Uses of Offshore Companies

An offshore company is a very flexible corporate entity. As such it can be integrated into a wide variety of business arrangements. Reduced tax and increased confidentiality are just two of the main benefits which can be achieved by a proper application of the offshore company. However, it would be erroneous to believe that an offshore company incorporated in a no-tax jurisdiction "flies above" all the complicated tax regulations in force in the high-tax jurisdictions. Contrary to a popular belief, having an offshore company in itself does not relieve its owner from all personal tax liabilities in his home country. A clever use of an offshore company, however, can reduce, defer or completely eliminate some tax that would otherwise be payable by his business. The ability to accumulate revenues in a tax-free and hassle-free environment of an offshore jurisdiction are especially helpful to start-up businesses, allowing them to grow faster be more competitive.

Nevertheless, the practical implementation of an offshore strategy will almost always have to confront some of the anti-avoidance laws that may be in force in the country where the beneficial owner resides or where he does his business. For this reason we recommend that anyone, who considers an offshore incorporation, starts by taking some advice from an accountant or tax advisor located in the clients` country of domicile and in the country where the proposed business operations are due to take place. In case with offshore companies, the laws in the offshore jurisdiction will often have to be considered in conjunction with the laws and regulations of other countries, in particular the countries where the offshore company will have its sales, contracts and assets.

Royalty / Copyright / Patent Holding Company

An offshore company can purchase or be assigned the right to use a copyright, patent, trademark or know-how by its original holders, with a power to sub-license and subsequently exploit the intellectual property right in various countries. Such arrangements must be properly planned, as many high-tax countries impose withholding tax at source on royalty payments. An existence of a double-tax-avoidance treaty between the countries involved may reduce such withholding tax.

An offshore company can be used by internet-businesses to hold domain names and operate websites in a tax-free environment. An offshore company may be especially useful for businesses selling any non-material products through internet. In fact, operation of a high-tech, global, internet-based business through an offshore base is probably the best application of an offshore company, ever.