Offshore – from the English offshore – “outside the shore“, “outside borders“.
You can view the price list for offshore companies here. We work with agents worldwide.
This is one of the most effective methods of tax planning. The basis of this method is the legislation of certain countries that partially or fully exempt from taxation companies owned by foreign persons, that is, in the language of tax authorities, non-residents.
An offshore company is a legal entity that does not conduct business activities in the country of its registration. The owners of these companies are non-residents of those countries. That is, they do not live in them and do not conduct any business activities there.
Such companies are permitted in countries where very low taxation is provided, or where taxation is essentially absent altogether. In some countries where there are no taxes for such companies, there is only a fixed annual fee, which amounts to no more than 500 – 700 dollars per year.
Offshore companies are very common. Owners of such companies from dozens of countries have long realized their advantages. The number of offshore companies amounts to several hundred thousand. According to economists’ forecasts, this number will triple in just five or six years.
By creating an offshore company, its owner can significantly, and most importantly, legally, reduce the amount of tax of his other firm – the local one. As a result of the interaction between the local firm and the offshore company, it is possible to virtually eliminate corporate income tax payments and significantly reduce social and income tax payments.
You can register or buy an offshore company (equivalent to a Limited Liability Company or Joint Stock Company) in several dozen countries.
What schemes can be used with the help of offshore companies?
Scheme No. 1. Storing money.
You have a certain amount of money. You want to keep it in a safe place. You want to have quick and unhindered access to it. At the same time, the political regime should not interfere with you.
You need a good bank – in a country with a stable political and reliable economic situation.Imagine if you opened a bank account in your own name. Why would you want someone else to control your financial flows? There is a very high risk of compromising the confidentiality of account ownership. Your personal credit card would reveal your financial status.
Opening an offshore company is one of the best solutions in this case. Here, you will be the director, you will manage the offshore company’s account, but no one will know that you are the owner. In all countries where offshore jurisdictions exist, disclosing information about a company or its owners carries criminal penalties.
The most popular in this case are:
The Bahamas, Panama, the British Virgin Islands.
Scheme No. 2. Expanded business.
Your company is engaged in foreign economic activity. You need to optimize taxes, simplify document flow, accelerate financial flows and ensure their reliability, and protect yourself from the arbitrariness of fiscal authorities. An offshore company is a solution that will allow you to solve many problems. It acts as an intermediary between your local company and the seller (buyer) with whom you conduct your international business.
For conducting trade operations, experts recommend opening companies in jurisdictions that have a double taxation avoidance agreement with our country.
Scheme No. 3. Import.
Example. To import, say, some production line and not pay customs duties and VAT, you need to purchase this line through an offshore company and contribute it as the authorized capital of a joint venture. Another option is leasing this equipment to the company. That is, you can pay leasing interest abroad.
Offshore companies can also serve many other schemes. Their main advantage is the simplicity of operation and significant savings of your funds.Recently, the purposes of using offshore companies have changed somewhat. While previously an offshore was primarily necessary for capital outflow, it now serves as a fairly effective tool for stabilizing payments, regulating the price of export-import contracts, self-financing, selling copyrights, paying for foreign currency contracts, leasing equipment, hiring personnel, supplying tolling raw materials, purchasing real estate abroad, as well as conducting investment and speculative activities on global financial markets.
A very interesting approach to using an offshore company was employed by Philips. The company established an offshore as an insurance company. The cleverness lies in the fact that in this offshore company, Philips representatives insured everything possible, even such minor items that no insurance company in the world would cover. As a result, businessmen receive money as insurance compensation.
In which countries can an offshore company be registered?
There are more than 70 countries in the world where an offshore company can be registered. The legislation of these countries provides tax benefits for offshore companies.
The most famous among them are: Panama, Gibraltar, Cyprus, the Bahamas, Ireland, Liechtenstein, and the US state of Delaware.
Countries where offshore companies are registered can be conditionally divided into several categories:
1. Small states, islands with a low level of economic development but with sufficiently high political stability (the Bahamas, the British Virgin Islands, Vanuatu, the Seychelles, etc.).
As a rule, these states impose no reporting requirements; the only requirement is to pay an annual fixed fee to the treasury. Typically, in such countries, there is no register of shareholders and directors, and the confidentiality of owning such a company is very high. Such companies are usually used as a safe and for financial transactions.2. States where, in addition to offshore companies, there are also ordinary (onshore) companies that may belong to non-residents, but if they conduct business activities within that country, they may lose their preferential tax-free status. To prove that a company has not conducted such activities, in these countries it is usually necessary to undergo an audit and submit reports annually. The control from the governments of these states is stricter than in the previous case, a register of directors and shareholders is maintained, but the prestige of the companies is much higher. These are Cyprus, Ireland, Gibraltar, Luxembourg, Switzerland, the Isle of Man, etc.
3. Countries that are not offshore at all, but quite the opposite, yet if you behave correctly there, you can operate a perfectly respectable company and pay very little. These are the USA, Great Britain, Canada, etc. In these countries, everything is open, you have to pay taxes and fees, and registers of directors and shareholders are maintained. However, there are organizational and legal forms that allow you to exist comfortably, paying only fixed fees. Such companies are suitable both for running a serious business and for simply storing money.
We would like to note that many novice businessmen do not quite correctly interpret the term tax-free zone. For example, you are in the Republic of Moldova and believe that by registering a company in a tax-free zone, for example, in Belize, you legally receive dividends and income. Yes, from the perspective of the offshore country, you are absolutely legally deriving benefit. However, it should be kept in mind that Moldovan legislation obliges a resident to pay certain taxes when receiving them abroad. At the same time, businessmen simply do not report their sources of income and use special nominee services.