The choice among numerous offshore jurisdictions can be complicated. A lot of parameters should be taken into consideration. Each offshore financial centre carries its own set of advantages, benefits and possible trade off.
When I am designing an offshore company structure and during the tax planning process, I always start with reviewing your business and residency situation and your banking needs before selecting the best jurisdiction for your offshore company. A solution tailored to your specific needs is the driving vehicle to conclude the ideal jurisdiction that fit your case.
In my though, I shorten the list of possible domiciles by analysing your primary motivation for the incorporation.
- If you are focused on simplicity, ease of administration, and privacy, I often recommend Seychelles, BVI or Belize.
- If you are focused on asset protection, I might recommend Cyprus.
- If you are operating a business, or wish to create a hybrid corporate / foundation model, I usually recommend Panama or Isle of Man.
- If you are doing business in Asia, I usually start with Hong Kong or Singapore.
- If you are looking for a financial services or Forex licensed entity, I usually suggest Belize or Cyprus for an EU license.
- If you will invest in a hedge fund, or require maximum transparency and regulatory agencies, I usually recommend Cayman Islands or Luxembourg.
Some of my thoughts on the most popular jurisdictions can found below.
A popular offshore company these days is the Seychelles IBC. The Seychelles IBC is a flexible tax free company ideal for a wide variety of uses. Seychelles IBCs are commonly used as Holding Company (real estate, shares, equities) or consultancy and personal service company.
Confidentiality is one of the key features of a Seychelles IBC. The reason for this is due to the fact that the details of the Seychelles IBC's beneficial owners, directors and shareholders are not part of the public record. This information is only kept at the offices of the Registered Agent in complete confidence.
A Seychelles IBC is an efficient entity through which to open an account at an E.U banking institution.
Belize provides a very efficient corporate, LLC and trust code which can be adapted to just about any situation.
Belize is an ideal place for the formation of an offshore company. Belize IBCs are companies that are commonly used for offshore banking, to conduct international trade, and for asset protection.
Belize IBCs are also commonly used for the ownership of real estate property and land; personal service by individuals working overseas and offshore e-business.
The Republic of Panama is a presidential independent, sovereign state. It is well known as one of the most developed international business centre. Panama has the fastest growing economy and the largest per capita income in Central America.
The laws of the Republic of Panama only permit the submissions of accounting records, files, correspondence or other documents to foreign authorities with the express permission of the Courts of Panama. Information sharing treaties are limited to drug-related offences. All other revelations are expressly prohibited and may result in criminal prosecution.
Panama is a jurisdiction for an offshore IBC or an International Foundation for asset protection purposes. Panama's legal system is well developed and tested, professional local counsel is available, and their advanced corporate code allows for maximum protection.
Cayman offers a well-regulated and internationally respected, tax-neutral, offshore business environment.
Cayman Islands is popular for large fund formations and investments and is the largest centre for hedge funds in the world.
Back in the day, the Cayman Islands were the original offshore jurisdiction. Now, a Cayman offshore corporation is popular with large fund formations and investments, individuals seeking entry to the most compliant banks, and is the jurisdiction of choice for large offshore structures.
The Cayman Islands is the largest offshore banking centre with approximately 200 licensed banks.
Hong Kong has a favourable taxation regime, which means that correctly structured and managed Hong Kong companies can be used for international trade without paying tax in Hong Kong, provided the company does not have Hong Kong source income.
Hong Kong imposes no withholding tax, sales, tax, capital gains tax, net worth tax, or VAT and there is no tax on investment income or capital gains.
Hong Kong has long been the door to mainland China. I will recommend Hong Kong if you are looking to do business in China.
Singapore has established a thriving financial centre of international repute, serving not only its domestic economy, but also the wider Asia Pacific region. Singapore's financial centre offers a broad range of financial services including banking, insurance, investment banking and treasury services. Singapore has evolved into one of the world's premier banking centres.
Singapore is becoming increasingly important as one of the world's lowest tax havens and is keen to attract Westerners. It's a good choice for offshore company formation if you're looking to dispose of assets because there is no capital gains tax. In addition Singapore does not levy a withholding tax on dividends. Interest and royalties paid to non-residents are, however, subject to a 10% or 15% withholding tax.
The annual costs for maintaining a company in Singapore are significantly higher in comparison with other offshore jurisdictions.
The British Virgin Islands' ('BVI') remains the world's leading offshore centre for the incorporation of international business companies, with approximately 450,000 active companies currently registered in the Territory.
One of the key strengths of the BVI which explains its continued success in an increasingly crowded market for offshore incorporations is that it is considered to be a responsible, respected financial centre. The attractiveness of the BVI as providing a prompt, low-cost and flexible option to incorporate special purpose vehicles and other entities (particularly funds), has been embraced across the world, with many now referring to an offshore international business company as simply a "BVI".
Last but not least, if you are looking for a European Union Country, with easy to establish and low cost to maintain such a company, Cyprus is an ideal location to meet and exceed your needs.
The Cyprus entrepreneurial environment and supporting facilities compare favourably with those of the best-established centres in the world. The island is considered to be a primary offshore and international business centre among approximately 50 countries offering facilities for these purposes.
Cyprus is a leading financial centre with one of the lowest tax rates among European Union countries, enjoying an extensive double tax treaty network, offering excellent professional services and a transparent regulatory environment and a great place to live.
Its tax and legal systems are in full compliance with the EU and the OECD's requirements, thus resulting in Cyprus being included in the white list of international cooperative jurisdictions. Cyprus is a competitive business centre since is offering excellent professional services and is a highly reputable financial centre due to its status as a member of the EU.
With such variety of available jurisdictions to setup an offshore company, there would be more than one suitable jurisdiction to incorporate your offshore company. Attention to detail should be given in selecting the best possible choice, taking into consideration all the parameters.
Concluding this article I would like to emphasize that in business one size doesn't fit all. Each case is unique and must be treated as such.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.