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The Notion of an Offshore Company and Reasons to Turn to this Type of Activity

The notion “offshore” implies any activity performed abroad, i.e. in a jurisdiction of another country. When relating to an “offshore company”, this means that the company’s owner is located in one country, while performs business in another state (another jurisdiction).

However, the term is more complicated and comprehensive. It is not as easy to understand as it may seem at the first sight. The notion is used as an antonym to “onshore” activity.

The difference between the two notions is that an “onshore enterprise” implies all kinds of domestic activity (i.e. the one that is registered and functions within the borders of the same country where its owner lives). An “offshore company” means functioning outside the borders. The most beneficial point about the system is that such companies are owned by non-residents; thus, they are not liable to local taxation.

What are the reasons to use this form of business activity?

The main reason is to avoid taxation. Different states have various taxation systems. A businessman may live in a country with high taxes, while other states can be more loyal towards businessmen and offer more favorable conditions for business development (including taxes). Moreover, many states offer special conditions to non-resident enterprises.

What is the benefit of welcoming countries? By providing businessmen with favorable legislation and low taxes, offshore jurisdictions look for attracting foreign capital. Taxes are not the only benefit from offshore activity. Welcoming states offer more privacy, more security, and simplified policies.

What is the Principle of Offshore Company Functioning?

This type of business activity implies trading, holding assets, and conducting all types of business matters legally while being located in the jurisdiction of another country. Such companies are considered non-resident ones since they are owned by foreigners and all transactions are realized outside.

The Essence of an Offshore Corporation

Additional protection is distinguished as another benefit of forming an offshore entity. This can be achieved only when a legal system of another country is used to incorporate business. Separation into court and legal systems makes it more difficult for cheating organizations to get to your assets or accounts.

Note that an offshore enterprise has the status of a separate legal entity, which means that it functions as an individual person, regardless of its owners. Thus, it turns out that a company owner and the enterprise itself are separated legally. So, all the actions (transactions, debts, liabilities) have no relation to its formal director.

Yet, there is no single jurisdiction to regulate offshore activity. Each state develops its own laws and rules. Thus, businessmen tend to compare conditions offered by several states and pick the most favorable options.

What are the best Business Spheres to use Offshore Activity?

Businessmen can use the offshore environment for the following kinds of business activity:

  • Start a business and operate it;
  • Open and hold bank accounts;
  • Conduct transactions;
  • Make all sorts of deals within the law;
  • Hold assets (both physical and digital).

There are other ways how one can name “offshore companies”. These include “IBCs” (International Business Companies), “non-resident corporations”, “foreign companies”. But generally, all these terms mean one and the same notion.

Being aware of all the above-mentioned pros, be sure that starting an offshore business is the right way to reduce your spending on taxes and get more from your activity. However, there are other positive moments about holding business in another jurisdiction, namely enhanced security and protection, privacy, simplified norms and regulations. For hosting states, the main benefit is attracting more capital to the country. Below, let’s see the advantages for business holders more precisely.

Benefits of Going Offshore

  • Privacy
  • Asset Security
  • Tax Reduction
  • Lawsuit Protection
  • Financial Privacy
  • Simple Corporate Regulations

1. Privacy

When dealing with this type of company, an actual owner is separated from the entity with all its liabilities, debts, and assets. The business itself stands as a single unit without any reference to the owner, which guarantees a high level of privacy. Thus, all the deals are conducted without specifying the name of the owner, as well as all financial transactions are carried out from the name of the company (not its owner).

2. Confidentiality

In most cases, offshore companies’ registries are closed from the public, which ensures keeping the names of shareholders and owners, as well as all the related to the information, confidential.

The same relates to all data about the company, accounts, and details. Although the level of transparency depends on the country and its laws, in most cases, such enterprises are considered anonymous.

3. Tax Reduction

Low taxes are the main benefit of offshore activity. As a rule, countries that host foreign businesses offer a special status and favorable taxation conditions to foreign companies.

