The term Offshore Company typically refers to the International Business Companies (IBC) or other types of legal entities, which are incorporated by the shareholders/ beneficial owners under the laws of a foreign/overseas jurisdiction where they are not resident. Another defining aspect of an IBC or an Offshore Company is that these companies are prohibited from conducting local business activities.
An Offshore Company normally is allowed trade, hold assets and conduct normal business activities legally outside of the jurisdiction where it is incorporated.
The simple reason why such International Business Companies are referred to as Offshore Companies is because they are mainly incorporated in jurisdictions that are island states that grant exemption from taxation to the companies and its owners. Their revenues mostly come from government fees payable upon registration of a company and its annual renewal.
Consequently, an Offshore Company or Jurisdiction has nothing to do with the location and more to do with the Corporate and Tax Laws that govern the companies incorporated. In fact, it would be correct to say that one of the most prominent offshore jurisdictions in the world is the US State of Delaware.
There have been some negative connotations in the recent years around the legality of incorporating offshore companies, however, the truth is that the offshore companies are entirely legitimate tools available to anyone for all lawful purposes. Unlike popular perception, Offshore Companies and Banking are not just for wealthy businessmen or multinational corporations but for anyone looking for an alternative to plan their financial affairs intelligently:
Investors looking to diversify their asset base internationally for better opportunities
Companies looking to invest into a business in an overseas country
Online businesses that have no physical presence and want to operate globally
Start-ups who want to maximize profits and minimize tax burden
Service-based companies wanting to offshore their business structure
Families looking for Trust formation, estate planning and wealth management
Anyone who has an international lifestyle, ‘digital nomad’ or dual citizen and are looking to minimize their tax footprint
Potential benefits of a properly structured Offshore Company are numerous –
The placing of assets into offshore corporations and overseas legal structures can provide a strong layer of protection from future liabilities. By having investments or bank accounts and other assets owned by your offshore corporation, it makes tracking them down via an asset search difficult. Offshore companies provide highly effective asset protection and effectively screen your finances from public view.
An offshore company separates you from the business entity and because the offshore structure is located in an overseas jurisdiction there is a separate legal system and set of laws that help protect the company should it become targeted in any asset search or lawsuit.
Most foreign offshore countries do not respect local court orders unless there is a criminal investigation with significant evidence of wrongdoing in order to break into assets of an offshore structure. Countries that have an offshore financial centre impose significant barriers to entry that prevent only the most strong-willed creditor the ability to break into the structure.
One of the main offshore company benefits is that they are generally “tax neutral” meaning they are often tax exempt in the country of incorporation or they pay a low or nil effective rate of taxation when used as a holding company receiving dividend income for instance. Properly structured and administered, this may result in a reduction, deferment or even complete elimination of the tax burden.
Tax obligations vary greatly from country to country so it’s important to make sure what your tax obligations are before choosing a jurisdiction. Tax obligations usually are determined by the country where you have permanent residency in and as a beneficial owner of a company you would be liable to be taxed in your country of residence. While IBCs remain tax-free, that may not free you as a beneficial owner from paying taxes.
Low Capital Requirements
Offshore companies typically provide flexibility in terms of structuring of the capital of the entity. This often includes very low minimum paid up capital requirements.
Simple Corporate Regulations
Offshore jurisdictions have created simplified corporate laws in an effort to attract foreign companies and individuals by simplifying regulations and by lowering the amount of bureaucratic red-tape.
Some of these simplified policies include no auditing nor financial reporting requirements as well as no secretaries nor need to hold company meetings.
There are a number of offshore jurisdictions also known as Offshore Financial Centres (OFCs) worldwide that could be used in formulating a well guided legal offshore strategy for both individuals and corporations. Rosemont Partners are well placed to assist with a full suite of incorporation, domiciliary and administrative support services in most OFCs for the International Companies, Trusts, Foundations and Funds. We list below some of the more commonly used jurisdictions that we’re able to offer solutions from –
British Virgin Islands (BVI)
UAE: RAK Offshore, JAFZA Offshore and ADGM registered SPV Companies
Kindly Note: We do not include prices on our website as each situation is unique. New Regulations have radically changed the Offshore Corporate Services Industry. Please get in touch for a compliant customised solution and price quote.
Our experienced team of Irish, British & Indian Corporate Structuring Specialists are happy to provide an obligation free Confidential Preliminary Consultation.