24 May Benefits of having an offshore company
With an offshore company, it is possible to have a secure number of advantages. Opening an operation in your overseas market is generally the most costly and time-consuming way to enter it, but the rewards can be great.
Local rules may restrict your options, but the three main ways to open an overseas operation are to set up:
A local office
Which has to have one or more of your employees physically there. Benefits: A local office gives you the chance to identify and enjoy opportunities in your target market. It also gives you the flexibility to control your operation, and expand if necessary. Your customers will take you more if you have a local base. This is particularly true if your products need specialist after-sales service.
A locally registered subsidiary company
A new business in the target market, subject to local company, employment and tax rules, and generally hiring some local staff.
Benefits: A local subsidiary company offers limited liability if things go wrong. It is also easier to expand than a local office.
A joint venture
Partnering with a local business to set up a new business with ownership shared between you.
Benefits: if you use a joint venture, you will be able to share the risk. You will also enjoy your partner’s local knowledge and reputation.
There are also other benefits…
1. Shipping Companies
The use of offshore shipping companies can drop direct or indirect taxation on shipping. Shipping companies may own ships, the profits from which activities can be accumulated tax-free. There are some tax and legal requirements to be followed.
2. Low Capital Requirements
Offshore companies usually provide flexibility with the structuring of the capital of the company. This often includes no minimum paid up capital.
3. Professional Services
Individuals who receive large fees in respect of their professional services in capacities such as designers, consultants, authors or entertainers, may assign or contract with an offshore company the right to receive those fees. The offshore employment company may not have to pay tax on its profits which can be invested again in a tax-free climate to generate further income from the offshore company.
4. Copyright and Royalty Companies
An offshore company can buy the right to use a copyright, trademark or known by its original holders with a sublicense. With the ideal property right, the offshore company can then enter into an agreement with licensees around the world who would be able to achieve the ideal property right in various countries. Often royalties paid out of a high tax area attract withholding taxes at source. Often an interposing holding company may allow a reduction in the rate of tax withheld.
5. Asset protection
Offshore companies are often ideal vehicles for holding global assets of all kinds due to strong laws in the jurisdiction of the formation around protection of assets held by the company.
In conclusion, there are important legal and financial implications involved in setting up an overseas business. You should take advice from your accountant or business adviser.
ATPC is a network of professionals that helps companies and individuals to achieve their goals. We have experts in many fields: finance, law & legislations, bookkeeping, accounting, etc.
Feel free to contact us if you need any help or support for you and your business.
Malta: (+356) 2713 4281
Italy: (+39) 39279 82389