USES OF OFFSHORE COMPANIES
An offshore company is a flexible business instrument and as such can be integrated into a wide variety of tax planning and asset protection arrangements. Reduced or deferred tax liability and increased confidentiality are just two of the benefits which can be achieved by proper application of an offshore company. The practical implementation of an offshore strategy will of course depend on the anti-avoidance laws that may be in force in the country where the beneficial owner is citizen, is domiciled or does business. Therefore to all potential customers we recommend to obtain a qualified tax advice from a specialist in Your country of residence, domicile or proposed business operations.
What is an offshore company, anyway?
Anyone who has ever come across the concept of a "company" or "corporation" will know that it is a legal concept, aimed at creating a new, distinct, separate "legal person". The purpose of creating such a new corporate body is to legally allocate and
A "company" or a "corporation" is what's called in legal-speak a juridical person, or a corporate body. A corporation can have and do much of the same as any private individual – it can own assets in its own name, enter into contracts, acquire rights and obligations, be liable for its actions. So, same like an adult human being, a corporation normally has it's own legal personality. Even a corporations' life is somewhat similar to that of a human being – a corporation is "born" (by a fact of registration in an official Registrar) and it can "die" (by being dissolved or liquidated).
There are several components in every corporation, each with its own purpose. As this article primarily deals with what is popularly known as "offshore company", a question may arise: what is the difference between an offshore company and an "ordinary" company? Structurally – there is no substantial difference! An offshore company will quite simply be the same sort of corporation, just created outside the usual domicile country of its owner(s).
So, as far as semantics go, "offshore" for an American can be Canada, or Russia ... or British Virgin Islands. Quite simply, offshore is something that is NOT onshore. However, for quite some time, the term "offshore" has been used in a much narrower sense – pointing to a company, which is not only formed outside the normal domicile of its actual owner, but is also enjoying a number of cool extra benefits. For instance, it can be free of taxation. Free from onerous reporting and book-keeping requirements. Free from burdensome capitalization rules. Free from the necessity to register its owners on a public file. Fast and easy to register. Simple to maintain and operate. That's what most people would deem as an "offshore company". However, structurally, this offshore company still retains most of the components of a "regular" company.
Following is a description of the main elements and components of an offshore company, in particular, as applicable to a British Virgin Islands Business Company.