It is essential to understand that the definition of an offshore company significantly differs from what it was ten years ago.
However, the essence of such planning remains the same – the benefits of tax optimization, capital protection, avoidance of legal disputes, and expansion of business in the global market.
An offshore company is not necessarily required to be located in a low-tax jurisdiction or country, as it was commonly believed in the past. Today, it is possible to set up offshore businesses in many European and Asian countries.
Sometimes, it is much better to register an international business structure not in traditional offshore jurisdictions but in prestigious countries with a good reputation. This way, you can address multiple objectives at once:
- The trust of partners due to the reliability of the place of incorporation.
- a specific banking sector.
- The reduced tax burden in offshore zones.
- Business expansion.
- Confidentiality achieved through legal means. For example, through a trust, assets are transferred under management and do not belong to the beneficiary in a documentary sense.
- Avoidance of heightened scrutiny by global regulators.
Best countries to register an offshore company in 2023
The presented list must be considered only partially. We have chosen only a few countries, not all of which are considered classic offshore jurisdictions but offer favorable conditions for the registration of international companies.
- Hong Kong is a first-class jurisdiction for offshore business, which can be established through a local agent, providing total tax exemption.
- Belize remains a completely tax-free jurisdiction. Regarding confidentiality, it should be noted that the publicly available information would be the company name and the registered agent's address. Details of directors and shareholders are kept confidential. Additionally, Belize allows bearer shares, which is a rarity in 2023.
- The Cook Islands offer a high level of confidentiality, do not recognize foreign court decisions, and provide zero taxes for international corporations.
- Nevis allows the registration of an offshore company with a single member, does not enforce foreign court decisions, and creditors can initiate proceedings against debtors only in Nevis by posting a bond of $100,000 in the court. Tax-wise, it is similar to other offshore jurisdictions, with 0% taxes applicable when certain conditions related to income source and business activities are met.
- The Cayman Islands is a popular jurisdiction for offshore activities. It is not included in the blacklist of the EU, and OECD allows the use of professional officers' services and does not impose reporting requirements.
- Georgia is not a classic offshore jurisdiction, but it is a favorable country for establishing an international structure as there are no obligations to pay tax on foreign-source profits. However, knowing about the open registry, where shareholder and director information is publicly available, is essential.
- The Seychelles Islands are a tax haven with a zero-tax system and a closed registry. So that you know, information is only shared upon request from relevant authorities and court orders.
- Saint Vincent is a Caribbean island where the government has established strict guidelines for protecting and disclosing financial information to foreign entities. Due to the absence of a public registry and a high level of confidentiality, the founders and shareholders of an offshore company remain beyond the reach of global regulators.
- The UAE is popular among foreign entrepreneurs for offshore business registration. In this country, there is no personal income tax, and if desired, an investor can obtain UAE residency for themselves and their family members.
- Serbia is not considered a tax haven, but due to its low taxes and stable banking system, it is suitable for both living and serving as an economic sanctuary for international companies during times of crisis, both temporarily and permanently. You can read more about setting up a company in Serbia.
How to choose a suitable offshore jurisdiction and open a company
The selection of offshore jurisdictions should be based not on general considerations but on the specific situation, carefully weighing all the advantages and disadvantages of such a step. There is no universal recipe for this. However, we have prepared some basic recommendations for you.
Factors to consider when choosing:
- Level of fiscal burden – remember that offshore islands with zero taxes are not always the optimal choice.
- Ease of company registration – traditional tax havens often cater to affluent individuals. For businesses, other characteristics are more important, such as protecting the company's rights, the level of beneficial owner's personal data disclosure, requirements for resident directors, and more.
- Stability of the national currency – British offshore jurisdictions can be considered stability models.
- Stability of the political system – avoid countries where executive power frequently changes hands. Not all offshore zones can be considered stable, so exercise extreme caution.
- Degree of economic and societal openness – if the laws of a particular jurisdiction are not favorable to business and there is a high level of control over citizens' private lives, such a choice can hardly be considered optimal.
- Stability of the banking system – this requirement is crucial for businesses and individuals. Most problems can be avoided by opening an account in another jurisdiction, but such a step requires additional consideration.
- Infrastructure development – connectivity, logistics, local market size, reputation, and the legal framework regulating commercial relationships are essential for businesses. Private individuals are interested in other factors, such as social infrastructure facilities, personal safety, roads, transportation, and the availability of nearby stores, among others. Be sure to determine what matters most to you, and only then make a choice.
As you can see, choosing a jurisdiction for an offshore company is challenging and requires consideration and analysis of many factors. Therefore, it is best to seek the help of experienced experts, such as International Wealth specialists. Professionals will not only help you choose the ideal offshore jurisdiction for your purposes. Still, they will also handle all the issues when opening a company.
