According to recent estimations, more than 50% of the world capital is located in banking, trust or investment companies in offshore zones. Only during the last decade the number of companies which were opened in such territories exceeded 65.000. But why is it getting so popular? We would like to tell you some of the main benefits and why wealthy people tend to get into an offshore investment.
Definition
Offshore is a term widely used in financial centers all around the world as well as certain bank operations. Offshore company is an entity which does not conduct any activity in the country of incorporation, and, more importantly – the owners of such company are non-residents of this country. At least, this is the main condition of the counties where such companies can be incorporated. Usually, such businesses enjoy zero taxes and they are only required to pay fixed annual fees. The most common type of an offshore are joint stock and limited liability companies. Incorporated companies are only subject of supervision in the jurisdiction of its registration. From the legal point of view, these businesses are no different from any local ones. The main reason of the whole existence of such form of companies is the tax regulations of particular countries. Most of times such businesses partially or fully exempt of taxation, however they must not conduct any operations within the territory where it is incorporated. However, it is important to mention that in order for it to function successfully, the country must have an agreement of avoiding double taxation, otherwise it will be charged for its business operations in the country of origin.
Advantages:
- Financial privacy;
- Asset protection;
- Reduction in income tax;
- Zero taxation for transfer of ownership or inheritance;
- Protection against inflation;
- Limited liability;
- Reduction in management costs;
- Zero control in currency exchange;
- Support from local government;
- Information about owners and beneficiaries is fully confidential;
- Easy access to banking services and investment management;
- Close North American and European markets;
- Absence of international trade fees;
- No limitation on export/import volumes.
Hundreds and thousands of companies lead their businesses using offshore companies. Many of them are looking to optimize their tax burden, some need higher confidential levels, other are looking at cheap banking and absence of currency exchange control. All in all, whether you are looking to pass the inheritance or each year more worried about growing taxes – offshore company can be en answer to many problems.
Offshore investments are mainly associated with low or zero taxes, but we think that one of the main virtues is excellent privacy of your operations and total private and corporate confidentiality. Most of the counties manage to control all private and corporate accounts, and in case your deposit account amounts even slightly exceed of what they are expected to be, government will immediately act in that way.
In contrary, with offshore account you wouldn’t have to worry about any of that. The disclosure any information about operations, owners of beneficiaries is a subject of criminal prosecution.
