Having an offshore company can offer a multitude of benefits to both new and existing businesses. Some of the main pros associated with creating an offshore company are offshore asset protection, tax savings and increased confidentiality for directors, members and shareholders. But on a simple level, forming an offshore company enables business owners to grow their corporate presence internationally with fewer overheads.
Registering your offshore company can legally reduce the tax obligations of your business. Non-resident companies are tax exempt in many offshore jurisdictions or at least enjoy low levels of taxation.
Businesses can use their offshore company to take advantage of income tax and capital gains tax avoidance. Here are two of the most common reasons why companies choose to have an offshore company:
Tax Exemption for Foreign Income
There are different ways that businesses can minimise their UK taxes by using an offshore company and one of these is tax exemption on foreign income. For business owners incorporating their company in an offshore jurisdiction as a non-resident company, they can be exempt from paying UK tax on all sources of foreign income. These can include taxes related to property, foreign trading income and foreign investment income.
Tax Exemption for Capital Gains
Non-resident companies can often hold assets that increase in value and then sell them free of UK tax. Essentially this enables non-resident companies to hold property, shares and other investments that they can then sell on without paying the usual UK taxes. This does not necessarily just apply to overseas assets but can be related to UK investment property for example, just as long as the capital gains are not used in a UK business.
Non-resident companies in some jurisdictions are not required by law to publish information about the personal details of the directors, members and shareholders of a company. Anonymity can be preferable for many different reasons and is not permissible in countries such as the UK where information on directors and shareholders must be published on public Company Registries.
For this reason, business owners and shareholders that desire anonymity will opt for a nominee director/nominee shareholder service whereby a third party is publically known as the director/shareholder of the company. The beneficial owner of the company would retain complete control of the company through Power of Attorney.
Once the offshore company is set up, the legal obligations and associated administration for directors and secretaries of offshore companies are often reduced. Therefore, the necessity for employing permanent accountants, secretaries and receptionists is not always there and many opt for a telephone accountancy service or virtual office.
The process of actually setting up an offshore company can be relatively fast and easy. Setting up an offshore company with a company formation agent can be done in as little as 24 hours.
For more information on how you could benefit from having an offshore company, feel free to visit Offshore Formations 24.7 for professional advice on tax planning, nominee services and offshore banking.