Delaware in the United States may seem like an unusual offshore jurisdiction but it is in fact the largest ‘tax haven’ within the United States and it is also the largest state in the US for company incorporations because of its tax friendly treatment of non-resident corporate bodies.
A Delaware offshore company is relatively low cost to establish and maintain, and provided that the company has no business interests in Delaware it will escape corporate income tax, making the formation of a company in Delaware advantageous for many. This article is a guide to offshore company formation in Delaware.
The sophisticated Delaware Corporation Law governs the incorporation and management of offshore companies within the state and is considered by many to be a fair law, well maintained for the benefit of those who choose the state in which to incorporate. This makes Delaware a state favoured by many seeking a tax friendly jurisdiction but also a fair and safe haven.
In terms of the taxation benefits available to those who incorporate a corporate body in Delaware, assuming the company and its shareholders remains non-resident and conduct no direct business in the state, the offshore company will pay no Delaware corporate income tax and will pay attractively low rates of franchise tax on the authorised share capital at a rate of 1%.
Any Delaware company will have to pay federal tax however which means that Delaware is not an offshore tax haven in the true sense of the term. Shares held by non-resident shareholders are free from taxation, this includes state inheritance taxation as well which can add to the attraction of the state as a location in which to incorporate.
In terms of the numbers of shareholders and directors a Delaware offshore company needs, it requires a minimum of one shareholder and a minimum of one director. Other than submitting an annual franchise tax report there is no annual accounting and reporting requirement for companies incorporated in Delaware which reduces the overall administrative burden of maintaining such a company, which in turn adds to the attraction of Delaware as a location in which to incorporate!
If you’re interested in learning more about Delaware offshore companies or incorporating offshore please click here to complete the offshore advice service form with your requirements.
