Offshore Company Formation

DOING BUSINESS OFFSHORE

To facilitate international business, Healy Consultants Group PLC assists our Clients with engineering global, legal corporate structures. There are three low tax offshore entity types including i) the traditional tax haven entities including the BVI, Isle of Man and Seychelles ii) legally tax exempt trading companies in reputable countries including Singapore, Hong Kong and UK and iii) low tax/tax exempt trading companies from reputable countries like Ireland, Hungary and Liechtenstein.

Healy Consultants believes traditional tax haven entities are unpopular with banks, customers and suppliers. Instead, Healy Consultants recommends our Clients to choose low tax jurisdictions to conduct substantial operations. Alternatively, our Clients may also conduct international business through legally tax exempt companies setup in reputable jurisdictions including Singapore, Hong Kong and Dubai.

  • What is an offshore company?

    • Offshore companies are entities registered outside the country where its main operations are located. These entities are used to conduct business transactions with partners who are not based in the country of incorporation;
    • Common uses – Offshore companies are generally used to facilitate global trading, allowing Clients to close contracts and sales while minimizing i) international taxation and ii) accounting and filing obligations. These companies are also commonly used as holding vehicles for worldwide subsidiaries;
    • Taxation considerations – Offshore companies are generally free of i) corporate income tax, ii) capital gain tax, iii) withholding tax and iv) other taxes which would otherwise apply to a tax-resident company. While the offshore company is legally tax exempt in its country of incorporation, income derived is still taxable in the jurisdiction where our Clients are tax resident;
    • Other common names – Offshore companies are also known as i) non-resident companies, ii) international business companies (IBC) and iii) exempt companies.
  • Advantages of an offshore company

    Advantages of offshore business entities
    1. Many of our Clients use offshore companies to enjoy the associated tax benefits including:
      • An offshore business can legally minimize domestic and international tax. For example, a properly structured non-resident UK LLP is legally tax exempt on global income sourced from outside the UK. Consequently, entrepreneurs prefer to conduct EU business through this entity;
      • An offshore company allows international businesses to conduct trade in multiple countries in a more tax efficient manner. For example, our Client can efficiently conduct business throughout Asia by incorporating a single Singapore offshore entity, instead of registering a business and incurring tax in each country of business;
      • A well located offshore holding company can minimize withholding tax through double tax avoidance agreements (DTAAs). For example, a Singapore offshore company enjoys the benefits of 81 DTAAs, reducing withholding tax on income from global subsidiaries to holding company;
      • Capital gains and inheritance tax can be legitimately minimized when international assets are owned by an offshore LLC. For example, a Luxembourg SPF can own international securities, real estate, and private equity and can be transferred or sold to third parties without triggering local tax liabilities.
    2. The other benefits of offshore companies include:
      • Offshore companies are often used by online businesses to reach customers across the globe. For instance, a Singapore based company may setup an Indian corporate bank account to receive funds from Indian Clients. Meanwhile, the services will be continued to be provided out of Singapore;
      • Offshore entities are frequently used to set up joint venture companies because both parties need a reputable neutral jurisdiction with strong contract law (e.g., Singapore); These reputable jurisdictions give strong business law support, allowing for fair dispute resolution. Thus, providing confidence to business partners and customers;
      • Offshore entities can also be used as a form of asset protection. Healy Consultants’ offshore business services are also often used by individuals who live in politically unstable countries to hold wealth and avoid expropriation or exchange control restrictions in their country of origin;
      • Some offshore jurisdictions do not require non-resident companies to disclose identities of shareholders and directors, allowing them to protect their privacy.
    3. It is easy for our Clients to operate and maintain an offshore company because:
      • Many offshore jurisdictions have relatively relaxed regulatory regimes, reducing regulatory and administrative burdens on our Clients;
      • Some offshore jurisdictions do not require annual financial filing and tax returns, reducing accounting obligations.
    4. Offshore companies have access to numerous support services including:
      • Offshore corporate banking enables our Clients to receive and settle foreign currencies, eliminating exchange rate risk while minimizing transaction costs;
      • Offshore companies allow access to global markets while being tax neutral. Many of our Clients opt for offshore companies to i) open merchant accounts to receive international customer credit card payments or ii) open brokerage accounts to efficiently trade securities on global stock exchanges;
      • Yachts or ships may also be owned by a firm registered in an offshore jurisdiction, which can prove to be a cheaper and more tax-efficient method of ownership (e.g. using a Marshall Islands company).
  • Disadvantages of an offshore company

    1. Our Clients must be aware of the certain issues when dealing with offshore companies including:
      • Since 2010, there has been a global crackdown on the use of offshore companies for tax evasion. Many jurisdictions are implementing measures to make director/shareholder details publicly available;
      • Some offshore jurisdictions like Marshall Islands and Seychelles do not enjoy positive reputation in the business world. Therefore, it is possible customers and suppliers may refuse to deal with such companies altogether;
      • In the recent years, it has become increasingly difficult to open corporate bank accounts for offshore companies setup in low reputation jurisdictions like Isle of Man and Guernsey;
      • Jurisdictions in Singapore and Hong Kong mandate every local company to submit annual returns and financial statements. Additionally, Hong Kong requires active companies to go through annual audit;
      • While it is possible for Client to not pay taxes in these offshore jurisdictions, they are still required to pay taxes in their home country.
  • Most common types of offshore businesses