When starting a business in an offshore state, a company holder doesn’t have to pay taxes in the country of residence. Thus, if your taxation system is more complicated or characterized by high taxes, opening a company in an offshore state is an ideal way out to avoid over-taxation.

Note that each state is characterized by a unique and specific tax system, the obligations of which vary greatly. Thus, before choosing a suitable jurisdiction, study the one of your native state thoroughly.  As a rule, a businessman is liable to the taxation systems of the country of permanent residence. So, to pick the best offshore state, study all the details of your local taxation system and ones of potential offshore states, compare them and only then, make a choice.

4. Simple Corporate Regulations

Offshore jurisdictions are characterized by simplified regulations and laws. Countries attract foreign investments by offering simple and clear regulations without excess bureaucracy. For example, some states free foreign investors from auditing, reporting, or the need to hold corporate meetings, etc.

5. Asset Protection

Note once again that an offshore activity means shielding your company from you. Thus, this type of business holding provides a more secure level of protection in case of a lawsuit. If you have an offshore business. It will be quite difficult to prove your connection to the company.

Moreover, if talking about debts imposed on an individual, the company won’t suffer from this. And vice versa, the company acts as a single entity, and the businessman has no connection to its debts.

6. Legal Protection

Since the company operates in another state with its own laws and obligations, it is subject to an overseas jurisdiction and is liable to its regulations. Still, offshore states try to protect offshore enterprises by creating a favorable legal system and supporting foreign business development. The above-mentioned points show how offshore activity develops, outlining its main benefits. This is a beneficial way to develop a business avoiding high taxes.

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Reasons to Form an Enterprise in Switzerland

Picturesque nature and breathtaking landscapes are not the only pros of Switzerland. The country also manages to succeed in the sphere of business development. It is included in the list of topmost destinations for forming companies. The state is considered one of the most beneficial venues for business activity in Europe. Switzerland creates a favorable business environment by providing liberal conditions based on a future-oriented base.

There are a number of factors that determine country popularity as a destination for starting a business. The causes are the following:

  • The country is characterized by a stable economy and a strong currency in comparison with other European countries.
  • The taxation system is liberal and favorable towards businessmen.
  • The labor market is distinguished by the presence of highly-educated and experienced workers who easily adjust to various work conditions. Recruitment of flexible employees allows gathering the necessary staff.
  • Switzerland is the leading financial center with dozens of companies having head offices in the county.
  • The level of life is high in the country, which contributes to the fact that citizens are intelligent, ready to cooperate and adjust. They pay a lot of attention to innovation and encourage all sorts of ideas in this domain.
  • The economy of the state is distinguished by the highest purchasing power throughout the world. The business environment is characterized by productive suburbs and a well-developed regulatory system. These facts contribute to stable and fruitful business activity.
  • One more favorable condition is the Switzerland government that is reliable and effective. The country develops its economic sector based on traditions, which ensures financial stability. As a result, the state’s economy is characterized by low inflation and interest rates.
  • Well-developed public infrastructure & Low VAT in comparison with other European states.
  • A workforce is highly educated and skilled, which ensures recruiting the required employees and gathering a high-quality staff.
  • Annually, the country’s government allocates a lot of funds for the research and development sector. This contributes to the creation of stable and fruitful business activity on the territory of the country. The state encourages foreign businessmen and helps them make the first steps in their businesses.

All the above-mentioned points prove that Switzerland is the perfect destination for promoting your business abroad and starting new activities. The state’s legislative and taxation systems are favorable towards foreign investors. The government provides liberal laws and conditions for starting a business. The country’s economy is strong and stable, which ensures excellent prospects.

