What is an offshore company?
First and foremost, it is essential to define the term Offshore. Offshore relates to managing, registering, conducting, or operating in a foreign country, often with financial, legal and tax benefits.
An offshore company has a variety of uses and benefits for clients wishing to engage in international financial trade and investment activities. Depending on the specific offshore jurisdiction, an offshore company may have the following features and advantages: Ease of Incorporation, Minimal Fees, No Foreign Exchange Controls, High Confidentiality, Tax Benefits.
Who should use an offshore company?
An Offshore Company may be of interest to a great number of people and it may be used for various activities:
Creating an offshore company allows you to begin an activity without having to deal with the set-up of a complicated infrastructure. An offshore company allows you to quickly create a stable structure with a simple administration and enjoy all the benefits of the offshore jurisdiction.
Commerce over the Internet (E-Commerce):
Internet traders can use an offshore company to maintain a domain name and to manage Internet sites. An offshore company might be ideal for people whose business is on the Internet. You might choose to incorporate the registered office of your company in an offshore jurisdiction to take advantage of the various benefits offered by these jurisdictions.
Consultants / Counsellors:
You can also carry on your consultancy or counselling business through an offshore company. You will find it easier to manage your company, while being registered in a stable jurisdiction and benefiting from all the strengths of this jurisdiction.
International commerce can be carried out through an offshore company. It will handle purchases and sales operations. SFM can also arrange for obtaining a VAT number for companies that we register in Cyprus or in the United Kingdom.
Holding intellectual property rights:
Any kind of intellectual property right (a patent or trade mark) may be registered in the name of an offshore company. The company may also buy or sell this type of right. It may also grant rights of use to third parties against payments.
For the custody of movable and immovable property:
Offshore companies are used to hold both movable property (such as yachts) and immovable property (such as houses and buildings). In addition to confidentiality, the benefits and advantages they offer include exemption from certain types of taxes (e.g. inheritance tax). It should be noted, however, that some countries do not allow the acquisition of movable/immovable property through offshore structures and therefore those wishing to form an offshore structure are advised to check with a competent authority before proceeding.
For inheritance purposes:
An offshore firm that always stays afloat (provided all costs associated with running it are paid) may, in some countries, be used as a means of avoiding inheritance tax laws. With a view to optimising inheritance tax liability, the offshore structure may also be combined with a trust or a foundation.
Offshore companies are very often used for share or foreign exchange transactions. The main reasons being the anonymous nature of the transaction (the account can be opened under a company name).