Forming an offshore company provides many advantages no matter what you are looking for, whether its asset protection, privacy, or tax reduction. Creating an offshore structure allows you to move your business from a high-tax high regulation jurisdiction to a country where you are able to take advantage of local corporate laws and liberal company regulations.
Choosing the best place to form your company is about what is best for you. What local environment suits your personal needs.
Each country has its own unique financial environment that offers particular advantages for different businesses. While there are differences between each offshore jurisdictions, they tend to have the following similarities including:
One of the most compelling reasons to use an offshore corporate entity is that when you use an offshore corporate structure it separates you from your business or assets and liabilities. As an entity, it 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 which provides confidentiality for directors and shareholders.
All the details of the company and its accounts are not open to the public unless there is a criminal investigation. While each country has its own level of transparency, you are more able to remain anonymous (depending on the country and your tax obligations with the country where you live) with your assets and company structure kept at arms length.
Most countries that have an offshore financial centre offer special taxation status to non-resident companies that are incorporating in the country for the purpose of worldwide dealings.
These offshore business structures hold a special status that makes them nonliable to local domestic taxation nor or they obligated to pay taxes on their worldwide income, capital gains or income tax. Your taxation obligation may be more complicated depending upon the country where you live and its CFC laws, the offshore formation structure and the country where you incorporate.
Offshore tax havens offer tax benefits as a way of attracting foreign businesses and capital into the country. By incorporating in their offshore centre, in exchange, they receive fees when the company is registered and through a yearly fee.
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.
Separating your assets from you as an individual gives you a layer of protection should you be targeted by a lawsuit. Shielding your assets with an offshore structure, whether that's an LLC, Trust or Foundation, makes it much more difficult to tie you to your assets.
Whenever you have an investment or assets, it important that they remain distinct from your person; this ensures that they will not be liable to any of the debts that you incur as an individual. This is enabled by the fact that the structure takes on a legal right to incur debts/liabilities like that of a legal person.
An offshore company separates you from your assets and because the offshore entity 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 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 centre impose significant barriers to entry that prevent only the most strong-willed creditor the ability to break into the structure.