Our company has got 20 years of experience in establishing and maintaining companies within various jurisdictions, including both low-tax and zero-tax, which are traditionally known as offshore.
Despite an “abusive” connotation that the term “offshore” has gained lately, these kinds of companies have been widely and legally used in many fields of activities.
The use of other jurisdictions’ tax advantages has had a long history, which will continue to exist as long as there are differences in tax rates and rules.
What is an offshore company?
• It is commonly acknowledged that it is a company registered in a country:
o With a low tax rate;
o With an exemption from income tax earned abroad;
o With a “normal” tax rate, but with an exemption from tax on certain types of income (low-rate) or some types of companies.
• Funds and Trusts of low-tax jurisdictions.
Which jurisdiction is the best one to choose?
There is no universal algorithm. When you have different jurisdictions to choose from, you should consider a number of factors, such as:
• The role (position) of a company in its plans, structure.
• Business activity, income sources and types.
• Location of an activity, as well as terms and conditions of a local legislation applied to companies within different jurisdictions.
• The possibility to apply treaties.
• The period of time a company is planned to be operated for.
• The need for indirect taxation of planned transactions (VAT).
Potential benefits of using offshore
• Tax advantage.
- Lowering of the overall tax burden for a final beneficiary.
• Confidentiality.
- In some cases, there is an opportunity to “shield” behind an offshore without the need to disclose true owners. It has to be mentioned though that an absolute confidentiality is impossible in the modern conditions. For more information on this issue, please view the section Questions and Answers.
• The simplicity in establishing and running a company, as well as a minimum or lack of accounting.
Risks to be considered when setting up an offshore
• Tax risk in case of an “incorrect” decision.
- A wrong choice of a company’s form, scheme or structure will not only end up failing to bring a desired outcome, but may also result in serious tax consequences.
• Legal prohibition for offshore-companies.
- Quite a few types of jurisdictions are either currently imposing or have already imposed measures that restrain the possibilities to use offshore companies.
• Possible issues with inheritance.
- The better a company’s beneficiary is kept dark, the more complicated it becomes for heirs to claim on assets.
- Income tax on all the property is due to be paid by heirs.
- The existence of previously undisclosed creditors with relevant claims on heirs.
• Property risk (fraud, raiding).
- Registers of owners and directors within some jurisdictions are kept in a paper form, which may further lead to a risk of a business take-over through a company’s documentation fraud.
• Risk of invalidating a company or its transactions and possible relevant tax consequences (e.g., for “Letter Box Company”).
Our qualified specialists in cooperation with the best corporate services providers all over the world will assist you in the selection and registration of your company within a jurisdiction* that corresponds to your goals.
*We deal with all types of jurisdictions that serve the tax planning goals. The most “traditional” ones are as follows:
Cyprus, Malta, the United Kingdom, Switzerland, Sweden, Denmark, Luxemburg, Lichtenstein, Hong Kong, BVI, Seychelles, Marshall Islands, Panama, Belize, Nevis, Gibraltar, etc.
Experts responsible for provision of this service:
Leonid Ageev, partner, email
Aleksei Saaremägi, partner, e-mail
Anna Grishakov, corporate manager, e-mail
Jelena Samohvalova, corporate administrator, e-mail
Tatjana Tsenter, corporate administrator, e.mail