    There are four main types of business entities which can be used as trading or holding offshore companies. Please find below a brief description of each of them:

    • International business companies – These companies are mostly available in tax havens jurisdictions. They are usually cheap to setup up and benefit from special taxation regulations which allow them to trade with customers outside of their country while being tax exempt. Examples include Cayman Islands and BVI;
    • Hybrid companies – These companies are usually considered tax-resident but benefit from reduced or no corporate income tax. To access DTAAs, they must meet residency requirements, usually achieved through appointment of resident directors. Hybrid companies can be registered in Labuan, Mauritius (GBC1) or the Seychelles (CSL);
    • Non-resident companies – In countries with a territorial tax system, companies controlled from overseas and do not conduct business within the country of incorporation benefit from a legal exemption from corporate income tax. Such entities are usually an excellent choice for our Clients who do not want to damage their reputation using a tax haven business entity. Examples of such jurisdictions are Singapore and Hong Kong;
    • Zero tax companies – These companies are LLCs incorporated in a country which does not implement corporate income tax. The UAE is an example of a jurisdiction providing such type of business entity. However, forming such a company tends to be more challenging and costlier than the three other types of entities described above.
  • Comparison of offshore companies

    Healy Consultants’ preferred jurisdictions for offshore companiesHealy Consultants’ preferred jurisdictions for offshore companies
    Global tax exempt companiesGlobal tax exempt companies
    Traditional tax haven companies for offshore businessesGlobal tax exempt companies
    Tax exempt trading companies from reputable countriesGlobal tax exempt companies
    Trading companies from reputable low tax countriesTrading companies from reputable low tax countries
    Asian offshore companiesAsian offshore companies
    Legally tax exempt offshore companiesLegally tax exempt offshore companies

  • Offshore banking

    Offshore corporate banking options
    1. Global banks have been increasingly more reluctant to open corporate accounts for offshore companies. Healy Consultants will assist our Clients to prepare a quality corporate bank account opening application with their preferred banking institution;
    2. Clients will be requested to provide standard due diligence, including i) detailed business plan ii) certified business profile iii) certified passport copy and proof of address from all bank signatories, directors and shareholders and vi) board resolution with the name of the signatories authorized to open and operate the account;
    3. As banks continue to tighten bank account opening procedures for offshore companies, our Clients may also be requested to provide additional due diligence, such as i) proof of business in the country where the account will be opened and ii) sales contracts;
    4. Furthermore, there is a 50% probability that the bank will require our Client to travel to attend a one-hour interview with the bank officer. In that case Healy Consultants will try to negotiate an exemption for our Client;
    5. Following bank account approval, the selected bank will directly and independently provide our Clients with the corporate bank account numbers. If required, Healy Consultants can assist our Clients to activate their internet banking;
    6. The below table presents Healy Consultants’ suggestions for offshore bank accounts:

  • Offshore asset protection

    1. Offshore companies are commonly used to ensure protection of wealth from potential political and economic instability, thereby mitigating financial and legal risk;
    2. Offshore companies, if properly structured, are also a good option for protection of family wealth from expropriation or exchange control restrictions, including international securities, real estate and private equity;
    3. While traditional tax havens have been widely used in the past for offshore asset protection; capital gains and inheritance tax can also be legitimately minimized when assets are owned by an offshore company in a reputable jurisdiction;
    4. Trusts are excellent alternatives to a complex structure of limited liability companies and corporations commonly used for estate planning. For the EU, our Clients should consider a Liechtenstein Trust or Foundation.
  • Offshore jurisdictions – latest updates

    Offshore business registration guides and success tips
    1. Panama Papers – millions of files regarding ownership of companies set up by the Panamanian Law Firm Mossack Fonseca were leaked to the press in 2016. This event showed that offshore companies are still commonly used by businessman, politicians and high net worth individuals to minimize tax obligations;
    2. Luxembourg Leaks – in 2014 documents were leaked reveling tax scheme avoidance of more than three hundred multinational companies with operations in Luxembourg. Following such documents, the EU has been trying to impose more severe tax regulations in the region;
    3. “Double Irish” and “Dutch Sandwich” – multinational corporations used the Double Irish arrangement to lower corporate tax liability, by funneling its corporate income through Ireland, Netherlands and finally, Bermuda. After three years of investigation, the EU commissioner ordered Apple to pay 13 billion euros to the government of Ireland for such scheme. The ruling is going to be appealed by both the American company and by the Irish government;
    4. Common Reporting Standards – In 2014, the OECD countries agreed to adopt new standards for automatic exchange of fiscal information (AEOI) between their tax administrations. This will allow Governments to crack down on tax residents that use offshore companies to evade tax obligations.

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Contact us

For additional information on our offshore company registration services, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Karen Lee, directly:
client relationship officer - Karen
joint research centre for EU offshore authorities group RAK offshore - a complete offshore business and financial center OECD better policies for better lives