What is an offshore company?
Offshore or non-resident company is a company that conduct an insubstantial or zero volume of business within their jurisdiction of incorporation. More specifically, offshore company has three main characteristics:
- should be registered as an entity within the jurisdiction of incorporation.
- the ‘incorporators’ should be domiciled outside of the jurisdiction of incorporation.
- the company should transact the major majority of business outside of the jurisdiction of incorporation.
- Mostly the term ‘offshore company’ is associated as means to increase tax efficiency.
Who should use an offshore company and what are most common uses and benefits of these companies?
An offshore company may be of interest to a great number of people and it may be used for various activities. Mainly for Tax mitigation and double tax avoidance, confidentiality and limiting liability:
International business and commerce can be carried out through an offshore company. It will handle purchases and sales operations, taking advantage of the fact that its profit will not be taxed, or only at a low level, depending on the jurisdiction. This type of use is particularly interesting where goods from one country are sold in another country while you yourself are based in a third country.
For the custody of movable and immovable assets such as yachts, aircrafts, houses and commercial buildings. In addition to confidentiality, the benefits and advantages include exemption from certain types of taxes (e.g. inheritance tax). It should be noted, however, that some countries do not allow the acquisition of movable/immovable property through offshore structures and therefore those wishing to form an offshore structure are advised to check with a competent authority before proceeding.
Holding intellectual property rights, royalties (a patent or trade mark) may be registered in the name of an offshore company. The company may also buy or sell this type of rights. It may also grant rights of use to third parties against payments which will be considered as revenues and will thus benefit from the low level or zero taxation of the jurisdiction in which it is registered.
For succession purposes with and offshore company that always stays afloat (provided all costs associated with running it are paid) may, in some countries, be used as a means of avoiding inheritance tax laws. With a view to optimizing inheritance tax liability, the offshore structure may also be combined with a trust or a foundation.
Listing on exchange, Stockbrokers/Forex where offshore companies are very often used for share or foreign exchange transactions. The main reasons being the anonymous nature of the transaction (the account can be opened under a company name) and the attractive fiscal conditions of offshore regulations (little or no tax levied on profits made)
For businessmen an offshore company allows to begin business activities without having to deal with the set-up of a complicated infrastructure and allows to benefit from fiscal advantages and ease of administration.
Consultants may carry on consultancy or counselling business through an offshore company which is easier to manage and will have reduced or even zero taxation depending on the jurisdiction in question.
Internet traders can use an offshore company to maintain a domain name and to manage Internet sites. An offshore company might be ideal for people whose business is on the Internet. Choosing to incorporate the registered office of your company in an offshore jurisdiction to take advantage of the various benefits offered by these jurisdictions.
Which jurisdiction should I choose for my company?
The most important factor in choosing a jurisdiction is to be sure that your company will be incorporated in a country that has reliable means of communication, political and economic stability, good reputation, favourable fees, rapid incorporation process, high level of confidentiality and sophisticated corporate laws.
All the jurisdictions we work with enjoy the above mentioned advantages. However, the right choice of jurisdiction also depends on where you live and on the business you conduct.
Does my company have to provide accounts to any tax authority?
In most jurisdictions not, which is one of the main advantages of offshore company. However, in a few select jurisdictions, such as Hong Kong, Cyprus, Gibraltar and the UK for example, it is indeed mandatory for companies to produce yearly accounts and to have them audited, and in some cases, to pay taxes (please refer to our jurisdiction comparison table).
Do I have to pay taxes on profit or interest earned by my company?
No. Most of the jurisdictions we work with do not impose taxes on profits made or interest earned by the company. Some, like Hong Kong or UK, only tax profits made within the jurisdiction, whereas Cyprus charges a 12.5% flat tax.
Do I need to come to the country of incorporation to open my offshore company?
Not at all. Our main office located in UK for practical reasons, but that does not mean that you will have to travel here to open your offshore company. Everything can be finalized by correspondence, provided that we receive all necessary KYC documentation from you.
How long will it take for me to establish the company and to receive my corporate documents?
Every jurisdiction has its own incorporation time-frame. Once the company has been incorporated, it will generally take about 2-6 days for the corporate documents to reach you.
Is it expensive to form an offshore company?
