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Offshore

 

 “…anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the Treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister is so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more that the law demands...”

 

Judge Learned Hand (US Court of Appeal) in Helvering v. Gregory
 
An offshore company can be a very practical and economic addition to a corporate or individual portfolio. Reduced tax and increased confidentiality are just two main benefits which can be achieved from utilization of an offshore company. The practical implementation of an offshore strategy will of course depend on the tax laws in force in the country where the beneficial owner resides and/or does business.

 

The common characteristics of an offshore company are low or no taxes afforded by its jurisdiction and different compliance requirements in comparison with its “onshore” counterpart. In theory, every country is offshore to the rest of the world and having a "tax free" regime is not always the primary consideration as there may be other fiscal, legal and administrative reasons for going "offshore". Surprisingly, for example, the United Kingdom, which has some of the lowest tax rates in the European Community and the highest number of double taxation treaties in the world as well as certain States in the USA, are among the largest “offshore” financial centres in the world.

 

Profits received by an offshore company will generally be taxed at the rate (which can be zero) of the jurisdiction in which it is registered and are generally beneficial in comparison with home country rates.  


Motivation for Offshore Establishment

The principal motivation behind the demand for offshore services for both individuals and companies are:

  • Tax Minimization
  • Asset Protection
  • Risk Management
  • Cost Reduction
  • Confidentiality

Corporate Characteristics

Many offshore and tax planning jurisdictions have made efforts to ensure that their company law provides the following features:

  • Limited Liability
  • Minimization of directors liability
  • Minimal or optional statutory filing obligations
  • Nominee shareholders allowed
  • Disclosure of beneficial ownership either not required or limited to special bodies, such as offshore authorities or central banks
  • Broad range or permitted company names and suffixes to denote limited liability
  • Low capital requirements
  • The ability to hold directors and/or shareholders meetings anywhere in the world
  • The absence of or the optional requirement for the audit of accounting records
  • Confidentiality as in most common law tax jurisdictions, beneficial ownership, director and shareholder details are not a matter of public record.

There are many territories to consider and we at GSL will be pleased to assist our clients in making the correct choice to suit their business needs.