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Starting an Oshore Company"

An oshore corporation can protect your business and your
investments from high taxes and asset confiscation, but you
have to know how to use one properly.
Setting up an oshore company that moves your
current business to foreign location is a necessary
step in protecting your business or personal assets."

Forming an oshore company as it is a completely

legitimate way to have your company operating
under the laws of a country with business-friendly
regulations. Here are some things to consider:"

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More than 1 million people

each year turn to Nomad
Capitalist for offshore

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What myths about oshore companies should

be dispelled?"
Who should set up an oshore company?"
What sort of company should you set up?"
Where are the best locations to set up an
oshore company?"

intelligence
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Common misperceptions"

All too often the image of the oshore company

industry is one of money laundering, gangsters, drug
money, and villains wearing white linen suits that are
never stained by the cognac they always seem to be
drinking."

This couldnt be further from reality (although your

particular cognac consumption may vary) as oshore
companies are simply entities that people create in
order to legally take advantage of the global tax
market."

Reasons why someone may start an oshore

company are similar to why someone would start an
oshore trust:"

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Protecting assets from impending litigation"

Shifting the tax burden imposed upon the
company"
Protecting the companyfrom political unrest
and economic instability within the country of
the owners"

As you have just read, theres no mention of drug

money or anything illicit. It is simply a way that
intelligent business owners choose to protect their
hard work, protect their shareholders and maximize
the potential profits of their business."

That said, you should make sure that your oshore

company is 100% compliant in your home country.
Its not just the rules of the corporate jurisdiction
you must follow; you must also follow rules
determined by your personal citizenship."
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Who should set up a company?"

There are many people who would be interested in

setting up a non-resident company, but only a few
will truly benefit. In order to identify those who will
most benefit from an oshore company I will
highlight the following groups:"

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E-commerce or web based businesses"

International businesses"
Wills and inheritance"
Stock brokers and forex traders"
Holding property"
Intellectual property rights"
Counsellors and consultants"
Business people"

Lets look at each one and explain a little bit about

why they should start their own oshore company."

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E-Commerce or web based businesses
!

The very nature of a web-based E-commerce

company is one of globalization. The fact that there
is rarely a brick and mortar location for many webbased companies is even more incentive. If your
customers are global, why shouldnt your business be
global as well?"

As an added consideration, pairing up your oshore

company, that is already all over the world as an Ecommerce entity, with anoshore bank
accountcan help you set up a second stream of
revenue."

Why is it important to have an oshore company

and oshore bank account? Because the economic
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health of each country is not always on the up and

up. Inflation or hyperinflation in your home country
can make your money worth much less quickly.
Having an oshore company and an oshore bank
account can get you around this issue."

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International businesses
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If your company is already all over the world, finding

the best oshore location to protect your interests is
only natural. The owners of an international
business can set themselves up through an oshore
company, allowing them to make their purchases and
sales through the laws of the oshore jurisdiction.
The result is always better taxation."

For example, most tech companies have set up shop

in Ireland. Irelands low 12.5% tax rate is attractive
compared to nearly 40% in California, but up until
recently, these companies could pair Irish companies
with Netherlands companies and a domicile in a tax
haven to lower their tax rate to below 5%."

That Double Irish Dutch Sandwich is going away,

but there are similar strategies for international
businesses to shift IP, sales, and other business
elements around the world."

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For wills and inheritance
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An oshore company can often be combined with

an oshore trust to create an entity which optimizes
your inheritance tax laws. This is especially
beneficial when you have assets in one country and
you wish for someone in another country to receive
your assets on your passing, or while youre alive, as
part of an inheritance."
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After spending all your life building your company
and assets, why let the government take part of it
from you as you pass it along to your family? They
already took plenty of your taxes, and they arent
your kin!"

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Stockbrokers and forex
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An oshore company is a great way to anonymously

trade stocks and shares, while also doing foreign
exchange transactions. The reason why it is
anonymous is because the transaction is being done
under the name of a company, not the name of a
person."

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For the holding of property
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An oshore company can be set up to hold two

types of property:"

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Moveable property such as your boat or

yacht"
Immoveable property such as your home"

You will use an oshore company in this instance for

the confidentiality involved, and for the chance to
enjoy better taxation."

Finding an authority on this subject is essential as

the laws around this can be dicult to navigate.
Some countries do not allow for the movement of
movable or immovable property through oshore
companies."

There is a reason, for instance, that countries like

Liberia, Malta, and other little-known jurisdictions
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are often used to register ships; they oer special

advantages specific to yachts."

