Which offshore company to choose and why?

Which offshore company to choose and why?

The laws that allow the incorporation of offshore companies, i.e. companies registered in a tax haven that allows to operate at zero taxes, are almost all inspired (I’d say copied) by the law of Delaware, United States and almost all, amended in the last years to comply with national and international laws against money laundering and the financing of terrorist or criminal activities. Among the few jurisdictions that haven’t changed the laws, there is precisely Delaware, but we will see later why these companies are barely usable.

On the Web, you can find hundreds of offers from offshore companies with a variety of prices, some with hidden prices, others with balanced prices (if you’d like to see ours, click here), but incorporating a company isn’t a walk (picnic) and thus, essential to be guided, with the right procedure, before you can choose. We’ve been offshore specialists since 1992 and with our texts, we always do as much to advise you not just on how to sell products. For this reason it’s important to read this article and others that you can find on the blog and frequently asked questions. There will surely be doubts and we’re at your disposal to answer you by email. If you want a telephone consultation, you have two options: Request and pay for the service of your choice and benefit from a free telephone consultation with the lawyer Caporaso, or request and pay only the consultation.

What does "offshore company" mean?

It’s a company registered in a country, usually abroad (offshore), considered a tax haven which, in order to develop its economy, uses special legislation that does not provide taxes for activities carried out outside the national territory. Offshore companies are generally easy to register, have few administrative or tax obligations and allow some anonymity. In Addition, these jurisdictions in which offshore companies are registered are not very collaborative and hardly respond to requests from foreign courts. The creation of an offshore company is a simple process that takes only a few days. It’s not necessary to open offices or hire staff, although a certain presence (Virtual Office and mobile phone line) gives confidence to banks and customers. In the event that the owner does not wish to appear, many law firms (including ours) provides a fiduciary shareholder, in addition to the Trustees, which is customary. However, it’s necessary to identify the client with a KYC (know your customer) form, a telephone conversation and the sending of an identity card, electricity, water bill, telephone or others to establish his place of residence. Customers can also be verified, at our discretion, in the World Check System.

What are offshore companies for?

Contrary to what the media and some governments say, offshore companies are legal, but not designed to conceal illegal activities or as a kind of pirate flag. In some cases, authorized or unregulated activities in a given country may be carried out while they are illegal or strictly regulated in other countries.

Offshore companies are generally a valuable tool to:

  1. Open bank accounts abroad and/or invest on the stock exchange, be able to conceal the real beneficiary if necessary (divorce, seizure of assets, etc.);
  2. Participate in other companies by concealing real partners for confidentiality reasons.
  3. Buy and sell products to your national company or other companies, by billing the desired price to be competitive;
  4. Charge services without paying taxes;
  5. Protect your assets in Italy or abroad;
  6. Avoiding judicial seizures;
  7. Avoid inheritance rights and secure a better future for your family;
  8. Create an economical alternative in total anonymity;
  9. Reduce the tax burden;
  10. Invest abroad.

It’s important to keep in mind that in some countries, hiding assets or bank assets from tax authorities is a crime: If you reside in one of these countries (such as Spain), you must enter the shares or bank accounts in the tax return. In this case, we recommend relocating your business by moving abroad. Panama offers friendly countries (including Italy) a permanent residence obtained at low cost and within a short period of time.

How does an offshore company operate?

Like any business, but almost without bureaucracy. Even if you’re asked to keep the accounts, no one will ask or deposit them, much or less someone will ask you how you spent the money earned. You can open the company in any jurisdiction of your choice and the account in another country, including Europe. In practice, there are no bureaucratic requirements, with the exception of those that can be requested by the banks as well as the annual state tax and resident agent payment. If you have partners, respect the rules, but it’s necessary to explain everything to the lawyer, before the creation, so that all members can be protected.

Which jurisdiction to use for your offshore company?

In summary, we could say that all offshore companies are equal. So why choose one jurisdiction over another? For various reasons, the main ones are:

  1. Language of the Constitution: This factor could save on the future costs of legal translations, depending on the area where the business will operate.
  2. Approval of jurisdiction by banks: Banks pose many problems with African jurisdictions (Liberia and Seychelles) and with those in the Middle East (Lebanon and the Arab Emirates) that are considered to be at greatest risk due to the origin of capitals. But the companies that the banks least like are those of the United States, because if the bank does not inform the authorities of the financial assets of the citizen, resident or the American company, it risks receiving millions of fines.  
  3. Approval of the jurisdiction by clients: It’s possible that some customers do not like to receive invoices and make payments to offshore companies for the fear of controls by tax authorities. If you can’t convince your customers, then you can request a written request from a reputable accountant and send it to him.
  4. Related Services: To operate a company, it’s not only necessary to write the Constitutional Act: once the legal existence of the company has been demonstrated, it will be necessary to give life to an office, staff, telephones, website, etc., so that both banks as well as customers knows where to find it. Therefore, establishing a company on a small Caribbean island where communications are poor and requesting an additional service they'll try to “pluck it." It can be fatal. The added value of a company resides in the services and solutions that the agent can provide. That is why we recommend Panama: We’re in Panama, we’re from Panama and have been operating since 1992 in Panama.
  5. We don’t advise companies in Liberia, Seychelles, most Caribbean Islands, United Arab Emirates and many offshore jurisdictions that are generally more bureaucratic, do not offer good services or communications. In any case, if you need it, for a particular reason, we can help you, but we do not guarantee services such as phone, address, accounting, etc.

