The term offshore refers to a business entity established outside the area where the business owner resides.
What is an Offshore Company?
An offshore company conducts all of its transactions outside the borders where it is incorporated. It is owned and exists as a non-resident entity, therefore meaning it is not liable to local taxation.
What are the Benefits of an Offshore Company?
Overseas company formation can provide a wealth of benefits, as well as helping to grow your business outside of your country of residence.
Setting up an offshore company allows you to enjoy the tax benefits that are accessible to you when your business is in an offshore jurisdiction.
Offshore jurisdictions have simplified corporate laws in an effort to attract foreign companies. Some of these policies include no auditing, financial reporting requirements, no secretaries or need to hold company meetings.
Protection of Assets
When formed in a reputable jurisdiction, an offshore setup can provide business and asset protection. The structure takes on a legal right to incur debts and liabilities like that of a legal person.
Depending on the offshore location there are a number of opportunities available including investing in foreign markets and purchasing real estate.
As an entity, your company takes on a separate legal identity separate from those who own it. Financial transactions and business dealings would then be carried through the name of the business rather than a single individual.
Most offshore financial centres have company registries that are not open to the public providing confidentiality for directors and shareholders unless there is a criminal investigation.
There is a separate legal system and set of laws that help protect the company should it become targeted in a lawsuit. Most foreign offshore countries do not respect local court orders unless there is a strong criminal investigation. Countries with an offshore financial centre impose barriers that prevent most creditors from accessing the structure.
Who Should Start an Offshore Company?
It is more straightforward and beneficial for businesses that aren’t tied to one location, such as:
- E-commerce and internet-based companies
- International companies
- Investors and traders
- Owners of mobile assets
- Beneficiaries of intellectual property
Best Places to Start an Offshore Company?
The most popular offshore jurisdictions include:
- Hong Kong
- The British Virgin Islands
- Cayman Islands
- Cook Islands
How to Choose an Offshore Jurisdiction
There are many things to consider while selecting an offshore jurisdiction. It is worth researching the following:
- Is there a reliable means of communication?
- Is the offshore jurisdiction reputable?
- Is it politically and economically stable?
- How sophisticated are the tax laws?
It is clear that an offshore company can have many benefits given that you do your research and choose the jurisdiction that works best for you.
For more information on how Paramount Formations can assist in the formation of an offshore company, view our services or contact us on 0800 0198 698.