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Arguments for Starting A Business In United Kingdom

Investors who desire to expand their US businesses to Europe should definitely consider the UK (specifically London) as a favorable place to settle their businesses. The country is ranked as one of the most popular destinations for legalizing foreign business in Europe. This is proven by the fact that more than 8,400 US companies call the UK their home. Such famous enterprises as Linkedin, Airbnb, and General Assembly have their offices on the territory of the country.

Although a shift to the EU market may cause some concern, the offered conditions and a developed business environment are favorable and fairly familiar. For those business owners, who doubt entering the EU market via the UK, the following reasons will reassure their future prospects and flourishing.

1. Paying attention to the digital economy and tech business boom

The list of enterprisers present in East London’s Silicon Roundabout totals over 2,300 businesses with the number of digital tech staff of more than 50,000 persons, which means that the city is the perfect venue for a tech activity of any kind. Note that the country is called the fintech capital of the world. So, your business benefits a lot from this destination.

As for the digital economy, this segment is rather promising and quickly developing. Note that it is the UK that took the first place in the rating of countries with the greatest amount of annual investment. The amount of foreign investments was £2.99 billion, which is an all-time record for the venture capital scene. For comparison, the amount of money invested in France, Ireland, Germany, and Spain taken together is less. The country’s reputation on the business scene is enhanced by the presence of such giants as Facebook and Amazon.

Although the majority of all enterprises and tech corporations are based in London, other cities are also are home to many well-known businesses. For instance, such brands as Skyscanner, TV Squared and Administrate are located in Edinburg. The staff of employees engaged in the digital domain totals 50,000 people in Manchester only. Generally, the digital sphere offers 1,50 million jobs.

While Manchester serves as the main country’s tech hub and hosts MoneySuperMarket, other examples include Newcastle that houses ImpulsePay, Liverpool with its flourishing environment for the gambling industry. Cambridge stands as a separate milestone in this list since it produces both intelligent specialists and hosts advanced businesses in the sphere of tech and digital economy.

2. The workforce and recruitment

The UK economy is distinguished by a high level of the workforce that totals 30 million. The indicator is the second-largest throughout Europe. The range of experienced specialists is wide; moreover, further labour growth is predicted for the next decade.

There are two crucial points that determine UK competitiveness on the labour market. Moreover, the country is not simply competitive in the sphere; it outstrips other European states in terms of recruitment. Firstly, the UK has flexible labour laws, which allow diverse businesses to easily adjust to the specifics of the country’s legal system. Thus, the UK law is favourable for various investors and meets their needs. Secondly, labour costs are lower if compared to other countries of Western Europe, which guarantees the UK thriving.

Although a slight fall was observed in the recruitment sector over the past decade, British citizens are intelligent and skilled. Despite foreign businesses will have certain difficulties in recruiting British staff, generally, workers are ready to adapt to the required styles due to their education and experience.

3. Gateway to other countries

London can serve as an intermediate chain on your way to wider world expansion. The country is characterized by perfect transport links with other world points. Thus, the UK can be the first step in developing business relations with other Asian and European countries for your business. While the city is home to diverse spheres of activity, including tech, art, green energy, etc., for a foreign enterpriser it means excellent adjustment.

If your target is to create a world-known brand based in two main geographical locations, namely the US and the UK – this option will benefit your business. The country has wide trade connections, which is proven by statistics. According to Trading Economics, exports from the country grew by 2.3% for just one month.

What does it mean for a foreign enterpriser? A businessman would have excellent opportunities for further exporting goods worldwide, resulting in worldwide domination on the global market. Moreover, UK products are characterized by high quality and have impeccable reputations; consumers tend to acquire goods with the Union Jack.

Brexit stands as the only concern about expanding business activity in the UK, bringing a certain degree of uncertainty about future prospects. Yet, with the fall of the pound, UK products have become more competitive abroad, causing the rise in export.

4. Financial Security

Now, the UK takes the 5th place in the rating of the largest world economies. It has managed to overcome Brexit uncertainty and entered 2018 with positive statistics. Today, the British economy is stable and flourishing.

