Economic Substance for Your Offshore Company

Paper “shell” or “brass plate” companies are reminiscent of the 1980s Miami Vice era! Over the years with international political pressure aimed at combating money laundering and tax evasion, economic substance requirements have been introduced. Wherever you want to incorporate an offshore company – be it the Marshal Islands, Belize, Cyprus, Nevis, the BVI, Seychelles, Guernsey, Great Britain or Germany – the company needs substance. What is substance?  Some tangible presence in the country from where it is managed.   

Fortunately, however, there is the new, efficient and compliant way of running offshore companies. They rely on “economic substance”. In this article you will find out what is economic substance, and how setting it up can be easier than you might imagine!


First of all, why should you, as the owner of an offshore company, bother about this? What are the advantages for the company owner? Simply put, economic substance guarantees stability for the business, long term operations, and smooth cooperation with banks and the regulators. Simply having professional financial statements, that might cost $1000 per year, can go a long way towards reassuring banks that your company is professionally run and around for the long term.

We offer turnkey company registration services whether you would like to form your offshore company in an offshore, mid-shore or onshore jurisdiction. You will have a corporate bank account, a company office, a physical business address as well as accounting and legal support. Please apply for a free consultation regarding asset protection through an offshore company with InternationalWealth experts.


The economic substance requirements in 2021

Having economic substance is simply good business. Although it is optional under OECD-FATF guidelines, and in many cases by national legislation as well. For example, the BVI, Seychelles, and Belize have now written into their legislations that every IBC (international business corporation) or LLC registered on their territories shall have substance. In Cyprus, the banks generally require that all Cypriot-registered companies have substance: they will probably not open an account otherwise.

Since January 1, 2019, all reputable offshore havens have made economic substance obligatory for the companies registered there. These jurisdictions include the following ones:

  • British Virgin Islands (BVI).
  • Nevis
  • Cayman Islands.
  • Anguilla
  • Bermuda
  • Isle of Man
  • Bahamas

These jurisdictions have also been under pressure to follow the ‘recommendations’ of the European Union authorities who mantain a list of countries with non-transparent tax systems. If a country has a non-transparent tax system, it can face problems with international partners, foreign tax authorities, and financial institutions.

Please note that in most countries, the substance requirements apply only to locally registered companies and they do not apply to businesses controlled or managed from another country. That means the IBCs (International Business Companies) can be spared the economic substance requirements. In any case, we recommend you to consult an expert on this matter.

Acquiring economic substance for your foreign company

Both newly registered companies and existing companies should consider acquiring or enhancing economic substance in the offshore havens where they are registered. There are international requirements as well as national ones. Whilst international requirements are optional, it makes good business sense to do business as transparently as possible. When your company is registered in an offshore jurisdiction, we recommend it should have economic substance that includes the following elements:

  • A company office in the country of incorporation (minimum hotdesk, co-working space or virtual office);
  • Company personnel with salaries and local social security payments;
  • A registered office address, a local telephone number, and a company website;
  • A professional company director with experience and sufficient qualifications, and not a nominee director “off the street”;
  • Financial records and audited financial statements, even if there is no obligation to file reports.

While it was easy to open an offshore company before by simply paying the registration fee and renting an office, today you should be moving towards fully-fledged economic substance in the country of incorporation This includes hiring a professional director, purchasing office equipment, keeping financial records, and of course engaging in business activities not on paper only but in reality too.

Find out more about an offshore company formation in Nevis.

Economic substance acquisition for your offshore company: our services 

If you would like to open an offshore company, our InternationalWealth / Offshore Pro experts will be happy to assist you in setting up the necessary economic substance for the company. All you have to do is order our services, cover their costs in any currency (including crypto), supply the documents, and sign the necessary papers. As a result, you will have a workable company in an offshore jurisdiction.

Services that we offer:


Company registration.


Opening a personal and/ or a corporate account with banks worldwide in Caribbean, Singapore, Europe etc, or alternatively a payment system or a neobank.


A company physical office in the country of incorporation: purchased or rented in accordance with the company’s geographical location and the number of personnel. We can help arrange lease contracts, utility connections etc as required.


Tax planning and accounting services (via referral to local professionals in suitable jurisdictions).


Professional company directors and company managers.


Legal consulting  (via referral to local professionals in suitable jurisdictions).

Please contact International Wealth experts by email, telephone, or the live chat. We will gladly offer a packaged service to you (company registration + economic substance acquisition) or help you acquire substance for your already existing offshore company. 

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