The term “Offshore company” or simply “Offshore company formation” is frequently used in two different and distinct ways. A typical offshore company formation involves an individual, or a group of individuals, establishing an offshore company or corporation in a country that does not provide corporate taxation or the other privileges normally associated with domiciled citizens of that country. An offshore company can be a direct reference to: an individual who owns a private jet, a business with a warehouse in Spain, a trust fund managed by an attorney in Jersey or even an offshore bank account(s). Each of these examples illustrates how an individual or an entity can establish an offshore company, obtain the services of a qualified lawyer, transfer assets, create a nominee account and make use of various other features available to make their offshore company more effective.
Individuals and companies use offshore company formations to create legal offshore companies for a variety of reasons. Individuals often open offshore company names as a vehicle to obtain beneficial investments. A prime example of this would be the purchase of a property in an overseas country. Another frequent use is to conduct trade between countries or between states, or between different parts of the world. Some companies use offshore company formations to create a shield for their assets in the event of bankruptcy or fraud. In addition, offshore company formations have become a popular choice for individuals and companies that wish to protect their wealth, protect assets from the jurisdiction of creditors and or law enforcement agencies, or as part of a strategic investment move オフショア開発.
As a general rule, most offshore companies are limited in what they are able to handle and where they can invest their assets. Usually a country’s laws do not allow individuals or entities to act as trustees for another individual or entity. Additionally, most offshore companies are not able to purchase or sell shares of stock in another jurisdiction. In the case of the latter issue, a company normally appoints a nominee service to act as a trustee on its behalf and hold all share sales and dividends.
In some jurisdictions, some taxes are levied on business outside the country in which the corporation operates. However, most countries do not have corporate tax. In an effort to attract more foreign investment, many governments have adopted a system of direct taxation. This is when a portion of the profits from the corporation are collected and placed in a special account and given to the government. In theory, this should generate a higher amount of profit for the parent company since the parent company should be collecting a profit. Unfortunately, this strategy rarely works because most foreign investors prefer to invest in a second country regardless of the possibility of paying taxes on the profits.
As an alternative to direct taxation, many jurisdictions have implemented a system of indirect taxation. This means that the profits from the corporation are not directly taken out of the shareholders’ accounts but are instead passed down through the operation of a system of taxation. This is often done through an income-tax system, which is based upon a national source of income. For example, corporate income derived from sources within a particular state, whether it is from a city, state, or country and which are only taxable once per year would not be taxable for corporate citizens of that jurisdiction unless they have been resident in that state for six consecutive months.
Another option that has become popular with foreign investors is to use offshore mutual funds. Similar in many ways to offshore bank accounts, mutual funds can be set up in a foreign jurisdiction and used to accumulate funds for the purpose of investing in stocks and other assets. These transactions are not taxable by the countries where they are made and, thus, provide a way for individuals to save both money and time while gaining access to an international investment community. Another option that is available to foreign investors is to set up a brokerage account. This allows individuals to manage their own investment portfolio without having to maintain a bank account in the country where they may have company investments.