An offshore company can be described as an entity registered outside the country where it’s mainly operating in. The term offshore refers to the company not being resident where it is formally incorporated.

Furthermore, often more than not, the directors and other members of an offshore company are non-resident also contributing to the company not being resident in the country of registration.

The term “offshore” may be a bit confusing, because several modern financial centres in Europe, such as Luxembourg, Cyprus and Malta registered companies offer international business entities the same benefits to non-resident companies as the traditional Caribbean “tax havens”, but often do not use the term offshore.

Apart from being non-resident, countries promoting the incorporation of international businesses offer features such as fewer reporting requirements, business registries not open to the public and tax reduction possibilities. However, the European jurisdictions, such as Malta, are often more strict and only offer non-resident status and tax benefits.

The Differences Between Onshore and Offshore Companies

Onshore, also referred to as domestic, and offshore or non-resident companies, often function very similar. They carry out similar business activities and have similar management and shareholding structures.

Although there are no clear differences due to the individual corporate laws of each country, generally the main differences are tax structure, the level of confidentiality and asset protection.

Many countries want to attract foreign companies and investors by introducing tax laws friendly to non-residents and international companies. Delaware in the United States for example is historically one of the biggest tax havens in the world. In the early 19-hundreds, tax laws were amended and as a result of today, about 60% of the Fortune 500 companies are registered here.

Confidentiality and Asset Protection in Offshore Companies

Offshore tax havens are often labelled as a way for tax evasion. This is often due to their strict secrecy and asset protection laws as they are not obligated to report or reveal any information to your country of residence. However, that does not mean you do not have to follow laws where you are resident in terms of financial reporting obligations.

An offshore company can be described as an entity registered outside the country where it’s mainly operating in. The term offshore refers to the company not being resident where it is formally incorporated.

Furthermore, often more than not, the directors and other members of an offshore company are non-resident also contributing to the company not being resident in the country of registration.

The term “offshore” may be a bit confusing, because several modern financial centres in Europe, such as Luxembourg, Cyprus and Malta offer international business entities the same benefits to non-resident companies as the traditional Caribbean “tax havens”, but often do not use the term offshore.

Apart from being non-resident, countries promoting the incorporation of international businesses offer features such as fewer reporting requirements, business registries not open to the public and tax reduction possibilities. However, the European jurisdictions, such as Malta, are often more strict and only offer non-resident status and tax benefits.

The Differences Between Onshore and Offshore Companies

Onshore, also referred to as domestic, and offshore or non-resident companies, often function very similar. They carry out similar business activities and have similar management and shareholding structures.

Although there are no clear differences due to the individual corporate laws of each country, generally the main differences are tax structure, the level of confidentiality and asset protection.

Many countries want to attract foreign companies and investors by introducing tax laws friendly to non-residents and international companies. Delaware in the United States for example is historically one of the biggest tax havens in the world. In the early 19-hundreds, tax laws were amended and as a result of today, about 60% of the Fortune 500 companies are registered here.

Confidentiality and Asset Protection in Offshore Companies

Offshore tax havens are often labelled as a way for tax evasion. This is often due to their strict secrecy and asset protection laws as they are not obligated to report or reveal any information to your country of residence. However, that does not mean you do not have to follow laws where you are resident in terms of financial reporting obligations.

The confidentiality by having an offshore company is not about hiding assets from the government, but about privacy and protection from unwarranted lawsuits, threats, spouses and other legal disputes. In this way, no-one will have access to your company and assets.

The Benefits of Registering an Offshore Company

The term offshore and confusion surrounding such companies are often associated with illegalities. However, offshore companies act like any normal company but are held in different jurisdictions for tax purposes thus giving it benefits. This does not mean it acts illegal, it’s simply a way to optimise a business for tax and security purposes.

Offshore financial jurisdictions provide supportive laws and regulations that provide a level of asset protection and security normally not found in traditional onshore companies. These are often restrictive requirements, high overheads and disclosure policies. Although anyone can start a company, not every can get the same benefits.

The most common advantages you will find are:

  • Easy of registration
  • Minimal fees
  • Flexible management and minimal reporting requirements
  • No foreign exchange restrictions
  • Favourable local corporate legislation
  • High confidentiality
  • Tax benefits
  • Minimal or no limitations in regards to business activities
  • Relocation possibilities

Types of Companies that can benefit most from offshore company registration

Although it really depends on the laws of your country of residence and how you want to optimise your business, generally online businesses and anything that is not dependent on physical infrastructure often has the greatest benefits. Even a location such as Malta can provide easy access to the European market without the big tax burdens of being resident in the European Economic Area.

Activities such as the below are the most common and beneficial for offshore registration:

  • Offshore savings and investments 
  • Forex and stock trading
  • E-commerce 
  • Professional service company 
  • Holding Company 
  • Internet services 
  • International based company
  • Digital-based Company
  • International trading 
  • Ownership of intellectual property
  • Remote Gaming Company

Your country of residence will ultimately define if you can become completely tax-free or not. However, it is still possible to reduce your tax burden instead of living, working and have your company in a high tax country.

List of Offshore Company Jurisdictions

While there are often only certain jurisdictions described in the media, such as Panama and the Cayman Islands, there is a vast list of jurisdictions that have liberal tax laws and want to attract foreign investment and companies.

Although this list does not cover every possibility of registering an offshore company, it does represent the best and most popular choices.

  • Anguilla
  • Bahamas
  • Belize
  • Brunei
  • Cayman Islands
  • Cook Islands
  • Cyprus
  • Delaware
  • Gibraltar
  • Hong Kong
  • Hungary
  • Ireland
  • Isle of Man
  • Malta
  • Marshall Islands
  • Mauritius
  • Nevis
  • New Zealand
  • Panama
  • Puerto Rico
  • Samoa
  • Seychelles
  • Scotland
  • Singapore
  • St. Vincent
  • Switzerland
  • UAE
  • UK

Requirements and Cost of an Offshore Company

Previously the registration of an offshore company was easy, and could often be done online, but new tax laws and the complexity of multi-jurisdiction companies are complex and need individual tax advice. Therefore it is not possible to provide an example cost. Every situation and jurisdiction is unique and should be carefully planned and evaluated.

Generally, the following requirements need to be met in order to register an offshore company:

  • Memorandum and Articles of Association
  • Know Your Customer (KYC) documents
  • Application document for registration
  • Name, date of birth, social security or national insurance number of the director(s)
  • Notarised bank statement
  • Banking reference letter
  • Professional reference letter
  • Copy of passport for identity verification
  • Copy of a utility bill, or similar, to prove your physical address.

Although this list is not exhaustive and does not necessarily apply to all jurisdictions, these are usually sent off to the registration office where you want to register the company.