You should be careful when protecting domestic

assets in an oshore company. US courts, for
instance, can completely disregard a foreign
corporations protections if the property inside is
within the United States. Dont think your local
courts have to honor your oshore company if they
dont want to."

Transferring and holding intellectual

property rights

If you own a patent or trade mark, registering it in

the name of an oshore company can allow you to
buy and sell these rights. Having these registered
under an oshore company also makes it easier to
grant these rights to third parties."

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Counsellors and consultants
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Many counsellors and consultants who set up an

oshore company find it easy to manage their
company through them than their onshore
counterparts. This is due to dierent, or relaxed,
bookkeeping and reporting needs. They also enjoy
the taxation benefits of the jurisdiction they choose
to set up their oshore company in."

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Business people
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Individual business people can also set up their own

oshore company to create a simple and stable
administration for themselves. This is especially
beneficial when you need to prepare for a new
activity in a hurry as you do not have to deal with an
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infrastructure build that is complicated and time

consuming."

Types of companies"

There are five basic types of oshore companies

that you can set up:"

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IBC International Business Company"

PLC Private Limited Company"
LLC Limited Liability Company"
GBC Global Business Company"
SRL Socit responsabilit limite
(French) or Sociedade annima de
responsabilidade limitada (Portuguese)"

Each type has its own unique strengths and

appropriate uses. Some are only available in certain
oshore jurisdictions, and well look at that now."

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IBC International Business Company
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This type of oshore company is much like a private

limited company. It will have shares and share
capital, but these shares are not publicly traded.
There will also be a board of directors, just like a
private limited company. Of note is the fact that an
IBC is not allowed not engage in business within the
jurisdiction where it was incorporated."

There are countless numbers of IBCs around the

world as it isthe most common type of oshore
company. The reason why there are so many IBCs is
because of all the benefits this type of oshore
company features:"

Nomadcapitalist.Com

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Few restrictions are imposed upon your

business activities."
They typically only require 1 director and
shareholder. This can be one single person or
company in total if you want to set it up that
way."
There are typically no audits. While you are
typically supposed to keep books (and you
may well need to for your home country),
these books are usually not audited."
No taxation, just a fee that is somewhere
around $100 $500 USD per year."

You can use a wide variety of suxes for your IBC

depending on the jurisdiction: Ltd, S.A.,
Corporation, Corp., Inc, and Incorporated are all
possibilities. You may not be able to name your
oshore company by all of these names in every
jurisdiction."

Another instance in which youll want to speak with

a professional oshore expert is when it comes to
choosing which jurisdiction to start your oshore
IBC. This is because Anguilla, Seychelles, St.
Vincent, Nevis, Belize, Bahamas, and Dominica,
each have particular legislation in place around
oshore companies and IBCs."

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PLC Private Limited Company
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This is the second most popular type of oshore

company. This is due to the confidential nature of
them not being as high as it is with an IBC. You
usually have to keep records, prepare accounts, you
could be audited, and there is occasionally a very low
tax rate involved."

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Although these barriers can be worked around by

having the corporate entity as an IBC and using
nominees, corporate directors or shareholders."

Some non-resident jurisdictions have their own local

variation on the PLC. Luxembourg, Monaco,
Lebanon and Switzerland have the Socit Anonyme
(S.A.). Panama, Costa Rica and Uruguay have the
Sociedad Annima (S.A.). Switzerland and
Liechtenstein have the Aktiengesellschaft (A.G.).
Call it local flavor as each one is a PLC with a
slightly dierent name."

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LLC Limited Liability Company
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LLCs also have their place in the oshore world.

Nevis is one example of an LLC jurisdiction. Others
include:"

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Anguilla"
Marshall Islands"
Saint Kitts and Nevis"
Delaware, USA"

Three other oshore jurisdictions allow you to set

up an LLC, but they have their own local names for
them:"

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Belize, the Limited Duration Company, which

can only exist for up to 50 years"
Costa Rica, Sociedad de Responsabilidad
Limitada"
Panama, Sociedad de Responsabilidad
Limitada"

The first one is exactly like an LLC, but with a time

limit on how long it may exist for. Costa Rica and
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Panama are largely the same, but they use a Spanish

equivalent."

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GBC Global Business Company
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This is a type of oshore company that is exclusive

to Mauritius. They are available in two classes:"

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Class 1 GBC This is an oshore company

that is resident to Mauritius. A tax rate of 0%
to 3% is imposed. You must keep accounts and
have at least one local director."
Class 2 GBC This is for non-resident
oshore companies. They are nearly identical
to an IBC."

