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How can offshore company be used? What are offshore companies?


An offshore company is a regular company that has been incorporated in a country other than ones place of residence, citizenship or domicile. Offshore company has requirement to conduct its business activity outside the country of registration and because of this the offshore company is exempt from most of taxes in country of registration.

  • For instance if it is incorporated in Belize, it could base its primary operations in Panama.
  • It cannot trade within the jurisdiction in question, so the company in Seychelles cannot carry out any business within that territory.
  • Must pay nominal tax expenses imposed by the jurisdiction in question, the offshore company in BVI has to pay the mandatory annual taxes there.

A lot of people consider incorporating an offshore company much more beneficial than an onshore company that is incorporated and operating within the same jurisdiction. Of course there are different factors somebody must consider when he is deciding where to incorporate.

Offshore companies are incorporated to take advantage of these following features:

Taxation - Tax planning purposes: Companies that do not trade within the jurisdiction they were created have to pay a minimum of taxes, like annual and license fees.

Confidentiality: This advantage is very important, due to security purposes. If somebody is doing transactions in the name of a company instead of an individual, this can keep the identity of the principal out of any documentation and unrevealed.

Fees: Some jurisdictions have lower incorporation and annual fees.

Cost operation: In terms of expenses, it is cheaper to incorporate a company offshore, i.e. an offshore financial center, than renting an office, hiring staff, etc. This is especially good solution for various online businesses.

Legal protection: In general it is easier for an offshore company to protect itself, from lawsuits, disclosure of assets, etc. Since the laws that prevail over it are the ones of its own jurisdiction, not the place where the company carries out business.

Legitimate uses of offshore companies:

  • International trading
  • Asset protection
  • Captive insurance (license is required)
  • Yacht registration
  • Tax planning
  • Protection of intellectual property
  • Succession planning
  • Confidentiality (non-criminal)

The jurisdictions used for the incorporation of an Offshore Company are called an Offshore Financial Center (OFC). The most popular jurisdictions for incorporation of offshore companies are:

A lot of people confuse the terms Offshore Financial Center and Tax Havens. Although they may seem like the same thing, they are not. A Tax Haven is merely a territory in which the taxes are low, or there are no taxes at all; while an OFC is a jurisdiction that provides facilities other than low tax, for an offshore company to be incorporated.

Another service for an offshore company in an OFC is the banking. In most of offshore financial centers there are secrecy and anonymity for account holders. This is for many owners is very appealing, if they want to keep their identity private.

Information about offshore companies in different jurisdictions:

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