How to Set Up an Offshore Company

Published on 03 January 2005
Category: » Offshore Banking, Offshore Investment & Savings » Offshore Company Formation and Incorporation

Your complete guide to offshore company formation - from explaining how and why an offshore company can benefit you, to explaining how to set up an offshore IBC to suit your needs.

Have you ever wondered why people incorporate companies offshore?
Or have you ever thought about whether the features of an offshore company could benefit you in some way?

While there are many internet sites offering complete company formation services, there are few independent resources providing a guide to offshore company formation.

Yet surely you need to know how the process works, why it’s used and whether or not it can benefit you before you go ahead and incorporate a company offshore right?

Right!

Which is why this guide has been written - it will explain to you all the features and benefits of operating offshore which should allow you to decide whether incorporating in this way is right or you.

Finally it gives you the ‘how to’ information you’ll need if you decide that you’d like to go ahead and establish a business offshore.

What is an offshore company?

The definition of an offshore company is - a company which rarely conducts business in its country of incorporation and one which is incorporated in a country where taxation is lower and reporting restrictions are more flexible than the country in which you reside.

Other common names for this type of company are ‘non-resident company’ or ‘IBC’.

IBC stands for ‘International Business Company’ or ‘International Business Corporation’

Important information about IBCs: -

1) An IBC doesn’t have to be offshore
2) Nowadays when people talk about offshore companies they are almost always talking about Offshore IBCs
3) For the purposes of this article, where IBCs are mentioned they are offshore IBCs

The definition of an Offshore International Business Company is an entity (or company) that can only operate outside the country of its incorporation.

Alternatively it can only trade with another offshore IBC in the country of its incorporation.

What’s the point of establishing an offshore company or IBC?

There are many features and benefits associated with the establishment of a non-resident company, and different individuals and organisations have their own specific reasons for incorporating in this way.

The five main general benefits are: -

1) Reduced Taxation Liability - Offshore companies can be established in low or no tax jurisdictions.

If you do not derive a profit from the country in which the company is incorporated you may be able to reduce your taxation burden significantly.

In fact, some businesses can be structured in such a way that that any profits generated are realised in ways that minimise or negate overall taxation liability.

2) Simplicity of Operation - apart from certain types of business - like financial services companies and banks for example which are internationally regulated - certain jurisdictions make it very simple and highly attractive for all other types of company to operate.

It does depend a lot on the jurisdiction you favour, but you’ll find that when it comes to business reporting, account auditing, filing of financial records etc., the restrictions are likely to be far less than you would experience if you incorporated ‘onshore’, or ‘back home’.

3) Fewer Reporting Requirements - not only are the restrictions actually far less restrictive, you’ll generally find that the extent to which company information is required to be reported is generally far lower in most offshore jurisdictions as well.

4) General Asset protection - it’s possible to manage assets and business transactions in such a way that assets are shielded from any form of liability.

5) Greater Degrees of Anonymity - by conducting business through the offshore company and carrying out all transactions in the name of the private company, the name of the underlying principal of the company can be kept out of certain key documentation.

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