
Select the Best Jurisdiction to Register a Trust for Asset Protection
Protection of personal assets of the founders from legal action taken by creditors is an important part of the strategy aimed at finding a country or territory to establish a business. Most trusts, or offshore companies using the right legal form (e.g. LLC, LLP, Corp) will be able to provide a high level of protection.
Here are the Top 10 countries for Asset Protection according to the InternationalWealth Index 2020:
Position Countries and territories 1 Nevis 2 Cook Islands 3 Switzerland 4 Serbia (Endowment) 5 Luxembourg 6 BVI 7 USA – Wyoming 8 Luxembourg 9 Canada (Ontario LP) 10 Netherlands
The above mentioned ranking does not include all jurisdictions. It only covers 129 countries and does not take into account the laws of territories such as Hong Kong. Yet the offshore jurisdictions also manage to provide a high level of personal asset protection. Of particular note is the state of Wyoming (USA) that has overtaken Delaware to provide some of the strongest asset protection in the world. It also uses corporate law that has served as the backbone for many low-tax jurisdictions. This is the reason for incorporating LLCs in Wyoming.
Attention! When choosing a jurisdiction for asset protection, you should look not only at its prestige but also assess how realistic it is to protect your assets from lawsuits over there. The USA is one of the most litigious societies in the world. We generally recommend Nevis and Cook Islands, or a combination thereof, to our clients who are focused mainly on asset protection.
Select the Best Jurisdiction in Terms of Personal Data Security
Business data security involves protection of personal data of company founders, directors and managers. It can be secured in the following ways:
- Use of the service of professional directors;
- Engagement of a registered agent;
- Lack of requirement to provide data to publicly available registries;
- Use of the bearer shares;
- No participation in the financial information exchange.
Almost all offshore jurisdictions provide the above mentioned conditions, except for the last parameter. Those not participating in the automatic financial information exchange can be looked up in the FATF grey and black lists.
And the Financial Secrecy Index 2020 will also help you select the jurisdiction with the best level of data security to register your company in:
Position Countries and territories 1 Cayman Islands 2 USA 3 Switzerland 4 Hong Kong 5 Singapore 6 Luxembourg 7 Japan 8 Netherlands 9 British Virgin Islands 10 UAE
The above mentioned ranking allows you to navigate a large number of jurisdictions and make a decision as to where to register your company. But you should also keep in mind that it is not globally recognized. Nevis, which is considered to be one of the best in terms of business data security, is not in the top ten here.
As for the US, please note that the level of data security over there depends on the laws of individual states, e.g. only Nevada and Texas do not share financial information with the US IRS, while in certain states the lists of directors and managers may be publicly available.
Select the Best Jurisdiction to Register an IT Business
Many countries create a special favorable business environment where it is easy to register and operate IT companies in order to attract them. When looking for a jurisdiction to register an IT company, please consider the following aspects:
- Relevant laws;
- Low income tax and tax incentives;
- Availability of professional staff;
- Easy access to the international market.
As for the best legislation, Japan and Switzerland are clearly the leaders. They were the first to regulate crypto currencies and shared ledger at the national level, which has contributed to the emergence of leading companies in the IT sector in these countries. Some of the countries where IT companies can get tax incentives and international exposure include the UK, Cyprus, Estonia, Serbia, the US, Canada and North Macedonia, among others.
Find out what are the benefits of setting up an offshore LLC and an account in Nevis.
Select the Best Jurisdiction to Register a Company for Obtaining Citizenship or Residence Permit
Citizenship programs often include a requirement to invest a substantial amount in the country’s economy and not only through the purchase of real estate. There are also requirements to start a company and employ a certain number of local residents.
When choosing a jurisdiction for a residence permit or citizenship, attention should be paid to the opportunities offered by the new country’s passport: low taxes, freedom of movement and travel, easier access to certain services (education, bank loans).
Here are the best Citizenship by Investment programs according to InternationalWealth:
Citizenship by Investment (CBI) 2020:
Position Countries and territories 1 Turkey 2 Saint Kitts and Nevis 3 St Lucia 4 Grenada 5 Antigua and Barbuda 6 Vanuatu 7 Malta 8 Cyprus 9 Montenegro 10 North Macedonia
In addition to citizenship and residence permits, setting up a company in a particular jurisdiction is a great idea to prove your centre of vital interests in the country in order to obtain tax residency. The latter provides the opportunity to reduce the tax burden on personal income and thereby contribute to the preservation and accumulation of wealth.
Select the Best Jurisdictions for Business and Citizenship in Europe
The list of European countries considered offshore is relatively short. It includes Andorra, Gibraltar, Liechtenstein, Monaco, Montenegro, Malta, Cyprus, and most recently North Macedonia.
The listed jurisdictions offer low taxation levels. But apart from the latter, an important role in selecting a European country to register a company is played by the following:
- Prestige – Switzerland, Germany;
- Low taxes – Serbia, Hungary;
- Geographical position and data security – Serbia;
- Favorable environment for IT companies – Georgia, Poland.
There are many parameters to consider when looking for the right European jurisdiction. And for an informed search, one also has to study the corporate and tax laws of each country in detail.
You should start selecting the jurisdiction to register your company in 2021 by determining what requirements it must meet, i.e. optimize taxes, accumulate funds, protect assets, obtain citizenship, etc. And then study the costs of setting up and maintaining the company, and the complexity of managing it. That way you will find the best country for setting up a company.
It is important to consider the size of your business when making your choice. For relatively small companies it is recommended to use jurisdictions with high levels of data security and low taxes – e.g. Nevis, the Cayman Islands, the British Virgin Islands. Should you need to open a company close to both Europe and Asia, then Serbia is perfect in this case. Large businesses will benefit from such prestigious jurisdictions as the UK, Delaware or Wyoming (USA).
If you are looking for a jurisdiction or an offshore area for your business, please feel free to message us via online chat or send us an email using a special field. You can also book a free consultation with our experts.
We will get back to you as soon as possible and help you select the best country to register your company.