Setting Up an Offshore Company

There are different opinions on the matter of offshore companies. Some people try to scare the businessmen off and discourage them from using the offshore opportunities. The other, a smaller group, are confident that going offshore can bring you many useful instruments. In order to understand whether you need an offshore company and whether it may be of use to you, let’s first have a look at how the offshore company is set up and what it can be used for.

An offshore company is a foreign company, most often with certain benefits: lower taxes, simpler reporting, flexible laws. Offshore companies are used by businesses, capital owners and prudent people for a variety of purposes.

Let’s first consider these before we talk about how an offshore company is set up.


Why do I need an offshore company?

Offshore companies are usually established for specific purposes. The most common are as follows:


Asset protection. An offshore company is established to manage one’s assets: bank accounts, real estate, vessels. This is aided by a stable legal system of the offshore jurisdiction one chooses, and its well-functioning legislation. An important role is played by a well-developed sector of banking and professional services. In addition, many offshore companies provide a high level of data security: no one except the relevant tax authorities will be able to get information about your assets (given that the relevant information exchange agreements were signed).


Commercial operations. An offshore сompany is a foreign company that one can and should use for business projects. Commercial operations are a common option. Businessmen may conduct their business both within a single country and/or around the world. Thanks to reduced customs duties, sensible bookkeeping and low tax rates directly in the offshore jurisdiction, the business saves significantly and makes profits.


Services. In addition to goods, an offshore company has every right to provide services to its customers all over the world. Again, thanks to your company’s position outside the large countries with their rules, you are safe to provide services to both American housewives and Chinese billionaires.


Investment operations. This point is particularly important today, in times of sanctions. As we all know, it is not safe to keep all of your eggs (i.e. money) in one basket. So an offshore company for investments becomes the way out. No one will ban a Nevis company from investing in New York real estate or German shares.


A bank of your own. Another option to use an offshore company for is to set up a bank of your own. The financial institution will simplify handling of significant cash flows, making it easier to manage the operations within the holding company. In addition, it is very beneficial in terms of reputation. And the prices for services can be many times lower than those of the world’s major banks.


Holdings. This is a mixed option: business management and asset protection. It allows you to own, redistribute and reinvest your assets globally, generating more income. At that, you will enjoy high standards of data security and privacy.

What does it take to set up an offshore company?

The list of ways one can use the offshore company advantages is rather long. One gets the impression that the requirements for potential offshore company owners are also high.

This is partly true: in most offshore jurisdictions, one can no longer establish a company with a driver’s license and a handwritten paper proving that your funds are legal. The requirements have been tightened. However, comparing an offshore company to an onshore one will reveal many peculiarities.

And the first is that setting up an offshore company is many times easier and faster. And sometimes, even cheaper.

There are essentially two global steps in setting up an offshore company: opening the company and a bank account for it.


No particular issues to be expected when registering an offshore company. The main thing is not to chase lower prices and not to run into crooks. Otherwise, company registration takes from a day to a couple of weeks and costs from a couple of thousand dollars in reputable jurisdictions.

The bank account requirements are much higher. And from the looks of it, the documents required are still the same, but in fact the bank is treating new clients with more rigor. This is due to new laws, transparency and the war on tax evasion and money laundering.

It is with the bank account that you need to start and find out whether the bank is ready to work with your offshore company, on what terms, etc. 

How is an offshore company organized?

So, how is an offshore company organized? A good company consists of several elements which provide the following benefits:

  • Reduced tax burden and maintenance costs;
  • Personal data security;
  • Protection of assets from encroachment.

Tax reduction is ensured by the laws of a particular country where you choose to work. In Nevis, corporate tax is zero. In Hong Kong, too, if all transactions were conducted outside the administrative district.

International double taxation agreements are also a great help. Not only can you avoid paying income taxes twice, but the rate is often reduced. 

And maintaining an offshore company can be cheaper: fewer employees, lower annual registration fees, competition in the professional services market.

When we speak about data security, the offshore company arrangement can help us in the following ways: firstly, not all countries keep a register of beneficial owners and company directors at all, and in those that do, it is private. In other words, a casual passerby will not get to know that you own an offshore company in Belize.

Yet another possibility is to use a professional director service. Instead of you, a professional director will be listed in the company documents. He or she will protect you from other people’s prying eyes. But this instrument should be used with care, especially since banks and registered agents always know who the true beneficial owner is.

Asset protection is ensured by the laws of the country, the company structure and even the fact that your company is foreign. If a Nevis company owns property in Europe, it is extremely difficult and expensive to take the property away or even to sue this company.

If you decide to set up a multi-company structure, it will be even easier to protect your assets. It is only the paperwork that needs to be handled very carefully.

In a nutshell, an offshore company is structured as follows: the beneficial owner who established the company is in the center of it. He may be a shareholder, a member of the board (depending on the business legal form). If you wish so, you may take the position of director, and the number of directors is stipulated by the law. Or you may use the professional director services.

Also, in certain cases, a secretary is required. He or she must be local and is provided at an extra cost by the registered agents or specialized offices.

Your company will conduct business in a certain legal environment that allows operating within a broad legal framework, saving on taxes, and enjoying simplified reporting procedures. Information exchange and double taxation agreements are also at your service.

Legal peculiarities when dealing with an offshore company

Although setting up an offshore company is quite simple (especially if you employ professionals and write us to the email specified at the top of the page), you shouldn’t count on a complete lack of control and total economy.

Going offshore must be carried out in full compliance with all the requirements of current laws, both local and international. And here are several reasons for this:

  • A policy of transparency is being implemented everywhere around the world: tax evasion, weird transactions and lack of accompanying documents are punishable, even including imprisonment;
  • The automatic exchange of information, primarily on bank accounts, in addition to the operations of international holdings, is about to be launched. There is no getting away from it, even if it does not come into full effect right away. By the way, this is partly the reason why banks have tightened their requirements for clients that much;
  • The international meltdown is forcing large countries to look for money everywhere they can and to involve offshore companies in the process. If any transactions are made without a proper reason, there is a great chance of losing money.

Finally, offshore jurisdictions are no longer grey areas without rules. The demands for reporting, for transparency, interaction with peers around the world are ever increasing. And offshore areas and companies have to accept it to keep their reputation and their clients.

So, don’t walk on thin ice. Get professional advice from experienced experts. You will find out where it makes sense to establish an offshore company, how much it really costs and how it is best to organize the whole process as efficiently as possible.

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