Annual Maintenance of Offshore Companies

What are the components of the annual renewal fees?

Generally, the annual renewal fees consist of two parts: (A) mandatory fees, which cover the absolute minimum necessary to maintain the company in good standing, and (B) optional fees, for services that enhance and improve the offshore company, but are not compulsory. Usually, the scope of the optional fees depend on the exact configuration of the offshore company, as it was done at or following the incorporation.

The mandatory fees always include (a) Government fee, and (b) Registered Office and Registered Agent fee.

The Government fee is essentially a fixed amount of state duty that all offshore companies are supposed to pay in lieu of tax. Regardless of the name it´s called (franchise tax, exempt duty, registration fee or otherwise), it is quite simply a fixed fee levied by the Government for the privilege of being incorporated "under the flag" of the particular tax haven country.

The Registered Office and Registered Agent fee is a professional fee, which basically employs the Registered Agent as the official intermediary between the owners of the company and the Government, pays for the usage of the Agents office address as the legal address of the offshore company and covers the minimum custodial and adminstrative services necessary to comply with the requirements of the Companies Act. As the law requires that in order to be in good standing every offshore company must have a Registered Office and a Registered Agent, this service is pretty much mandatory.

The optional fees would be payable for offshore company management services, like (a) third-party directorship services; (b) nominee shareholders; (c) third-party account signatory services; (d) mail and fax forwarding, document remailing and call handling, also known as "virtual office" services; (e) miscellaneous secretarial, legal and administrative services, billed either on fixed-fee basis or according to time-spent.

For purposes of practicality, the annual renewal fees are normally invoiced once a year, shortly before the registration anniversary of the offshore company. The fixed-amount annual renewal fees are payable in advance, for the next year. In more complicated arrangements there may be specific fees that are billed on time-spent basis. These may be invoiced post factum, either monthly or quarterly.