INTRODUCTION

With taxation laws and regulations becoming more and more strict in an increasing
number of countries, individuals and companies are always on the look out for new
options to save taxes and protect their assets in the best way possible.

There are many advantages to setting up an Offshore Company for both individuals
and companies. One of the greatest advantages is that it can help you to protect
and increase your wealth while simultaneously diversifying your assets
internationally, giving you more flexibility in times of crisis.

Who can benefit from setting up an offshore company?

• E-commerce or web-based businesses: People who work online and live in
different places are natural candidates for wanting an offshore company. You
can choose to register your company where you will pay the fewest amount of
taxes, and at the same time choose a respectable jurisdiction with little reporting
requirements.
• International businesses: If your company has already extended to global
markets, finding the best location to protect your interests is only natural. The
owners of an international business can set themselves up through an offshore
company, allowing them to make their purchases and sales through the laws of
the offshore jurisdiction that will treat them best. The result is always better
taxation.
• Holders of wills and inheritance: An offshore company can often be combined
with an offshore trust to create an entity which optimizes your taxation related to
inheritance.
• Stock brokers and forex traders: Commonly, the biggest fear of people who
trade stocks is that their activity will somehow be used against them by
government goons. An offshore company is a great way to anonymously trade
stocks and shares, while also doing foreign exchange transactions (FOREX).
• Individuals: There are times when it is advantageous to set up an offshore
company for individuals — for example, to hold property or to increase your net
income when you’re self-employed.
• Intellectual property rights: If you own a patent or trade mark, registering it in
the name of an offshore company can allow you to buy and sell these rights.
Having patents or trade marks registered by an offshore company also makes it
easier to grant these rights to third parties.
 

Saving Money through incorporating offshore
Everyone knows that some of the most important companies in the world have
a huge amount of capital, and potentially taxable income, in offshore accounts.
Indeed, it is estimated that more than $63 billion of US corporate profits are
being held offshore and are not subject to US Taxes.

And it’s all legal and within the law.

As taxation of profits is an expense that can be reduced, corporations and

individuals look for legitimate ways to reduce it. It is neither unethical nor illegal to
seek relief from taxation. Tax law is an important tool that countries use to pursue
funding for governmental services. Each nation has different policies and budget
requirements, which leads to diverse tax laws.

Offshore companies are simply entities that people create to legally take advantage
of this global tax market.

While it’s possible to save your money by keeping it offshore in one or more bank
accounts, the setting up of a so-called offshore company can also help you
maximize your savings, increase your net income and protect your assets — and all
this in a legal way.

For most countries, profits from offshore activities only become taxable in the
home country of a person or company when the money is repatriated. If taxes
are not paid on repatriated funds, then it becomes “money laundering.”

The unspoken philosophy is: Tax law is complicated and confusing for a reason. If a
citizen or corporation wants to reduce their tax liabilities, they will have to work for
it.
Indeed, the path has been paved for all to take advantage of the government
designed loopholes. It just takes some knowledge.
 THE BEST COUNTRIES
FOR AN OFFSHORE
COMPANY
What types of offshore companies are there?
There are five basic types of offshore companies that you can set up:
• IBC – International Business Company
• PLC – Private Limited Company
• LLC – Limited Liability Company
• GBC – Global Business Company
• SÀRL – Société à responsabilité limitée (French) or Sociedade anónima de
responsabilidade limitada (Portuguese)

Each company type has its own unique strengths and appropriate uses. In order to
find out what type of offshore company is the right set up for you, you need to take
into account many factors, such as the countries in which you plan to conduct
business and bank, how much turnover you expect, the characteristics of your
money flow in general, the amount of time you are willing to spend with audits and
reporting requirements, and much more.

What are the best countries for an offshore company?

The best place for setting up an offshore company entirely depends on your goals.
One company might benefit from setting up in a country with no accounting or audit
requirements and zero tax.

A slightly larger, more diverse company might be better off going to Hong Kong or
Singapore and paying a small amount of tax to gain access to more world-class
banking, financial opportunities, and merchant services. And a company seeking to
raise capital might choose a completely different location.

Common traditional offshore jurisdictions include Nevis, Seychelles, Mauritius, the

British Virgin Islands, the Cayman Islands, Antigua, Anguilla, and even the Gambia
in Africa.

Other low-tax jurisdictions that are popular for offshore business include territories
like Gibraltar, as well as low-tax European countries like Ireland, Malta, and even
“zero tax” Estonia.
Meanwhile, the Middle East is growing as an offshore hub, with Dubai and Bahrain
offering their services to those interested in that region.

In Asia, places like Hong Kong and Singapore offer the potential for zero or single
digit tax rates for foreign businesses, as well as a network of global tax treaties.
Hong Kong, for example, uses its territorial status to allow “trading companies” to
operate and pay no tax.

To accomplish that, you simply use Hong Kong as your trading hub between two
other countries — for instance, purchasing goods from China and selling them to
Europe. Set up your invoices the right way and Hong Kong is essentially cancelled
out. While a Singapore corporation does offer a similar option, it’s a bit more tricky.
And, after a certain amount of profit, taxation in Singapore gets complicated.