The capital of the country is known as the world’s leading financial centre. Offices of large international banks are found in London. Foreign businessmen have excellent conditions in the banking sector. Facilities are customizable to the business community.

Britain’s taxation system is one of the main benefits of incorporation. Rates are favourable for starting a business activity. Thus, corporation tax is at 19%, which is the lowest for states of the G20.

Also, the UK’s system is distinguished by double taxation agreements with various states across the world, including India, France, etc. The essence of such treaties is that when exporting goods to third countries via the UK, US enterprisers won’t have to pay tax on income twice. Moreover, some states even agree to exempt income from taxation. This means that US companies can sell products abroad without being taxed twice.

The VAT rate is 20% currently. Most products and services (including some imported goods) are subject to this tax in Britain. For the R&D sector, the country offers various tax incentives applicable mainly to small and medium businesses.

5. Favourable business environment for entrepreneurs

Entrepreneurs engaged in various domains are welcome in the country. The UK is open to foreign entrepreneurs and has created a favorable environment for their businesses expansion. for example, an entrepreneur visa is issued and a special tax rate is applied to such companies. The income tax rate will be just 10% for the first £10 million in sale value. The country is the place where diverse industries flourish. Activities in the spheres of construction, healthcare, fintech, manufacturing are welcome. Thus, foreign businessmen can be sure of their prospects in the UK and further expansion to other states.

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Why should you Pick Malta as the final Destination for Starting a Business?

The business environment in Malta has faced drastic changes due to which incredible flourishing in the business sector is now observed. The success was achieved as a result of a shift from agriculture-based policy to other spheres of the economy.  The country has switched over to such domains as pharmaceuticals, IT&C, maritime and aviation technology, finance, engineering, and tourism.

The implementation of modern technologies and infrastructure adaptation cause an influx of foreign businessmen who are ready to invest in the provided conditions. Besides, the country acts like a supplier of the cheap workforce for European giants operating on the territory of Malta. Another important criterion for business attraction is a favorable tax policy towards foreign enterprises. To conduct business in Malta, companies must only register for the VAT.

What is Especially Attractive about Malta for Foreign Businesses?

When speaking about starting a business in the state, its taxation and legal systems are the main trumps that draw both foreign and local entities. The tax and legal policy provided by Malta is considered one of the most favorable in Europe.

The state is appealing to investors since its gambling and financial spheres are well-developed. Malta is one of the leading countries for gambling activity in Europe. Due to its membership in the European Union, Malta is distinguished by a stable credit rating, which stands as a guarantee of secure business development.

As for the taxation policy, the country is famous for its favorable and beneficial system throughout Europe. It is characterized by the lowest personal income taxes and corporate tax rates. These are what attract both foreign enterprisers and job-seekers to work and live in the state.

Benefits for start-ups in the country

Foreign businessmen will be glad to find out that no license is required for developing business in most activities, which means fewer nerves, fewer hustles, and less bureaucracy. There is a limited circle of domains, which requires issuing licenses. These include medical professions and financial services.

The country offers opportunities for opening businesses of many kinds. Investors will be pleased with the list of available types of business. Moreover, a registration procedure is simple and doesn’t take a lot of time.  Businessmen can pick different kinds of business vehicles, with sole traders and limited liability companies being the most popular.

Investment programs in the country

To improve Malta’s reputation on the international business market and attract foreign investments to the country, the government has developed several programs that are aimed at making the state the desired destination for business development. Most of them are targeted at start-ups and have already gained popularity across European countries. Some of the programs include:

  • the Business Advisory Program,
  • the Micro Investment Scheme,
  • the Venture Capital Malta Program,
  • the Strengthening Market Entry and Internationalization Scheme,
  • the Business Development Scheme.

