Why create an offshore company

October 19, 2017

What is an offshore company?

An offshore company is a company that is located outside your country of residence, mostly in a fiscally advantageous jurisdiction. It enables not to pay a lot of taxes and is not allowed to interfere in the businesses of its jurisdiction. It is a non-resident company and it opposes the “onshore” company. Nevertheless, in some favorable jurisdictions, such as Ireland or Singapore, it is possible to work locally in addition to that company.

An offshore company can also allow a certain anonymity, using a “Nominee Director“. The latter appears as the director of the company and signs the contracts and official documents. However, as regards offshore bank accounts, this service is invalid because, in a fight against money laundering, banks want to know all the information on the final beneficiary.

What are the advantages of this type of company?

The jurisdictions commonly referred to as “tax havens” offer many advantages for non-resident companies. Indeed, the latter will pay only a small tax or will even be exempted from it. There is no tax on profits for an offshore company and VAT is virtually zero in all jurisdictions with favorable taxation. In most of these jurisdictions, it is not compulsory for an offshore company to keep its accounts updated and publish its accounts. In addition, the management fees for this type of company are low. Finally, in many cases, there is no capital obligation paid when the company is created. To give a few examples, in Belize, VAT is 0%, as are the tax on profits and the withholding tax on dividends. This is also the case for the Seychelles. In Singapore, the VAT is 7%, the income tax varies from 0 to 17% and the withholding tax on dividends is also 0%.

Why create an offshore company?

The first reason to open an offshore company is of course tax optimisation. Indeed, in some countries, such as France, taxation is not at all advantageous, even discouraging. An offshore company will therefore help to optimise its income. Nevertheless, it is not interesting when your revenues are less than 50 000 euros annually and if you pay less than 15% of corporate tax. The cost of creating, though inexpensive, and annual management fees, in addition to the time that it will take, will make your offshore company little or unprofitable. An offshore company can also be created to own movable and immovable property, as well as to secure and transmit its assets. Do not hesitate to expose your situation via hello@calay.com or through our online contact form, to create YOUR offshore company!

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