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The essence of offshore company formation: what you always wanted to know!

Offshore company formation

Time and again, the term “offshore company formation” appears in the relevant business media and specialist magazines. But what is such an offshore start-up and what could be the concrete benefits for you as a company founder? And what exactly does the term “offshore” actually mean?

To put it simply and in summary terms, offshore is defined as those countries and territories which have little or very low corporate taxation (often referred to as “tax havens”).

Typical offshore countries include Panama, Belize, Seychelles and the British Virgin Islands.

Basically, an offshore company is a company that does not generate its sales in the country in which the company is registered under company law. An example of this is a company that provides its services in Germany but is registered and registered in Belize according to corporate law.

The minimum requirements in the offshore country

Often, in connection with the founding of an offshore company, the question arises as to which company structures should be maintained in the actual offshore country. As a rule, a so-called minimum local presence is required of offshore states. In practice, a company headquarters with a Registered Agent and a Registered Office is required on a regular basis. If the corporate law requirements of the respective offshore country are met, a so-called “Certificate of Good Standing” will be issued by the responsible company register of the offshore country after some time. This document confirms that all governmental requirements have been met, the taxes due have been paid and your offshore enterprise is in a “good state” overall.

Motives and motives for the offshore company foundation

One of the main reasons for starting an offshore company in practice is the desire for the lowest possible and optimized tax burden. In this regard, it is advisable from the outset due to the complexity of comprehensive expert advice, especially by your tax adviser and a corresponding specialized lawyer.

Another possible motivation for starting an offshore company may be the pursuit of the most possible anonymity. For example, anonymous property disposals are quite possible for offshore companies. Ras al Khaimah in the United Arab Emirates is a good example of a younger, yet very discreet offshore state.

Not to be neglected in the motives for the establishment of an offshore company is the aspect of the accounting and accounting obligations. In some offshore countries there are no legal requirements at all; in other countries, the requirements are minimal and not comparable with the bureaucratic requirements, for example in EU countries.

Why Establish an Offshore Company? It’s Not Just Tax Optimization …

Why establish an offshore company?

If you are considering setting up an offshore company but are not entirely convinced, we have compiled a list of 5 good reasons for setting up an offshore company.

1. Tax optimization

Offshore companies are the most popular way to legally pay low or even no taxes. With world-unique tax conditions and a stable legal environment, offshore companies are rightly referred to as tax havens.

2. Anonymity of ownership

Bearer shares (nominee shareholder) and nominee shareholder are tools that enable anonymous ownership of legal entities and entire corporate structures. These entities may still have anonymous ownership of both movable and immovable property, interests in companies, and other assets.

3. Protection of property

Executors who breach their powers together with the illegal practices and interventions of the authorities pose a threat to your property. The legal personality of offshore companies and the possibility of their anonymous ownership are powerful asset protection tools.

4. Low bureaucracy

Business with offshore companies is the dream of every entrepreneur. The foundation of the company is a simple act and is solved within a few days. The absence of the obligation to file tax returns and financial statements makes the company’s management painless. Termination of a company is usually the only decision that does not entail any further financial costs.

5. International image

Offshore companies and corporate structures are widely used for their resounding names and the international image they can get. For these purposes, there are popular companies from the United Kingdom or the US state of Delaware. In both of these cases, you can combine 0% tax liability and the international image that your business will bring.