When we have a client who wants to register an offshore company, the first question we normally hear goes as follows: ‘Where should I put my company?’ This question is very hard to answer unless we know the client’s goals and intentions. The choice of jurisdictions is great and so are the differences between them. A large number of factors needs to be taken into consideration including the costs of company incorporation, the corporate legislation in the country, the reporting requirements, the company maintenance costs, and so on and so forth.
Offshore Pro Group experts will be happy to discuss the possible options with you and make some suggestions based on your personal preferences. Please apply for a consultation by writing to our corporate email address (see above) or the live chat.
What is ‘an offshore jurisdiction’?
The word ‘offshore’ should not be associated with illegal business and money laundering. An offshore company is actually a company registered in a foreign country, in the broad sense. Historically, small island states located off the shores of the continent used to be referred to as ‘offshore jurisdictions’. In an attempt to attract some foreign capital, these countries offered tax incentives to foreign investors. Currently, about sixty national states and territories offer zero taxes to international entrepreneurs as well as other business incentives.
However, the opportunities that were available before have sunk into oblivion today. As the world is fighting the threat of terrorist attacks, international financial authorities are doing their best to have more control over money flows. In this way, they are trying to prevent money laundering and terrorism financing. Due to the harsh requirements put forward by such organizations as OECD and FATCA and to the new regulations put into effect such as CRS and KYC, many offshore jurisdictions have ceased to be attractive for foreign investors. So choosing from what remains is a task that you should approach with great care these days.
Key factors determining the choice of the offshore jurisdiction
Below please find some of the key factors that will have an impact on the choice of the offshore jurisdiction where you can put your company:
- The company owner’s citizenship;
- The company owner’s country of residence;
- The company business areas;
- The ultimate business goal;
- The locations of the company partners and suppliers;
- The economic substance requirements;
- The required registration documents and the company registration procedure;
- The possible restrictions;
- The country where you would like to have a corporate bank account;
- The types of the banking services that the company is going to require;
- The available forms of company ownership.
Besides, the overall international reputation of the country that you are considering is also of importance.
The first thing to bear in mind is the fact that an offshore company may not do any business in the country of its domiciliation if it wants to pay zero taxes. This rule applies to a vast majority of offshore jurisdictions. Registering an offshore company is going to be potentially lucrative if you are engaged in international trade and commerce and if your deal in finances. Offshores especially welcome the following types of companies:
- FOREX trade, trade in securities, offshore investments;
- Electronic commerce, international trade;
- Professional service companies, holding companies;
- Digital companies, real property possession and management companies;
- Providers of banking and insurance services.
Almost any offshore jurisdiction will give you access to flexible corporate structures that allow protecting your assets from raiders, greedy relatives, and corrupt government officials.
A very important question to consider when setting up an offshore company is where you would like to have the corporate bank account. Not all banks will service companies domiciled in certain jurisdictions or engaged in certain types of business activities that are qualified as ‘high-risk’.
It is not less important to learn the details of the local legislation. This concerns both corporate legislation and the general legal rules applied in the country. In some countries, for instance, the local courts of law will disregard any court decision that has been made in another jurisdiction. There are other legal peculiarities to be taken into consideration too.
When considering various options, you also have to find out if your offshore company is going to face any restrictions. For example, there are limited opportunities for FOREX trading in some countries. In addition to that, you should find the answers to the following questions:
- Is the country included in any black or grey lists of uncooperative jurisdictions?
- Is the company beneficiary register open to the public there or not?
- Do you have to obtain a license to engage in the type of business activities that you intend to engage in?
- Will you have to keep the books, file reports, and have them audited?
This may not be very good news but in many jurisdictions company beneficiary registers are now open to the public, and many countries are joining the automatic exchange of fiscal information group. However, you can still substantially save on taxes and audit.
If you are planning to manage your offshore company yourself instead of hiring somebody for this purpose, you should also find out if the country is comfortable enough for living there. The living standards are different in each country and you might want to take a trip to the one that you are considering for your offshore company before making the final decision.
The cost of registering an offshore company in 2021
One more important factor to take into account is the cost of establishing the offshore company and administering it in the future. The costs vary considerably from jurisdiction to jurisdiction but we would like to caution you against ‘buying’ cheap offers.
Let us take registering an offshore company in Belize as an example. You have to pay the state company registration fee, rent an office, hire an accountant, a professional director (if required), cover the cost of the nominee service (if required), and pay an annual registration extension fee. All these costs taken together cannot possibly be as low as one thousand dollars. Please be careful when considering such offers.
