Offshore Companies – legal tax optimisation.
It’s no secret that at this moment in time, it’s relatively easy to move offshore companies between destinations and to take advantage of the fact that individual countries have started to create “competitive advantages” for companies that reside in them.
In fact, it looks like some countries are targeting the creation of international agreements preventing double taxation of their residents, and others are trying tax optimisation to reduce taxation as much as possible.
The term “offshore” is used to describe a business in a country other than where management and employees are actually located. Sometimes, the term “offshore” is mistaken for “tax haven”, the majority of the population commonly uses this concept. A tax haven can also be the country where business takes place, however an offshore destination may, on the other hand, have higher taxation when it offers alternative benefits (such as higher ownership protection than guaranteed in the home country).
From the managerial planning point of view, the tax should be a factor as any other – as soon as we begin to look at taxation in this way, we can find a great deal of room to optimise and plan. Tax optimisation is perfectly legal and legitimate – which of course, is something quite different from tax avoidance, not paying taxes and tax dodging for which an individual can face prosecution.
A team of specialists are ready for all your questions!
Legal tax optimisation isn’t based on the fact that some countries “don’t talk” with each other and don’t pass on data about tax residents or deposit funds to a foreign bank that is supposed to keep banking secrecy and information about the fact that money is stored in it.
What has just been described above is a typical example of tax avoidance, which is illegal in most countries and is something that we definitely don’t recommend.
We should not be mislead by some representatives of European Bureaucracy – it is not legally possible to transfer money to an exotic country, set up a company with a fake name and hide income.
The objective of fair and effective tax planning is to find a solution whereby the advantages offered by individual countries are legitimately exploited.
Therefore, we strongly advise you not to consider offshore optimisation unless you know international law in detail and are familiar with the laws and financial regulations in the destination you’re targeting.
The benefits of using offshore companies can include:
Asset and privacy protection, protection of real ownership
(Example: Company Ltd owned by a Cypriot company whose identity is known and registered in the Commercial Register – the ownership of the Cypriot company and identity of the owner is hidden and protected).
Reducing bureaucratic burdens
Using destinations where minimum requirements for statements for the state government are placed.
For example, moving to countries where businesses are exempt from the obligation to pay income or revenue tax.
Risk distribution in business
Ownership and identity protection of the owner and director, division of ownership among several entities.
Growth in other world markets
For example, this is often the case for companies who are expanding their business into the USA.