Class 1 companies are able to take advantage of

Mauritius double taxation agreement, making them
attractive for those with business ties to countries
that have tax treaties with Mauritius."

Labuan in Malaysia has a similar company oering

(though not GBC) that allows companies to pay a
low flat tax outside of the traditional Malaysian tax
system, all while availing themselves of certain
Malaysian tax benefits internationally."

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SRL Socit responsabilit limite
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The French developed their oshore trust and

oshore company system dierently as they were
not part of the basis of trust law English common
law. The SRLs that the French built were based on
the GermanGmbh, and are similar to the
structures of the UKsPrivate Company Limited by
shares, and the AmericanLimited Liability
Partnerships."
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!
The Portuguese later adopted the concepts of SRL
and named it Sociedade annima de
responsabilidade limitada. You can now also find
SRL oshore companies in Lebanon, Luxembourg,
Switzerland, Madagascar, Algeria, Macao, and
Monaco."

The best country to choose"

Before we start looking at the countries themselves,

there are a few key questions that you need to ask
first:"

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Does the country have a reliable means of

communication between it and where you are
located?"
Does the country have political and economic
stability?"
Is the country known for having a good
reputation within the oshore company
industry?"
Are there sophisticated corporate laws within
the jurisdiction?"

Choosing an oshore jurisdiction that doesnt meet

the highest standards can hurt your profits and
possibly be no better than starting your company
onshore."

You must consult with an expert in the oshore

industry in order to protect yourself."

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Nevis. Stability, no records requirement; good

reputation"
Seychelles. Low fees, no public data sharing,
no records requirement; average reputation"
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Belize. Strong privacy laws, low fees, English

speaking; average reputation"
Hong Kong. Politically stable, financial
center, good banking, transparent; excellent
reputation"

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The list above is speaking generally. For the best
advice it is essential to schedule a professional
consultation. We also provide in-depth coverage of a
wide range of jurisdictions to Members of our
premium Membership, The Nomad Society."

How do taxes work?"

The answer to this all comes down to which
jurisdiction you choose to start your oshore
company in. To speak in general terms, youll have to
pay either no tax, or very little, as this is one of the
main advantages of an oshore company."

There are jurisdictions which will make it

mandatory for your oshore company to have yearly
accounts that are audited. Four examples are Hong
Kong, the UK, Gibraltar, and Cyprus."

Regardless of whether or not youre going to be

taxed within the jurisdiction of your oshore
company, you will still need to speak with a tax
advisor or expert to determine what your obligation
is to your local government."

It is important to note that there may be some

benefit to paying a little tax. Setting up shop in
Ireland wont draw any red flags the way setting up
shop in Seychelles will. Certain jurisdictions have a
bad reputation and you may have trouble opening
bank accounts outside of that country."

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Singapore, Hong Kong, and Ireland are all

worthwhile choices for companies that need a highend image that is hard to come by with a company
based on some far-flung island. These countries
arent traditional oshore jurisdictions but oer
many benefits of a tax haven without the stigma."

Other things to avoid"

There are plenty of people who will sell you on

strategies that are illegal, outdated, or flat out dont
work. These people cater to your fear and/or greed
and claim what they oer will solve your problem.
However, avoid these claims:"

Bearer shares. Bearer shares are the concept of

physical shares in which whomever holds the
shares, owns the company. As you can imagine, this
setup is a nightmare for anti-money laundering, so
most countries have phased them out. Only a few
countries allow bearer shares that are registered,
which eectively makes them useless anyway."
Nominee directors and shareholders. Most of
the time, using nominees will just cost you money.
Any bank you work with will demand to know the
beneficial owner of the company, so adding fake
shareholders or directors wont do you any good.
Countries are also increasing pressure on nominees
to turn over the names of their clients."
Anonymous companies. For the reasons above,
they simply dont exist. Dont believe the hype."
Low cost companies and banking. Going
oshore will cost you a little money. You not only
need to hire a professional, you might want to seek
tax advice for your home countrys rules.
Meanwhile, oshore banks may require more
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documents and impose higher fees than your home

countrys banks. Fee-free oshore is not a reality.

Get 1-on-1 help for your needs"

Theres a reason more than 1 million people annually

visit Nomad Capitalist for help internationalizing.
Thats because we oer unbiased advice based on
your personal needs."

Andrew Henderson, editor of Nomad Capitalist,

oers personal consultations in conjunction with our
pre-screened network of lawyers to help you."

If you are interested in booking a consultation

or done-for-you service, or need a referral,
please email andrew@nomadcapitalist.com.

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