Offshore company of Panama

Panamanian companies have their legal base in one of the oldest offshore laws dating from 1932. Although the bearer’s shares were removed a few years ago, in practice, shareholders are anonymous because the only person to whom their data belongs is the resident agent, the lawyer who constitutes the company. The choice of your trusted professional is therefore of fundamental importance. Panamanian companies that do not operate in the country are exempt from taxes, not required to submit balance sheets (even if they have to declare where they are kept) and/or tax declarations and may be administered from anywhere in the world. They must have a minimum of 3 and a maximum of 10 directors who may be individuals or companies. If the company is managed by another company, it gives the impression (especially to the banks) of wanting to hide something; So we do not recommend this. However, there is no need to worry because the administrators, if you like, we provide them included in the price. The only real compliance is the payment of an annual rate (single rate) and a resident agent (US) for a total amount of 600 euros per year, from the anniversary date of the company’s registration (calendar year).

Nevis offshore company

Nevis is one of the two islands that comprise the Central American Caribbean State. Along with St. Kitts, another important island, they are part of the Commonwealth Territory (Commonwealth of England), ruled by the Queen of England through special representatives named in the place. For its taxation system is considered a tax haven, however, it’s much more famous for its nautical record, which has a few thousand annual record. Nevis is a Government that in recent years, has put in place a strong tax competition, which offers fertile ground for the creation of offshore companies. It’s one of the states with the highest education rate, associated with an almost non-existent crime and an important insertion in the first positions of the UN’s classification with respect to individual freedoms. Nevis is a low-tax haven offering a zero tax regime for foreign earnings, which protects the privacy of every inhabitant and investor, both national and foreign. Regulated from the legislative point of view by the Anglo-Saxon common law, it has refined over the years its laws by allowing Nevis offshore companies to exploit a favorable tax system, for example to pay no taxes, even on profits generated abroad by companies registered in its national territory. Nevis has entered heavily into the global panorama of tax competition, for the ease of creating an offshore company, getting more and more success among the economic operators, also because of the characteristics related to companies and legal obligations for the start-up of Nevis offshore companies. There are three possible types of offshore companies in the Nevis region: Corporation, IBC and LLC. These three possibilities have common advantages, which are not often found in other tax havens. In fact, the complex panorama of international tax competition has permitted  Nevis not to force offshore companies to pay social capital; They are entitled to issue bearer shares without compulsory formalities or notarized deeds; whereas there is no formal obligation to present accounting books and financial statements of the type of company, which is fully comparable for the others, to European companies; even this linearity and ease of general control of offshore company makes the small State of Nevis a great place to protect your capital from the absurd claims of large international depositors, which maintains a high tax burden and unbearable on citizens. The possibility for Nevis to carry out a firm action in terms of tax competition is born and develops through the incorporation of the norms of the English law and local regulation in the economic milieu. In recent years, Nevis has signed several bilateral agreements against double taxation, notably with the major western capitalist powers: Denmark, Sweden, Norway, United States and UK, making the small Caribbean country one of the few countries in commercial and legal entities with their own tax competitors. Therefore, in the global panorama of tax rivalries, we can add an additional jurisdiction where it’s possible, safely, to incorporate or transfer an offshore company: A tax haven that, through strict legislation in terms of privacy and a simple tax system, is completely included in the list of States that exert pressure on large depositors, which makes tax competition more equitable.

The Nevis companies also have the habit of creating twin companies (of the same name) with companies in Delaware or other States of the United States considered prestigious, but with which it’s almost impossible to open banks accounts abroad.   

Delaware companies, United States

Delaware LLC companies and other States, such as Nevada, offer the advantage of not being blacklisted. Therefore, an American company, for example, Delaware LLC, may charge in Italy or Europe without any problems. With a series of subterfuges, the Delaware Company becomes totally tax-free. The disadvantage of Delaware LLC is that many offshore banks no longer open accounts to American companies.

Anglo-Saxon legislation, in a similar way between the U.S, United Kingdom and the former colonies, offers certain types of corporate structures with the benefit of the tax exemption, granted by the laws of Anglo-Saxon companies, to companies that operates outside their social residence. With such a structure, we can fully enjoy, a zero profit tax system, without incurring the problems and typical limitations of companies established in offshore jurisdictions, which offers other benefits, although more subject to controls and inspections, and sometimes not welcome in financial institutions.

