Request a callback
Tax Engineering

What is offshore?


What is offshore? Financial definition of offshore. Advantages and disadvantages.


Offshore is a country or a part of its area that offers favorable tax regime for foreign non-resident companies and investments. Usually offshore territories have more relaxed environment for business development than onshore zones due to the minimal list of obligations and requirements that the entrepreneur has to comply with in order to start its commercial activity. Additionally investors and foreign businessman can choose among hundreds of banks, insurance organizations, auditors, accountants, business centers and law firms that all together form what is called offshore system. 

Besides that, a term “offshore” can be used to describe a company that was registered in one country but operates on the territory of other jurisdictions. Also “offshore” can be applied to banking sector when we speak about bank accounts opened in offshore jurisdictions outside of country of residence of account holder, who can be physical person or commercial entity. These accounts are essential for any offshore tax planning as they allow recollecting all world earned income without any tax obligations and with maximum banking secrecy. 

Advantages of offshore

  • Simplified company registration process that can be done remotely; 
  • Partial or total tax exemption. Non-residents pay only annual fees; 
  • Lax currency control;
  • No annual audit is required but it is recommendable to keep the accounts in order; 
  • After the official registration of the company an offshore bank account can be opened in its name; 
  • Protection of assets against tax agencies and lawsuit;
  • Confidentiality. Almost all offshore jurisdictions have private commercial registries, which means that no information about the company and its beneficial owners can be disclosed to third parties;  
  • Possibility to enter international markets.

Disadvantages of offshore  

  • Close controls by national and international governmental bodies. However, if the beneficial owner pays his fees on time and the commercial activity is conducted legally and without legal violation, there will be nothing they could do against you; 
  • Anti-offshore policies. International collaboration against money laundering and monetary fraud forced many countries to apply anti-offshore policies and eliminate favorable tax regimes;
  • Distrust and bad reputation. After years of social media broadcasting the news about negative impact of offshore territories on world economy, many companies and individuals have stopped its cooperation with offshore companies.   


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


Offshore Company

Bank accounts

Prepaid cards

E-commerce package

Payment gateway

Online gambling license

Private foundations