Offshore, offshore zone – a country or territory located in a certain country that offers special economic conditions to foreign companies.
Offshore is a phenomenon that is gaining more and more popularity, the rules and principles of offshore companies are available to everyone, and the very mechanism of their work is completely legal.
Particularly attractive of these conditions are large tax benefits or no taxation at all. There are three types of offshore zones:
It is the classic offshore company that is most popular with businessmen. Usually, these are small, warm, island countries offering foreign companies a complete absence of tax obligations, a liberal policy regarding auditing and financial reporting, and low annual payments independent of income. The most famous offshore companies of this type are the Cayman Islands, Bermuda, British Virgin Islands, Panama, Belize, Seychelles, etc.
This type of offshore is characterized by a reduced tax rate and the same indulgent, as in classic offshore, attitude to documentation. Such zones include the Bahamas, Schotlania, Panama. However, this includes those countries that can still legally require the company to provide full financial statements. These include Hungary, Cyprus, Monaco, San Marino, etc.
Zones of this type are called “offshore” because in some cases, depending on the specifics of the country and the type of activity of a particular company, they also set a reduced rate for taxation of foreign companies. However, the need to keep accounting records, provide the necessary reporting, undergo audits remains unchanged. A striking example of a European offshore is Holland, where the tax on the activities of companies operating abroad does not exceed 1%.
What is an offshore company? This is a company that does not operate in the country where it is registered. The owner of an offshore company, in turn, should not have the status of a resident of this country. For example, a German who registered his company in the Bahamas, provided that his company operates in Germany, is the owner of an offshore company.
Suppose a businessman disagrees with the extortionate tax rate in his country. He intends to stop giving the state his honestly earned money and at the same time manage not to be punished for tax evasion. It is an offshore company that will allow a businessman to realize his grandiose plans – to save significantly without breaking the law.
Besides low or no taxes, offshore companies are attractive and easy to set up and use. You can open a company offshore in an hour. Most of these firms do not need financial red tape, collection of numerous documents, and passing inspections. Often, a fixed payment once a year is all an offshore company owner should worry about.
The advantages of offshore also include absolute confidentiality. The fact of non-disclosure of the names of the owners of the company makes it possible to include representatives of the authorities and law enforcement agencies among its beneficiaries.
An offshore company can act as both an intermediary and a business owner. In the latter case, the case will be reliably protected from raider attacks.
There are two ways to open an offshore company:
In most cases, the opening of an offshore company follows a single scenario. The registrar will need to provide a passport and also state the official name of the company. If the name is free, then the company will be entered into the register. This can take anywhere from 1 day to 3 weeks depending on the zone and agent. A good registrar himself will solve the problem of a legal address and help to form a staff, as well as in the future will serve it efficiently.
Next, you will need to open an offshore account, having previously selected a bank and decided on a service package. Among the advantages of this method, it is worth highlighting:
- freedom to choose a name;
- freedom of choice of organizational and legal form and legal address;
- a guarantee of the purity of the company, that is, the fact that previously no transactions were carried out through it;
- the ability to initially select the optimal configuration of the organization for your business (types of activities, staff, size of authorized capital, and so on).
Registrars often offer the opportunity to buy a ready-made legal entity in one of the most attractive countries from a tax point of view. It is already registered and sometimes even has a history of existence (without activity), which is good for doing business. Opening an offshore company through a purchase is carried out very quickly – in just a few hours. In this case, you get a company with a specific name. Although most often it will be possible to replace it in the future.
After the purchase, you will need to open an offshore account in the same way as in the case of registering a new legal entity. It is better not to buy companies with ready-made accounts, as they often have a financial history as well. Among the disadvantages of buying an offshore legal entity is the inability to choose the configuration, name, and legal form of the company, as well as the need to carefully check it for legal purity. Besides, not all jurisdictions allow buying and selling firms.