Setting up an offshore company is not just for wealthy individuals and big international companies. It is not only available to the Apples and Googles of the world. Regular entrepreneurs can take advantage of international laws as well as and set up an offshore business.
Despite the misconception that offshoring is about hiding assets and evading taxes, it is, in fact, a completely legitimate way to structure your business overseas.
Tax laws and business and banking practices vary from country to country. Some countries have laws that are beneficial to entrepreneurs and investors. A small business can take advantage of the laws and regulations of these countries by setting up an offshore company in a suitable jurisdiction.
We have helped many clients leverage the benefits of taking their business offshore. We take into account specific requirements, for example selecting a jurisdiction with strong asset protection if potential litigation is a concern.
At Global Expat Advisors, we review your business goals for offshoring with you and identify the jurisdiction that best matches your needs.
We then work with our legal team and local partners to set up the appropriate business structure in the target country. We can also assist you with related services such as bank account openings and tax filing requirements.
A US expat must still file a US tax return. However, roughly the first $100,000 of foreign earned income can be excluded from US income tax.
Companies operating with offshore subsidiaries can achieve a tax rate of 10.5%, which is half of the normal US corporate rate of 21%.
Select jurisdictions offer low fees for registering and operating a company. The capital required to register a company is often lower in foreign countries. Some countries don’t even require any capital for registration.
The administrative burden of running a business can be lower in some countries. A US expat still has reporting requirements in the US, however.
Similar to offshore trusts and banking, offshore companies help protect your assets against lawsuits. An offshore company can hold assets such as intellectual property or real estate investments.
In some jurisdictions, the identities of directors and shareholders are protected.
For example, a business with employees has to take into account foreign employment laws, ability to obtain work visas, and local talent. The Cayman Islands is not the best jurisdiction for that. Hong Kong, as another example, makes it easy to register a business but requires audited annual financial statements.
Selecting the right country to form your offshore company is the first and most important step.
