The meaning of the phrase ‘offshore zone’ has changed. Previously, it used to refer to a small island state lost in the middle of the ocean that could be used as a tax haven and that was indifferent where your money came from. Things are different now. International financial regulators are pressuring all countries trying to provide for money flows transparency. It is easier to control them when they are transparent. But the business world adapts to the changes and finds new ways of making profits.
We are bringing to your attention top ten nontrivial offshore zones that may be useful for optimizing your business operations in 2020.
What does ‘offshore zone’ mean today?
These days the phrase ‘offshore zone’ refers to any country or territory (state, region, overseas territory, etc.) that offers benefits to foreign business people such as tax incentives, simplified reporting requirements, and so on. This is how the word ‘offshore’ is used below.
Before, ‘offshores’ used to refer to jurisdictions with zero taxes and total confidentiality. Such jurisdictions are hardly imaginable in the modern world: everybody must exchange financial information in an automatic mode now.
The following offshore zones offer zero or low taxes to foreign entrepreneurs; they can protect your assets very well; and they enjoy good international reputation.
Each of these characteristics is important: Каждый пункт помогает бизнесу:
- Low taxes bring down the business costs;
- Asset protection against raiders, fraudsters, and lawsuits is as important;
- Good reputation of the country where your company is domiciled facilitate making contracts, opening bank accounts, and conducting all other business operations.
We divide countries that offer these benefits into three groups:
- ‘Classic offshores’ – countries that have been referred to as ‘offshore zones’ for years;
- Midshores – countries that have some characteristics of offshore zones;
- Onshores – high-tax jurisdictions offering some offshore opportunities.
Nevis is a classic offshore. It is a tiny island in the Caribbean Sea that is known for its white sand beaches, citizenship-by-investment program, and favorable conditions of establishing offshore companies (LLCs or BCs).
The following features are characteristic of Nevis:
- Zero taxes on profits, capital gains, and dividends;
- Not on the EU, IRS nor other black lists any longer;
- Banks can be found in the country, which means that possibilities exist to open local bank accounts;
- Nevis-registered companies are the most convenient tools of asset protection.
2. Marshall Islands
One more classic offshore zone is the Marshall Islands in the Pacific Ocean. It is one of the most secure offshore zones today.
The following features are characteristic of the Marshall Islands:
- Zero taxes and profits and capital gains;
- A large register of marine vessels;
- Has been taken off all black lists (even the French one);
- Is associated with the USA;
- Good for online business, trade, and IPOs.
We pass on to midshores now. Panama is the first such country located in Central America.
The following features are characteristic of Panama:
- Well-developed economy: trade, the Panama Canal, financial services, offshore services, etc.;
- Territorial taxation system: profit obtained from business operations abroad are not taxed in Panama;
- High level of personal privacy protection;
- The legislation protects foreign investments in the country;
- Local and international banks are available to open accounts with;
- A possibility to acquire legal residence in the country in exchange for investment.
The European midshore jurisdiction of Gibraltar provides for the possibility to open non-resident companies there. It other characteristic features include the following ones:
- Zero tax on profits obtained abroad;
- Corporate tax rate for resident companies is 10%;
- It is part of Europe, which gives direct access to the European markets;
- No VAT;
- No taxes on dividends paid out to non-residents of Gibraltar;
- A possibility to set up a European bank account.
Now we pass on to onshore jurisdictions with offshore elements. Hungary is an EU member state.
The following features are characteristic of Hungary:
- Business tax rate of 9%;
- The legislation protects foreign investments in Hungary;
- A possibility to open an account with a local bank;
- Easy access to the European markets.
Estonia is among the most digitalized countries in Europe and the whole world. Everything can be done online from registering a company to submitting the tax return.
The following features are characteristic of Estonia:
- Zero tax on the reinvested profit – a true offshore zone feature but the country is a member of the EU;
- Possibilities to acquire licenses for crypto business and e-wallets;
- A possibility to set up a European bank account;
- Electronic residency allowing remote control of Estonia-registered companies;
- Access to the EU market.
Serbia is sometimes referred to as a gateway to Europe. It is not an EU member state but it offers the following advantages:
- Duty free trade with Europe, the USA, and Russia;
- Corporate tax rate of 15%;
- A possibility to open a branch of a foreign company in Serbia, including an offshore-registered one, and then set up an account for it in the country;
- Fast local company registration and bank account opening;
- A possibility to acquire a residence permit in exchange for investment into business;
- Bank deposits are insured for up to 50,000 euros;
- There are Special Economic Zones where neither the VAT not the customs duties are payable.
If you are looking for a quiet place where you can engage into long-term business activities, please give an eye to Portugal. The following features are found in the country:
- ‘Old Europe’ equals ‘perfect reputation’;
- Access to the EU and world markets;
- If you have economic or other ties with Portugal, opening a bank account there is relatively easy;
- It is going to be a European bank account;
- Even if you have had trouble setting up the bank account, keeping it functional in the future is much simpler than in most other jurisdictions.
The base tax rate on profits is 38% in Canada, which does not sound like a low tax rate at all. The secret is the possibility to avoid paying high Canadian taxes by registering a partnership in the names of non-residents of the country and making profits outside Canada.
The following features are characteristic of Canada:
- Zero corporate tax on profits obtained abroad;
- Perfect international reputation;
- Opening a local bank account is relatively easy;
- A Canadian-registered partnership can have a bank account in a foreign country.
Even though Donald Trump has reduced the taxes in the USA, business is taxed quite heavily in the country anyway. There are exceptions, however: if you register a company in Delaware, Wyoming or Nevada and do business abroad, no taxes will be due in the States.
The following features are characteristic of some states in the USA:
- A possibility to pay zero taxes;
- A possibility to open bank accounts both in the USA and outside of the country;
- Perfect reputation;
- US banks do not exchange their clients’ information with fiscal authorities of other countries;
- Best-developed infrastructure in the country.
Which ‘offshore’ zone should you choose to form a company there? Please contact us by email 9see top of the page), WhatsApp or live chat and consult our experts. Depending on your personal goals and business objectives, we will recommend the country to register a company, the country to open a bank account, and the ways to acquire the necessary permits and licenses. Looking forward to hearing from you!