Wherever you choose to go, the reality is that it’s often a good idea to pay a little bit
of tax if doing so keeps your home country off your back. As the global war on tax
havens heats up, setting up your business in a respected jurisdiction may be the
best strategy for you. After all, going offshore is about saving money and protecting
assets legally, not hiding away or evading taxes.

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 REQUIREMENTS FOR
US CITIZENS

The US government has some tight restrictions on offshore companies. The biggest
advantage for an offshore company is the concept of tax deferment. This essentially
means that you can defer the taxes that are to be imposed upon your company
indefinitely.

With your taxes deferred you can take that money and reinvest it in your company.
When you combine this tax deferment with compounding interest, you’re talking
about significant capital accumulation over the years. You’ll only have to pay these
taxes off once you sell the company.

As a US citizen, however, you will be required to disclose any offshore business

you are involved in, and any bank account you own. Failure to comply with these
rules in the US or any other western country that requires them can lead to steep
penalties.

Because of this, we highly recommend that you work with tax lawyers in order to
ensure that you’re doing everything the legal way. It can be difficult finding a tax
lawyer you trust. Through working with us, you will have access to our extensive
rolodex of experts and highly trusted lawyers in countries across the globe.
 GETTING STARTED
While the process of offshore incorporation itself is straightforward and can be done
in a matter of minutes in some countries, laying the proper groundwork before and
after the official process is important. This also means consulting with a provider
who understands the rules and regulations in your home country. The best thing
you can do is choose the right representative.

How much does it cost to start an offshore company?

Start-up costs for your offshore company will vary depending on a number of
factors, including:

• Which jurisdiction you choose

• What add-on services you require
• Who you choose to incorporate
• Who you choose to maintain the company annually

The truth of the matter is that the cost of starting an offshore company is as variable
as the cost of having dental work done — and both can have painful and expensive
consequences if you choose the cheapest option.

For example, when you need dental work, you have quite a few options to get the
job done: you could go to the free clinic in the ghetto with rats running around and a
doctor whose license expired years ago, or you could choose the dentist who treats
the stars in Beverly Hills — or anywhere in the middle.

Most of the offshore company service providers you'll find advertising online are
closer to the rats than the stars. Some do a good job, but the main concern is that
low-cost providers WILL NOT know your tax consequences at home.

For instance, the law in St. Kitts and Nevis may be 0% tax, but if you're a US
resident you’re obliged to pay income tax in the United States. Low-rent providers
will not be able to help you in those crucial situations. In fact, they’ll probably try
and steer you away from doing things legally, either through shadiness or their
simple lack of knowledge.
Don't let a cheap $1,000 company become a $100K nightmare.

What about nominee shareholders, directors and bearer

shares?
If you are new to the offshore world, you’ve likely run into a lot of different ideas like
having a nominee shareholder or director or issuing bearer shares. But what are
they and will they be of value to your offshore company?
The general purpose of nominee shareholders and directors is to involve an
unrelated third party — often required to be a resident of the tax haven — as the
registered shareholder or director of your company so as to keep the identity of the
actual owner private.

In most cases, we rule against having nominee shareholders or directors. If you live
in a high-tax country, chances are you're required to report your interest and pay
tax on any earnings from an offshore company. We believe in disclosure. Nominee
directors add expense, can potentially cause problems, and don't add much value
in this day and age of transparency.

Bearer shares have been used in the past for similar purposes of privacy, but they
have largely been eliminated from every country on earth. Consequently, whether
or not you should use bearer shares is more an issue of availability rather than
legality.

Don't believe anyone who tells you that you can use bearer shares for "total
anonymity and privacy”. It's a scam. Even if you could, setting things up this way
will make it almost impossible to get a bank account, register property or complete
other, more important steps involved in setting up your offshore company.

The final steps to start your offshore company

Once your company is approved and set up, the next step is to open a bank
account, and possibly an offshore merchant account. Depending on where your
company is incorporated, your nationality, and where you want to bank, you may or
may not need to travel to the bank in person.

Typical offshore banking countries like Singapore and Hong Kong have been
making it much more difficult lately for non-residents to open an account. Many
banks decline US citizens as their customers, while others demand that you provide
excessive documentation. Therefore, it is necessary to know whether the country
where you choose to set up your offshore company can also help you in regard to
banking.

Of course, the most important step of all is to simply take action. The sooner you
get your business set up, the sooner you can enjoy the benefits. If you have read
this far, you know that there are many different options for you to choose from —
and you will soon notice that deciding on a jurisdiction for your company is not as
straightforward as it seems.

We are here to help you with the set up of your Offshore Company from A to Z.
Andrew Henderson, CEO and founder of Nomad Capitalist helps a couple of people
each month to put together their own Nomad Strategy. If you are at a point at which
you’re ready to move forward, but don’t know exactly where to start, click here to
apply for a Strategy Call with Andrew.