The Citizenship by Investment Program is the leading program of the Maltese government. It implies providing foreigners with an opportunity to apply for Maltese citizenship if a person buys a property on the territory of the country or invests money. We are a law firm and consult our clients on all sorts of business services and affairs in Malta. If you’re interested in investing in the state, feel free to contact us to learn more information and get answers to all questions on company registration on the territory of Malta.

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All about offshore companies

Today we will talk about offshores (from the words -off and -shore – off the shore). Such firm is a legal body, it has to be registered in an offshore zone. These zones include territories and countries, which are interested in attracting foreign customers with their tax and other advantages. Based on this, these companies either pay taxes at a very low rate, or do not pay them at all. They are not even subject to local taxes such as VAT or capital tax. The biggest plus – there is no headache with the preparation of financial statements, because it is not required. But there are also disadvantages – companies do not have the right to have local real estate and hold any commercial activities in the country. Also, you cannot interact with its residents. An offshore company can open accounts with local banks, not necessarily offshore, the main thing is that there is no currency control there. It will not be difficult to open your own firm, for this it is enough to turn to specialist for help like www.sgcsmanagement.com .

 The main thing is that there are no long queues, you just need to study the fundamental conditions for providing benefits so that there are no problems in the future. Most often, an offshore operates in a system of minimizing tax costs, acting as a foreign contractor to existing resident companies, not registering resident in the country of doing business: it’s not required for it, and any fixation of a representative office will inevitably entail tax reporting requirements (and, accordingly, deductions) in this country. An offshore firm is an independent legal body and conducts its activities in accordance with the country of registration laws, from the point of view of international law. 

The structure of an offshore firm depends on its type and the specifics of the legislation of the country of registration. The most common are LTD, LLC and LLP. Let’s look on the wide-spread one in the offshore business – LTD. It’s the limited liability partnership. It must have a sharer, one is enough. The sharer may be the actual owner of the company, but for better confidentiality, nominal sharers are used. They can be an individual or legal person. The firm must have one or more managers. The manager can be a citizen of any country due to the most offshore jurisdictions. Also, he may be its owner and the individual or legal person. But it’s better to delegate this function to the nominee manager for better confidentiality. 

In addition, the offshore often acts as an auxiliary unit of the main resident company, which acquired the offshore firm, taking on part of the turnover, accumulating profits and providing an additional investment tool. You can not only store money there, when you have a corporative account of an offshore firm in a decent western bank, but also by issuing bank payment cards for yourself and your next of kin, use them both in your country and in foreign trips around the world, regardless of the economic climate and stiffness of the regulatory bodies at home. Not to mention that the details of a well-known bank under a good contract can only positively affect the quality of the transaction with a profitable partner: there is no connection between such an account of your offshore firm and an account with an offshore bank (which serve completely different purposes). Contact our services for more details : www.sgcsmanagement.com

In order for an offshore firm to become an advantage, not a burden, you need to follow a few simple rules. Their non-compliance can lead to the loss of money, time, reputation, and in some cases even freedom:

– Act strictly in the legal field. Watch for changes in the rules, and if it’s difficult to control tax changes, for example, in Russia, Mexico and the USA at the same time, resort to the services of a pro.

– The offshore company may be called a tool. Any tool is used either for good or for harm. The second is punished and reckoning comes quickly. In addition, this tool is not able to solve all the problems of business or human relations, but it can help.

– Do not pursue cheapness of services. An offshore firm CAN NOT work not only without registration, but also without the reputation in the world, and a bank account in a bank with a good reputation to receive money. Where it is convenient to protect assets, it’s not always convenient to trade in industrial equipment.

– There are no easy solutions. When you choose an offshore, you have to work with it every day, you need to think, analyze, verify the facts. Otherwise, you will suddenly find yourself outlawed with fines and prosecution.

For all its attractiveness, an offshore is a responsibility. We advise you to play by the rules, and then this tool will open itself from the best side.

For the setup of your offshore company contact a real professional:

www.sgcsmanagement.com