Types of Offshore Entities

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If you’re not sure which structure suits you, or don’t have time to research all of your thousands of options, call us for a free consultation, with no obligation. One of our team will be happy to discuss your situation, requirements and the options you have!

A Non-Resident Company, IE: Non trading in that jurisdiction (often referred to as IBCs- International Business Corporations) can make a non-residential declaration at any time from its incorporation. In order to benefit from this tax efficient status, certain conditions must be fulfilled. Whilst the registered office must be in the jurisdiction the majority of the directors and shareholders (who can be nominees) must be Non-Residents. The shareholders can be nominees, and details of the beneficial owner are NOT required to be filed on public record. Whilst the company will be administered from the jurisdiction, it must be controlled and managed from elsewhere. A Non-resident company is NOT usually required to produce audited accounts, although some jurisdictions require basic balance sheets filing with companies registry. NO TAX is payable in respect of profit or gains, however a small charge, in lieu of tax,called an annual duty, is payable on the anniversary of the incorporation. In some jurisdictions, such as Gibraltar, companies are required to fulfill an annual corporate tax return (a service that we can now provide), and to obtain a Tax Identification Number (TIN), which most banks now require in order to open an account. In most cases, this does not make these companies liable for corporation tax, as the income is not physically accrued within the country of registration.

This type of company is the most popular type of company used by corporate service providers around the world and takes it’s strength from the care and control being outside of the jurisdiction and also outside of the Beneficial Owner’s own country of residence.

To clarify, providing non of the beneficial owners or shareholders are resident in the country, and the company does not trade within its jurisdiction, then it can claim to be non-resident and therefore only pay an annual duty and not corporation/company tax.

Example:

A trader – let’s call him George – sells handbags to market stall holders, big department stores and other retail outlets.

George buys from China at £10 and sells the handbags at £50 each, declaring a profit of £40 per handbag.

However, after setting up offshore – the offshore company buys the handbags from China at £10 and sells them to George’s UK company at £30. George sells them at £50 but his on-shore company has now only made £20 profit per handbag and is taxed accordingly.

The offshore company pays its duty in lieu of tax in its own jurisdiction (country) – for example – Gibraltar (including filing fees etc) is only £250 per annum regardless of the profit the company has made!

George could be selling trainers, consultancy services, electrical parts or widgets! The principles are the same.

Resident Companies, as there name implies should have a presence in their chosen jurisdiction. In most cases this does not simply mean the use of a registered office facility, but the physical presence of a place of business/office, possibly with staffing and banking facilities.

Most resident companies also have resident directors and secretary, although these can be nominees. In the case of a resident company it is usual for the shareholder/ Beneficial Owner to be from outside its jurisdiction, whilst taking advantage of the double taxation treaties and the low tax status of it’s jurisdiction.

Gibraltar, Cyprus and Monaco at 10% corporation tax are often favored ”resident” jurisdictions.

Many companies that are selling goods or services online are now required to demonstrate to their merchant service provider that they are ‘physically present’ in the jurisdiction, and therefore need hot desk or office pod facilities with a Trade license.

These are all services we can assist with.

This is a specialised structure and does not suit all applicants, however we are happy to discuss the pros and cons. Price on application.

Unlike a company, a Foundation is a stand alone legal entity. Where a company must have an owner, or owners, Director etc, a Foundation does not have an owner, but usually has beneficiaries.

Foundations are becoming increasingly popular, often replacing Trust structures due to their need to have a ‘Protector’. This protector is often a person close to original founder of the foundation, and can control the assets held within the foundation, rather than having a trustee, solely responsible for the managing of assets within a Trust structure.

Foundations are most often used for asset protection, as pre-nuptual agreements or protection from litigation and have a long established history of doing just that.

As the name suggests, a holding company simply holds something and does not “trade” as such. A holding company can hold shares, property, vehicles or anything of value which a client wants to protect.

Locating a Holding Company in an offshore jurisdiction where there is little or no income or corporation taxes and no requirement to pay dividends or capital gains taxes is attractive.

The offshore company can fund subsidiaries in other countries who could obtain local tax deductions on interest paid, can purchase properties in other countries than where it is registered and can accrue profits from loans made to subsidiaries.

In some jurisdictions, such as Gibraltar, an individual can claim a beneficial tax position under Category 2 Status as a resident.

This classification has a number of tax benefits, but also a number of specific criteria- such as property ownership or deposit holding in that jurisdiction.

One of the most tax efficient solutions for any business person is to change their personal residency status to a more favorable jurisdiction.

If you would like to discuss this as an options, we can help with Gibraltar, Andorra, UAE and even Paraguay.

You can obtain a Paraguay residency without even visiting or setting up a bank account there, or without investing in the country.

This is very beneficial if you need an address for an overseas bank that is currently reporting under CRS/Automatic exchange of information.

Call us for more details.

The ability to avoid Inheritance and Capital Gains taxes are major attractions when considering the use of an offshore company. Many property investment companies use offshore companies to hold their portfolios in order to protect their assets.

For example, if the property is owned by an offshore company and the beneficial owner wants to sell, they have two options – either sell the property from the offshore company to the new owners and the sale progresses as normal, with the deeds changing hands and being registered at land registry as normal. Alternatively, if the offshore company only owns one property, the beneficial owner can simply sell the shares in the company to the new buyer. This is particularly interesting to investors and developers.

For instance: An owner of a piece of land without planning permission, may wish to sell the land to an offshore company prior to obtaining planning, and before it is seen to increase in value.

The owner then obtains planning and sells the land via the offshore company to a developer, alternatively the offshore company may chose to build out the development. Either way, no capital gains tax is applicable.

Shipping Companies may own or charter ships, the profits of which can be accumulated tax-free. The use of an offshore shipping company can eliminate direct or in-direct taxation on shipping. The only proviso is that the offshore shipping company should be registered within the same jurisdiction as the flag under which the ship sails.

As well as shipping companies, we can also register ships, yachts or boats in various jurisdictions.

Please call us for further details.