Offshore Company Formations

 

Both companies and individuals can form offshore businesses. Offshore companies can offer advantages over their onshore equivalents in the following areas:

• Lower tax rates
• Easier company reporting requirements
• Security against creditors
• The protection of ones identity
• Avoid local investing restrictions

Using offshore companies for trading

Many companies which trade overseas have offshore bases. These businesses can be large corporations and owner managed smaller entities. The primary reasons for doing this are the large tax savings which are available.

The following list compares both onshore and offshore companies:

	UK Limited Companies	Offshore Companies
Formation costs	From £24.99	From £320
Company formation time	Typical company formations take 3 hours	Typical offshore company formations take one - two days
Company officers requirements	Private limited companies have few restrictions. Public limited companies has more restrictions, including a minimum of two directors and qualified company secretary.	Can be a single director
Areas of trade	Most of general but can be restricted in the case of companies limited by guarantee.	No restriction on trading areas
Company books and records	Must keep proper accounting records and statutory books for public inspection	Very often there would be no requirements to maintain records or books
Tax charged at	Varies between 23.75% to 35.75%	Frequently no tax payable
Protection of identity	Would have to use nominee directors and secretaries	Can range from partial disclosure to none disclosure requirement at all.

The benefits of offshore companies in protecting directors' identities.

Sometimes trading is not the prime purpose of forming an offshore company. Because of local investment restrictions or risk of actions from creditors, directors may wish to keep their identities secret.

Offshore companies are similar to UK limited companies in that they are able to own properties and hold cash, shares, and other items in their own right. Thus a person may use their company to make the various purchases and then be protected by the fact that no one can discover that the company is owned by that individual. Different offshore jurisdictions provide different levels of privacy.

Offshore companies for tax savings

The zero or minimal tax rates applicable to offshore companies makes them very attractive to profitable businesses. The prospective of retaining all of the income earned compared to other countries where the government would levy a tax on the income has led to some businesses opening offshore branches and using them as trading vehicles.

In additional to corporation tax savings, offshore companies usually enjoy tax free capital gains and inheritance charges. The suitability of offshore companies to a particular individual can only be ascertained after a reasonable detailed analysis of their financial situation, their future plans and their goals. Having said this the attraction of offshore companies are clear.

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