An Offshore Company is simply a company established outside of the country in which the Ultimate Beneficial Owners live. Despite living in a highly connected world, many people are still unaware that they are not restricted to having using a company, or banking, in their home nation. There are many advantages to operating an Offshore Company. Each country operates under its own company legislation and tax regime so there are advantages that can be levied by business owners.
Depending on the global jurisdiction, Offshore Companies are also known as;
- Non-resident companies
- International Business Companies (IBC)
- Exempt companies
Who Can Start an Offshore Company?
Anyone. As long as you have not been banned as a Director anywhere in the world, you can start an Offshore Company. Offshore investments are not limited to wealthy business professionals or investors but do include:
- Company owners who want to see their companies globalized.
- Entrepreneurs looking to form a subsidiary in the overseas.
- E-business or online enterprise with no physical presence.
- Start-ups wishing to enter the global marketplace and pay low tax.
- Businesses needing companies in locations that have reciprocal tax treaties with their clients.
Individuals and Families looking to invest in land or property abroad.
Why an Offshore Company?
The key benefits for those in business are;
1. Tax Advantages
Forming a foreign corporation can significantly reduce your company’s tax bill. Attention needs to be paid to the Controlled Foreign Company legislation of your home country, however from a significant corporation tax saving can be made by choosing a lower tax jurisdiction.
Branching into new international markets can be significantly easier using a company incorporated in a foreign jurisdiction. You may want to appeal to the US market for example, in which case clients may be more inclined to do business with a US company. If you are looking to break into the Chinese marketplace, a Hong Kong or Singapore entity would work very well.
3. Privacy and Confidentiality
In many locations around the world, the corporate legal system recognises the use of Nominee Directors and Shareholders. This keeps the name(s) of the actual beneficial owner private. This would be beneficial if you wanted to protect your identity from competitors, clients and potential creditors. It also works very well if you are looking to diversify your product range or move into a new market and you do not wish your competitors to know.
4. Reduction of corporate administration.
Depending on your location, the corporate administration required by your local government can be burdensome. In contrast there are many locations worldwide that have no requirements to file annual returns or file accounts, reducing costs to the business as books can be kept more simply and purely for the owner of the company.