Uses of offshore companies

Offshore companies have unlimited uses and benefits for entrepreneurs and individuals. See the 12 most valuable advantages you can obtain by forming an offshore company without taxes

  1. No taxes for E-commerce offshore companies for such commercial activities as: Travel agencies, online casinos, electronics stores, software development, sale of hardware, sale of professional services and tangible products by dropshipping.
  2. Offshore companies for real estate businesses to avoid paying taxes 
  3. Eliminate VAT on Community operations in Europe: your company will not be able to receive VAT invoices and will not be able to charge VAT to its customers.
  4. Anonymous purchases through offshore company: make purchases from suppliers to hide the final beneficiary of the corporation. This way your provider will not know exactly who is a buyer and you can examine your competition better.
  5. Exports and imports throughout the world.
  6. Rights management: Transfer industrial and intellectual property rights and manage image rights.
  7. Manage financial licenses and insurance companies quickly: The management of financial licenses and insurance companies in high tax countries can be very time consuming and expensive.
  8. Remove restrictions on beneficial owner´s nationality; invest in a prestigious country and be able to carry out operations without being discriminated because of your nationality.
  9. Dropshipping business: through an offshore company you have the possibility to send goods from your supplier directly to your client's country of residence without your personal data becoming public.
  10. Re-domiciliation of your business: opening a branch in another country to make sales and purchases in the country where you usually work, information about the onshore company of your country of residence will not appear.
  11. International prestige: possibility to set up a company in a country with greater international prestige such as United States, United Kingdom, Switzerland or Ireland and give greater credibility to your customers.
  12. Offshore companies to provide services such as consulting, tax advice, graphic design or programming consultancy offices, investment consultants, and market analysis.

The general uses of offshore companies depend on the purpose of its registration. We would like to point our the following ones:  

Trading Company

One of the characteristics of offshore companies is that they can take an order and a payment from the client and at the same moment buy it from the manufacturer or distributor asking them to deliver the order directly to the customer. Subsequently, an offshore company will transfer the profit obtained with the operation to an account located in a tax haven. Generally, this is a very useful procedure when the individuals involved in the operation, such as the seller or manufacturer, the buyer and the entrepreneur are located in different countries. Finally, the manufacturer or distributor will send the invoice for the goods shipped to the offshore company that previously has already charged its client for a higher price turning in its own profit. 

Investment Holding

Offshore companies are often created for the purpose of holding shares in other companies, international real estate, equities, bonds, and commodities or for the trading of FOREX and any other type of investment. Funds may be accumulated and reinvested throughout the world with the offshore corporation providing maximum anonymity of final beneficiaries and tax saving. The investments may be taxed in the jurisdictions where they are located; however, some countries offer tax-free bonds and allow interests and investments in the form of bank deposits to be accumulated in gross over several years. Additionally, many countries do not tax capital gains on investments.  Lastly, a properly structured investment company in an offshore jurisdiction that has a tax treaty with the desired investment country may allow for a lower tax rate on dividends, interest and royalties generated from these investments. 

Royalties/Patents/Copyright Holding Companies

The purchase or assignment of the right to use a patent, trademark, copyright or other "know how" to offshore companies often allows the royalties to be paid to the offshore company at a lower tax rate than in high tax countries. These royalties are often subject to tax withholding at the source country; however these taxes may be lowered through offshore company formation in an offshore jurisdiction. This type of offshore company is often established utilizing a tax resident entity that is able to access double taxation avoidance treaties such as the Seychelles CSL company.  

Professional Services Companies (PSC)

Expatriates working abroad often utilize personal services offshore companies to minimize tax burdens in their home countries. The contracting company may pay a salary direct to the expatriate capped at a certain sum as to minimize the tax burden with the remainder being paid to the PSC; or alternatively they may pay the full amount into the PSC with the expatriate taking a lesser salary allowing the offshore company to accumulate and invest the remaining funds. 

Asset Protection

An offshore company is often used as part of an asset protection structure involving offshore foundations, offshore foundation or two or more offshore companies domiciled in separate jurisdictions. The intention is to make it difficult for prospective adversaries to locate assets and consequently win law sentences against these assets. These structures typically employ at least two separate entities domiciled in separate jurisdictions with nominee services including both nominee directors and nominee shareholders. 

Inheritance Tax Protection/Probate

High net-worth individuals who wish to facilitate testamentary matters addressed to their heirs can benefit from the advantages offered by the use of an offshore personal holding company. Because when international assets, for example, real estate, is owned by an offshore company, it can be protected from inheritance taxes in the home country of the owner of that company. Everyone knows that inheritance affairs can become a nightmare, since they require solving many issues in each of the countries in which it is located. Then, the use of an offshore company domiciled in a third country helps mitigate said nightmare creating a clear and simple transfer of said assets to their corresponding heirs. 

Privacy

One of the most common reasons why our customers choose to register and use of an offshore company is the search for privacy. There are many people with a high level of wealth who want to maintain the anonymity of their assets: "I do not want to have anything, but I want to control everything". There is no doubt that this is good advice, especially if we consider the increasingly litigious society we are facing today. 

Accessing Tax Treaties

Certain offshore companies may achieve tax resident status allowing for offshore investing in other countries with a lower withholding rate than could be achieved in their home country.  The Seychelles Special License Company (CSL) is one such offshore company being utilized to access the growing list of tax treaties signed by Seychelles, chief amongst which includes China.  Cyprus and New Zealand also offer many options to reduce taxes through their network of Double Taxation Avoidance treaties. 

Overseas Property Holding

Many of the costs associated with purchasing property overseas can be minimized through the use of an offshore company.  Real estate, such as vacation villas, may be purchased through an offshore corporation and the shares sold to the next owner allowing for a quick and easy transfer and avoidance of many taxes associated with the sale of property.