The State of Delaware does not apply state taxes to companies operating outside its territory and which are non-resident shareholders in the United States, in the case of limited liability companies (therefore, other forms of companies such as the company, etc. are excluded), they must not make a tax return to the state. However, keep in mind that if you open a bank account in the United States or have business with American companies, Delaware LLC becomes a resident and must file a federal income tax return. Keep in mind that the United States is a signatory to a treaty for the exchange of information with the European Union and most countries. Therefore, if you do not configure Delaware LLC anonymously, the information you may provide to a U.S. registered agent is subject to disclosure (this doesn’t happen anonymously with us).

The deadlines for incorporation into Delaware ranges from 7 to 10 days from the receipt of the transfer to the sending of the Apostille documents.

You should know that when you’re working with a LLC company located in Delaware or another U.S. State. with exempt taxes, the costs of Apostille documents required after the Constitution are extremely costly. In addition, many foreign banks do not open accounts to American companies.

It’s often necessary to combine a twin company from Nevis with a Delaware company to be able to operate fully.

Consult us before requesting for a U.S. LLC. With a brief telephone consultation, you will avoid mistakes that could cost you more in the future.

What are the advantages of opening a branch of an offshore company in my country?

Firstly, it’s important to bear in mind that, in this case, the branch is subject to the controls and laws of your country, as in the case of a normal business. But get a SA at just over 2000 euros. Foreign law firms can register in almost all countries.

In most countries, there are two different solutions: The representative office and the identification of the company in public registers. In the first case, the foreign company only opens a tax code or number and position of VAT, etc. acting as the representative office of the foreign company: In this case, the accounting requirements are very simple; only an opening communication on stamped paper must be presented to the local Chamber of Commerce when this office is opened. In some cases, it’s also necessary to designate a resident tax representative. In the second case, the foreign company, while retaining its name and extension (LTD, LLC, Corp., etc.), becomes a SA with all the obligations it entails. The company must appoint a Director in the country, while remaining subject to foreign law on bankruptcy or failures. The role of the tax representative is limited according to the needs of the partners.

When can one open a branch of an offshore company in a third country?

The use of offshore companies to operate in certain countries with a high tax burden has become problematic, as it generates some distrust i.e. sometimes difficult to counteract. In such cases, it’s necessary to use a branch of an offshore company established in a country not listed on the blacklist. Generally, we often prefer this structure to the European subsidiary, which implies many bureaucratic obligations. The advantages of a branch in a non-European country, which isn’t on the blacklist, is not expensive and bureaucratic requirements are minimal. The administrator, a certificate from the chamber is provided and all documents are apostilled.

We can offer you the mailing address and the VoIP telephone number service.

What do you obtain after applying for an offshore company?

  1. The status of the company which is the constituent document of the company, in the language of the country in which it was created and apostilled. Some banks may also request additional documents which must be ordered separately.
  2. For Panamanian companies where subscribers are entitled to 1% of the shares, the subscription transfer (transfer of members) is provided. This document, which should not generally be presented to the banks, is a document signed by the subscribers that guarantees that you own 100%.
  3. Power of Attoney Apostilled, is the general power that allows you to operate anonymously on behalf of the company, if you have chosen a designated administrator. This Plenipotentiary power must be used with caution because, when not justified, it may suggest to the tax authorities that the holder is the real beneficiary of the company; Therefore, it’s not advisable to use it in the country of residence if it has not declared the company. This power must be presented to the bank where the account will be opened, on the understanding that if the bank is domiciled in a tax haven that does not agree with its country of residence, it will be covered (at least in part) by bank secrecy. For contracts signing, you can appeal to our directors, because in case of litigation, the company will ask or respond and not the natural person. To buy or sell a property, in the country where you live, name an accountant or a trusted lawyer as a representative with limited purchasing powers, while for sales you can get a specific power from time to time (this is a little more expensive, but safer to keep anonymity). If you open a branch, we will prepare a separate power of Attorney for the tax representative. Remember that lawyers have the privilege of secrecy between the lawyer and the client, unlike accountants. If you use a third person, pay attention to your choice.
  4. The annual tax paid to the Government shall be included for the first year or, in the case of Anglo-Saxon companies, for the remaining part of the calendar year.
  5. Registered shares guaranteeing the ownership of the company.

Note: The Apostilling of each document consists in certifying the authenticity of the signature and the legal quality of the official who signed the acts, certificates, trained in the Italian State and the value abroad, which occur in the countries that have acceded to the Hague Convention.

The Hague Convention of October 5, 1961.

Law of 20 December 1966, n. 1253

Countries that have not acceded to the Vienna Convention needs the documents to be sealed by their Embassy, consulate or in a friendly country. Therefore, the cost of this service may vary depending on the country. Europe has acceded to the Hague Convention.

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The views and opinions expressed in the web site are subject to change based on the laws, market and other conditions. The information provided does not constitute legal advice and it should not be relied on as such. All material(s) have been obtained from sources believed to be reliable, but its accuracy at the time you read is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information.




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