Uses of Offshore Companies

An offshore company is a very flexible corporate entity. As such it can be integrated into a wide variety of business arrangements. Reduced tax and increased confidentiality are just two of the main benefits which can be achieved by a proper application of the offshore company. However, it would be erroneous to believe that an offshore company incorporated in a no-tax jurisdiction "flies above" all the complicated tax regulations in force in the high-tax jurisdictions. Contrary to a popular belief, having an offshore company in itself does not relieve its owner from all personal tax liabilities in his home country. A clever use of an offshore company, however, can reduce, defer or completely eliminate some tax that would otherwise be payable by his business. The ability to accumulate revenues in a tax-free and hassle-free environment of an offshore jurisdiction are especially helpful to start-up businesses, allowing them to grow faster be more competitive.

Nevertheless, the practical implementation of an offshore strategy will almost always have to confront some of the anti-avoidance laws that may be in force in the country where the beneficial owner resides or where he does his business. For this reason we recommend that anyone, who considers an offshore incorporation, starts by taking some advice from an accountant or tax advisor located in the clients` country of domicile and in the country where the proposed business operations are due to take place. In case with offshore companies, the laws in the offshore jurisdiction will often have to be considered in conjunction with the laws and regulations of other countries, in particular the countries where the offshore company will have its sales, contracts and assets.

Professional Service Company

A freelance international contractor, consultant, designer or other professional individual working for a fee can reduce his tax burden by incorporating an offshore company, through which the fees for his contracts are routed. While the professional himself would receive a fixed level of taxed remuneration (salary) from his company, the bulk of the fee income would accumulate in the name and accounts of the offshore company, in a tax-free environment. Designers, authors, consultants and entertainers may assign or contract with an offshore company the right to receive fees due under a contract for services. A further advantage of a professional services company is that potential liabilities, associated with a professional services contract, would fall upon the company, not the individual.