Even though tax optimization remains the main reason behind starting an offshore business, there are many other advantages. Discover in this article the different reasons why to create an offshore company.
Reminder
When we talk about offshore, we mean something that is “offshore”, or “off the coast”. Thus, the term “offshore”, when applied to a company, means that the company has been opened outside the country of residence of its holder (physically and fiscally).
Another key characteristic: the offshore company cannot carry out any activity in the country of its registration. For example, an offshore company incorporated in Bulgaria cannot execute business activities in the country in order to benefit from the offshore tax regime.
See also: what is the difference between an offshore and onshore company?
Why setting up an offshore company: all the reasons
By choosing to relocate your company to an offshore territory or a tax haven, you benefit from various advantages including:
1.Tax optimization
This is surely the main motivation when setting up an offshore business. Be careful not to confuse tax optimization with tax evasion. This means benefiting from regulations that are often more advantageous than in the UK, particularly in terms of taxation on profits.
Let’s take an example: Company tax in England generally amounts to 19% of the profits made by your company (source). By going through an offshore company, you can get a tax reduction. You can even take advantage of an absence of income tax as it is the case in Belize, Scotland or Dubai. The objective is therefore to choose a jurisdiction in which the declaration of profits will be the most advantageous.
2. Protection of heritage
When seeking to effectively protect your assets, key elements must be taken into account, including confidentiality, protection against lawsuits and inheritance rights. This is often where the offshore trust comes in. The offshore trust allows the legal transfer of assets. Thus, it makes it possible to organize a succession while protecting the heritage.
In addition, as this power is executed in an offshore jurisdiction, it is possible to benefit from the privileges of the chosen jurisdiction and the secrecy of tax havens. Also, note that in some jurisdictions there is no inheritance tax on assets held by non-residents.
3. Guaranteed anonymity and bank secret
With an offshore company, you benefit from a high level of confidentiality. In fact, information on the internal structure of your company, such as the contact details of directors, shareholders and beneficiaries, are not disclosed to the authorities of the country in which the company is located.
4. More flexible accounting management
By setting up an offshore company, you are exempt from the obligation to file reports on your financial situation. Also, you usually offload your annual accounting tasks.
See also: why do you need an offshore bank account?
5. Balance of salary costs
When you open an offshore business, you often transfer part of your work to another country. In the same way, you transfer part of the social charges that you have to pay. However, social costs in the UK are among the highest in the world. So, by employing some of your employees abroad, you reduce your social charges and thus optimize the company’s income.
Conclusion
Establishing an offshore company requires a high level of knowledge of the jurisdiction in which it will be established. In addition, the administrative procedures are numerous and vary depending on the country. This is why it is recommended to trust specialists. At Mundo Offshore, we guarantee a high degree of confidentiality, personalized advice and competitive prices. Contact us.
