What is an offshore company ?
The establishment of offshore companies is becoming increasingly popular due to their tax advantages. What is it really about? What are the advantages? And who can set them up?
What is an offshore company?
An offshore company is a legal entity whose registered office is located in a foreign country, where the person responsible does not reside in the country and does not carry out any commercial activity. It is therefore a non-resident company and can benefit from the tax advantages offered by that foreign country. The creation of such a company is considered to be an optimisation of the tax system, although it may have an impact in certain circumstances.
Therefore, the company concerned is managed entirely outside its country of incorporation and does not use the economy or facilities of the host country. However, it may be represented by a local correspondent.
How are offshore companies different?
Offshore companies differ from other companies in their nature and the advantages they can offer, especially in terms of taxation. Indeed, no capital is required to set up an offshore company. In addition, in some jurisdictions, such as Hong Kong, offshore companies are tax-exempt since the offshore company tax reform. They are also taxed at very low rates in Poland and Bulgaria.
Administratively, the owners of offshore companies have the right to remain anonymous, and their identity cannot be determined.
Why and who can set up an offshore company?
An offshore company is ideal if a company pays too much money and cannot pay its employees enough. Indeed, in some cases, high social costs prevent companies from recruiting new employees, who are essential for the growth of the company and the development of its activities.
Offshore companies can be established mainly in the fields of telecommunications, business development, freelancing, import/export, real estate investment and consultancy. Although they are viewed with suspicion, offshore companies are not illegal.