We provide a full range of services related to offshore company registration and maintenance. We will prepare the application documents for you, perform the company administration duties, pay the registration extension and other annual fees, and so on. Please inquire about the cost of registering an offshore company with us. The ultimate price will depend on the jurisdiction that you choose and the range of company maintenance services that you wish to order.
Should you buy a ready-made offshore company or set up a new one?
We have dwelt on this issue before but we would like to draw your attention to it once again. Buying a shelf company can work out less expensive than registering a new one. But is the game worth the candle? Here are a few arguments against buying a ready-made offshore company:
- You will have to put up with the name that the company has as it is going to be printed on all registration documents.
- You will have to put up with the company registration date.
- If you buy a company with a history, you will have to conduct a serious security check, as you cannot be sure that the history is clean otherwise.
- A cheap shelf company will have no bank account in all likelihood so you will have to set one up just like in the situation when you are registering a new offshore company.
What is more, even if the shelf company that you are purchasing does have a bank account, the names of the account signers will have to be changed. Now, what happens when you put the request to the bank? The Compliance Department will have to conduct full due diligence procedures for the new account signers: find out about their background, their sources of capital, and so on.
There is no difference between setting up a new bank account and changing the signers for an existing bank account: the same time and money will be required in any of the cases.
Best jurisdictions for registering an offshore company in 2021
Setting up an offshore company can help you save on taxes. However, you have to make sure that the company is going to be operable and that you will be able to use it for your financial operations. Many international entrepreneurs choose to register an offshore company in one jurisdiction and set up a corporate bank account in another one. The choice of banks prepared to service foreign companies registered in offshore jurisdictions is not very large but there are a few banks in different countries that will service your company anyway.
Below please find a list of zero-tax jurisdictions that have bearable international reputations and do not have too many problems with the world regulating authorities:
4. Cayman Islands.
5. Marshall Islands.
9. Isle of Man.
In addition to that, there are highly reputable jurisdictions that give serious incentives to foreign investors. They do not levy zero taxes but they do offer quite attractive conditions including efficient asset protection mechanisms:
4. Hong Kong.
What jurisdiction should you choose to register an offshore company? It depends on your business goals and personal preferences in the first place. Secondly, the amount of investment that you are planning to make also matters. Besides, we have mentioned a few more key factors that you should take into account when deliberating the decision to set up an offshore company. What else should you consider?
- The reporting requirements that are in effect in the country that you are thinking about;
- The requirement to have a local resident among company directors (yes/ no);
- The corporate banking options available (local/ international);
- The timeframe of company registration;
- Agreements on double taxation avoidance and their applicability to your business;
- Automatic exchange of fiscal information (yes/ no);
- Forms of company ownership available in the country.
Thank goodness, gone are the times when offshore-registered company owners heard ‘service denied’ from any bank where they would apply for corporate banking services. Today, some efficient new solutions are available. Payment systems and neobanks (digital banks) domiciled in EU countries provide VIP-level services. Besides, there are reliable banks in the Caribbean basin that have correspondent accounts in the USA and Great Britain.
Please contact us to choose the best bank for your offshore company and file an application for a preapproval.
The range of our offshore services
We will be happy to help you build a business structure that will allow paying minimum in taxes and protecting your assets in an efficient manner. The following groups of people may be interested in our complex offshore services:
- International investors;
- People wishing to diversify their assets;
- Business people seeking to globalize their business;
- IT companies;
- Service providers;
- Startup companies;
When you register an offshore company, you can build it into your overall business structure thus gaining several competitive advantages. Please apply for our professional assistance in the matter by writing to our corporate email address (see top of the page). We will be delighted to see you among our clients.
Where should I register an offshore company in 2021?
The most popular offshore jurisdictions are Belize, Seychelles, Marshall Islands, Dominica, Bahamas, Nevis, BVI, Isle of Man, and some other jurisdictions. You have to take a great number of factors into consideration when deciding where you should put your offshore company.
What factors should I take into account when selecting the jurisdiction for my offshore company?
The key factors are as follows: company founder’s citizenship; offshore company tax residency; company registration timeframe; requirements to company directors; reporting requirements; and other factors. It is also important to see if the country will suit your business. In some jurisdictions, it is impossible to go into electronic commerce, for example, while in others, the possibilities for banking or insurance business are very much limited.
Does it make economic sense to set up a foreign company in an onshore jurisdiction?
Yes, it does as some onshore jurisdictions also offer inviting conditions to foreign investors. Some attractive offers can be found in Hong Kong, Singapore, Canada, Portugal, and some other national states and territories.