Establishing an Offshore Company in 2024

WWhat is an offshore company? Everybody seems to know what it means, but there are still some misconceptions. Let’s make it clear: an offshore company is a legal entity registered outside the business owner’s homeland. The main purpose is usually tax benefits provided to non-resident companies. If you decide to go offshore, be careful when you choose a jurisdiction. It should not be blacklisted, and it must comply with all requirements of international regulators. You will have to make a preliminary analysis before you make a final choice or delegate the matter to an expert.

New Regulations for Offshore Businesses

The majority of global entrepreneurs used to form their companies in “classic” tax havens of the past that ensured reliable asset protection, lavish tax incentives, and almost complete anonymity of business owners and key officials. The rules of the game have changed, though: nowadays, the beneficial owner’s name can no longer be kept absolutely confidential, and zero taxation is possible only under certain circumstances.

Can you still take advantage of legal tax minimization? Yes, you definitely can! All you need is to know the details of structure registration and carefully choose the jurisdiction where you will set up your fund, trust, or company.

Offshore company registration may seem simple at first glance. Still, practice shows that most business people lack enough expertise in the business, financial, and tax fields to choose the best destination, the most suitable company type, and a viable mechanism that will function seamlessly. As a result, they encounter many problems during entity formation and later on.

Steps Required to Set Up an Offshore Company

Legal Framework and Offshore Regulations

Make sure you have a fundamental idea about an offshore company and the problems it may bring, or you may receive unexpected claims from regulatory authorities.
Find out which countries are blacklisted by OECD to delete them from your shortlist while making a choice.
You need to find a proper balance between the tax incentives offered by the jurisdiction and its reputation (it has to be sufficiently high to satisfy your business partners).
Discover the economic substance requirements set by a particular jurisdiction.
You should have a clear answer to the question about your responsibilities as an offshore legal entity owner.
Make sure you understand the tax consequences related to your homeland and to the place of company registration (your country of residence may require declaring your foreign company and paying taxes on it).

Offshore Company Registrar

There is nothing better for a foreign entrepreneur on his way to success than a competent assistant who will deal with all administrative matters and explain all the nuances. The company owner will be able to focus on business instead. At the same time, the agent will find the best solution possible, collect the necessary package of documents, register an offshore entity, and set up a bank account. You will also be able to cooperate with the agent after incorporation to manage all kinds of administrative tasks easily, including submission of annual tax returns, financial reports, company renewal for a new year, and so on.

There are two kinds of service providers:

Specialized service providers deal with the services provided in one country. They are physically headquartered in this country and have a registered agent’s license. You can choose this company if you know exactly which jurisdiction is the best for your company.
Universal service providers can register a company for you in different countries. Please check whether they have enough experience to do so and use their assistance to create a structure you will use for many years without much trouble. Universal companies are not registered agents; they cooperate with reliable agents in the most popular countries.

Offshore Business Financing

You may need to incur extra costs in addition to the company registration fee and expenses on its subsequent extension, namely:

Corporate seal registration
Setting up a bank account
Renting an office (which can be virtual or corporate)
Nominee services
The cost of an audit
Apostille services, etc.

Some agents do not mention these services, which can lead you to believe that offshore company registration is a very cheap procedure. However, keep in mind possible extras, as they will inevitably arise.

Choosing a Proper Company Structure

Let’s take a look at the characteristics of the three main offshore company structures.

International Business Company (IBC)

You can conduct international business operations, including trade and investments
If the IBC fully operates outside the country of registration, it is not liable for a corporate tax.
The registration procedure is quick.
You will be able to enjoy the highest corporate and banking confidentiality possible.
There are minimum reporting requirements.
You need no more than one director and one shareholder to set up an IBC, and these positions can be combined by one person.
Belize, BVI, Marshall Islands, St. Vincent and Grenadines, and Nevis are the best destinations for IBC formation.

Limited Liability Company (LLC)

This is a hybrid structure that combines a partnership and a corporation.
It does not pay a local corporate tax on the income or assets received abroad.
Its members are not personally liable for the company’s debts and obligations.
An LLC is composed of members rather than directors and shareholders.
There are minimum reporting requirements to comply with.
An LLC can be started with at least one member.
The jurisdictions recommended for LLC opening include Nevis, Belize, Cook Islands, and separate US states.

Pte Ltd.

This is a private business where the number of shareholders does not exceed 50.
The company’s shareholders bear limited liability.
If the company’s income is generated abroad, it is exempted from taxes or pays them at a low rate.
If you are planning an IPO, this is not a suitable legal structure.
This company form is subject to more reporting requirements than an IBC.
The best destinations to form a Pte Ltd. are Canada and the UK.

As corporate norms may change annually, we strongly recommend consulting reliable experts to learn the latest news, get updates on the best jurisdictions, or learn more about offshore company formation. Choosing the right jurisdiction and company form are very important steps as they will determine your company’s future success. The place of registration should be suitable for the activity you are going to conduct and the further development of your business. The economic and political stability, as well as the reputation of the destination, are equally important. If you feel that your experience in international business is not sufficient, do not hesitate to discuss the details with an expert by following the above link – it will cost you nothing.