Offshore Business Structuring
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 a completely legitimate way to structure your business overseas.
Tax laws, 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.
Benefits of an offshore company
Registering a business offshore can have many benefits:
A US expat must still file a US tax return. However, the first roughly $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%.
Low operating cost and capital requirements
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.
Easy reporting requirements
The administrative burden of running a business can be lower in some countries. A US expat still has reporting requirements in the US though.
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 jurisdiction, the identities of directors and shareholders are protected.
Best jurisdiction for an offshore company
While there is a short list of popular countries, there is no one single offshore jurisdiction that is the best for all businesses. Selecting the best offshoring jurisdiction depends on the type of business and the desired balance of cost, tax impact, reporting requirements, privacy and asset protection.
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.
Our offshore business structuring services
At Global Expat Advisors, we review with you your business goals for offshoring and identify the best jurisdiction that 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 opening bank accounts and tax filing requirements.