Request a callback
Tax Engineering

What is an offshore hosting?


Question

What is an offshore hosting? What advantages and disadvantages do they have? What types of offshore hostings exist?

Answer

The offshore hosting servers are located outside the country of residence of the owner of an online business to avoid any problems of licensing, legality or formalities that governments submit to online businesses. Offshore hosting can be located in tax havens or in high tax countries. As in finance, servers located in tax havens will have greater opacity than those of a high taxation country, since as a general rule the owner of offshore hosting will not be resident in the country and will have more favorable laws than in his country of residence. When an individual hires an offshore hosting he has to take into account the country's internet communications and technology to avoid any type of errors generated in the transmission of data.

Offshore hostings are widely used by online casinos, bingo halls, slot machines, poker websites, FOREX investment business, Bitcoin online business, grow shops, pharmacy, adult content business, replica sale business, software and music download websites, offshore payment gateways, financial services, sale and purchase of gold, jewelries, insurance brokerages, multilevel marketing, telephony app. There are also businesses that by their nature are considered illegal and the owners of the offshore hostings, wither located in tax havens, or not will collaborate with the authorities of a country if there is any type of judicial requirement. The illegal businesses, such as selling of drugs, weapons, child pornography, infringement of copyright etc legally cannot be hosted in a hosting due to their nature.

Offshore hostings have many advantages, such as:

  • They help the business to avoid additional licenses and formalities imposed by governments. 
  • They cannot close the hosting if there is no court order issued by the country where the online business is operating. 
  • Anonymity: avoid collaboration between the authorities and the company where the hosting is located. 
  • Possibility to hire fast servers without displacements. 
  • Tax savings: normally offshore hosting is based in countries outside the European Union and therefore you wont be charged VAT when hiring the server. 
  • Offshore hosting functions all over the world
  • It can be hired by natural and legal persons.

The disadvantages of an offshore hosting are the following:

  • They tend to be somewhat more expensive than the servers that are located in your country of residence. 
  • Depending on the country where the offshore hosting is hosted, it may or may not have support in your language. 
  • Depending on where the hosting is hosted and the infrastructure of the country it can go faster or slower. It is not advisable to have clients from the country where the hosting is hosted.

Types of offshore hosting 

The types of offshore hostings that exist in the market are similar to those you can find in you country of residence. Depending on the needs and the size of our project there are the following types of hostings: 

  • Offshore webhosting 
  • Offshore hosting VPS 
  • Offshore dedicated hosting 
  • Offshore cloud

Depending on the company that offers offshore server services a client has an option to manage it by him or the company will make the relevant updates of operating systems on server, however, the second option is usually more expensive. In our opinion, the servers with higher speed and flexibility are a dedicated offshore hosting and the cloud offshore.

The recommended countries to hire an offshore hosting for its speed are the following: Panama, Brazil, Singapore, Hong Kong, Taiwan, New Zealand, South Africa, Mauritius, Uruguay, Chile, Thailand, Philippines, Japan, Germany, Austria, Gibraltar, South Korea, Romania, Bulgaria. Depending on the country where the server is hosted and the type of business that you want to host, you should consider the laws that exist in the country to avoid any problem. But if you take the precaution of not developing any business activity with local people or businesses of the country where the server is hosted you will not have any problem.

For example, a legal person wants to set up an online casino but finds out that the legislation of his country of residence requires the business to have a game license to operate. As you well know the high cost of gaming licenses (150,000 euros) can discourage the customer. After some research, the client decides to open a company in Costa Rica with a game license and a bank account in the name of the company in Europe, in Bulgaria, for example. Once the client has his legal structure shaped, he encounters the following problem: where do I host the casino? He can not hire the host offered in his country of residence because the local authorities require a gaming license for his casino and forbid him to have clients from his country of residence, nor can he accept payments from the clients on his bank account opened in his country of residence as it would mean he is doing activities that require regulation and he does not have it. To avoid these complications, the best solution is to hire an offshore hosting company in Panama and to host the entire casino platform there. Casino customers who search for casino in Google or Yahoo in their country of residence get connected to the server in Panama and not to the server located in your country of residence. In this way, the activity is not carried out in the country of residence of the beneficial owner, but in the country where the casino is located. Apart from this the server will be in the name of the Costa Rican company that will allow you to perform gaming activities all over the world except Costa Rica.

As you can see, offshore hostings are widely used worldwide to avoid legal gaps that exist in countries with high restrictions.



Make a question or comment

Recent posts

¿Qué es una sociedad instrumental para reducir los impuestos?

You also can have a bank account in Andorra

Why and how to invest in gold

What are the most famous tax havens?

How to transfer money to offshore?

Transfer prices: What are they? How do they work?

What are Holding Companies?

Characteristics of financial centers

FINANCIAL SERVICES

Offshore Company

Bank accounts

Prepaid cards

E-commerce package

Payment gateway

Online gambling license

Private foundations