How can an offshore company be established?
Offshore company formation, means that you establish a company that is incorporated in a country where you do not carry out your business. There are several types of offshore companies that you could set up. By establishing a company offshore, in a tax haven, you qualify to pay taxes on your gains at that country’s favourable rates. Setting up an offshore company, to get those favourable tax rates, is not a ‘free for all’ and you have to act according to the laws and regulations of that country. Whilst it is feasible to start your own offshore company you would be well advised to use the expertise of an established agency to do it for you. Increasingly countries are seeking ways to avoid losses in annual taxation to offshore companies. An expert agency in offshore company formation will advise and guide you through the process ensuring you stay within the law of your resident country and do not end up paying more tax than is necessary. Also, the expert agency can advise you which of the 40 or so countries, that are tax havens, would be best for you to establish your company in. Setting up an offshore company is ideally suited to businesses that are not labour intensive. Businesses working in the financial, information and communications services are all ideal businesses to set up or transfer offshore.
What to do when forming a company.
The key company formation jobs are:
· Articles of association – detailing the objectives of the company, its internal processes and the rights of its members.
· A Certificate of Incorporation – to show that the company exists and has not been liquidated or struck off.
· A registered agent – normally living within the jurisdiction of the country used to incorporate the company.
· A registered office – the official address in the country of jurisdiction for the offshore company. This does not also have to be the main business address.
· A list of members – stating the company’s legal owners.
· A list of directors – showing who is responsible for the running of the company.
· Information on shadow directors – care needs to be exercised in the use of shadow directors, as if they are deemed to be non-participatory in the company then the
· Naming a company secretary – essential as this is the person who has to ensure legislation is properly followed.
· Keeping statutory records – not just maintaining minutes of meetings etc, but also ensuring they are publicly available.
· Bookkeeping – proper records must be kept and audited.
Some more on tax havens.
Tax havens are usually small and under-resourced countries where an influx of investment from overseas can increase the economic and, therefore, social development of the country. With little or no physical resources of its own the tax haven needs to entice investors to it, they do this by offering favourable tax rates compared to the indigenous tax rates of the country where the business is currently registered. In effect an offshore investor forms a corporation in the tax haven which then acts as a shell to the investor’s accounts. The corporation would not be commercially active in the tax haven meaning that little, if any, tax would be due to the tax haven itself. Offshore companies in tax havens are also used to protect a company’s assets. If someone was concerned that they may be subject to a lawsuit by transferring assets offshore they can make them less susceptible to loss. Some examples of what a tax haven can offer are:
· Bahamas – has no personal income tax, no capital gains tax and no inheritance tax.
· British Virgin Islands – this is so popular as a tax haven that 41% of all offshore companies are registered here.
· The Isle of Man – has no corporation tax.
· United States Virgin Islands – gives a 90% exemption on income tax and a 100% exemption on all other taxes and duties to certain, qualifying, people.
What help is available for offshore companies?
It is, of course, essential to ensure that your offshore company is trading successfully and safely. The use of an agency to take care of any business credit reports will not only you help maintain effective credit control within your business, but also to quickly determine the financial efficacy of any potential trading partners. The sort of information an agency can quickly establish for you includes; details of proprietors, the size and nature of a business, its tax or VAT status, does it have an adverse credit history, current balance sheets, profit and loss or full accounts. Information on a company’s directors can also be very helpful when you are making decisions about working with another company. Having an agency to carry out director searches for you saves you time and will ensure that a thorough job is done.
If you would like to learn more about these services and which would be beneficial to you, please contact us using the “contact us” page on top of the screen for a confidential discussion with no commitment.