The cost of forming an offshore company varies depending on the jurisdiction you choose to incorporate and whether or not you wish our nominee director and shareholder services. After the first year and every year thereafter, there is an maintenance fee which includes annual government fees and registered office and agent fees and again use our nominee director and/or shareholder services.
What is a Shelf Company?
A shelf-company, also known as shelf-corporation or aged-corporation, is a company that has already been legally formed or approved for immediate registration, but has never traded nor engaged in any business transaction whatsoever. Since incorporation, its documents are kept motionless “on the shelf, hence the name. The company can then be sold to a person or group of people, who wish to start a company without going through all the time consuming procedures of creating a new one, which also helps to show corporate longevity in order to attract consumers or investors and gain access to corporate credit.Such companies are available for immediate purchase and can be yours within minutes, and changed to your requirements with new directors appointed and the share capital changed. The name of the company can also be changed to the name of your choice for an additional charge.
Note: shelf companies are usually more expensive than newly incorporated companies because of their age.
Can I change the name of my company?
The general process of changing company name is the same as reserving a name for a new company. In order to do so the company should check the availability of the desired name and after it must pass a special resolution in a general meeting or a special meeting of all the members (representing not less than 75% of the total voting rights of eligible shares). A signed copy of the resolution containing the new name with a copy of the amended memorandum and articles are to be sent to Companies House for approval and the public record.
A company may also file a conditional resolution stating that the company will change its name if certain conditions are satisfied. Companies House will register the conditional resolution but will not change company name and issue a certificate until written confirmation that the condition has been satisfied is received.
Can I change the director(s) of my company?
Yes. A board resolution must be drafted and signed by the existing director(s) of the company and officially filed with the company registry in the country of incorporation. The new director(s) must provide a copy of their passport, proof of permanent home address, telephone/fax number and email address together with a signed letter confirming that they wish to become a director of the company.
Can I change the shareholder(s) of my company?
Shareholders are the owners of the company, who appoint the directors to run the company on their behalf. In small corporations the shareholders are usually also the directors, although it is not a requirement. Therefore, depending on the circumstances and shareholder’s voting power the changes can be made. In case a shareholder decides to leave a company voluntarily, he can sell his shares, in turn, transferring the power of his rights and ownership to a new shareholder. Generally, shares for a private limited company can be transferred between new and existing shareholders provided that the relevant notice is issued and a Stock Transfer Form is obtained and completed. Otherwise, it is possible for the company’s articles of association or a shareholders’ agreement to establish some other system by giving the directors power to make the decisions. In this case the shareholders power to overrule the directors could be restricted, unless the director is the sole shareholder.
What happens if I do not need my company anymore?
Depending on the state of the company and its structure certain number actions would need to be considered. There are some significant differences in what is required by law to wind up a sole trader business, partnership or company.
If you have no further interest or use for your company and it is not in financial difficulty or insolvent, you may sell your shares (ownership) or you may wish to close it down (deregister) as long as it meets all the requirement s to carry on the procedure. A company ceases to exist with deregistration.
Note: You should seek your own independent professional advice to determine which option is appropriate for your company.
What is transfer of Domicile or re-domiciliation?
Re-domiciliation is the process by which a company/enterprise/ IBC moves its domicile from one jurisdiction to another by changing the country under whose laws it is registered or incorporated, while maintaining the same legal identity. Companies re-domicile for a variety of reasons, the most important being able to take advantage of more favourable tax laws or less stringent regulatory provisions, to align their place of registration with their shareholder base; or to access specialist capital markets. The ease with which re-domiciliation can take place has increased in recent years and the practice has expanded with it.
What is Notarisation, Apostille and Legalisation?
This is the attestation by a Notary Public that the signature appearing on the document is true and genuine. Notarisation is a formality often required for documents which are to be used overseas, or for certifying document copies. Once a document has been notarised by a Notary Public, and if it is to be used overseas, it may need to be apostilled.
Is a method of certifying a document for use in another country pursuant to the 1961 Hague Convention. With this certification by apostille, a document is entitled to recognition in the country of intended use, and no additional certification or legalization by the embassy or consulate of the foreign country where the document is to be used is required. An apostilled copy of the articles of incorporation or articles of organization is often required to open a bank account in another country. Note, certain countries require a certified copy of the articles of incorporation/organization with an appropriate gold seal instead of an apostilled copy.
Is the process by which the signature and seal of the notary are authenticated by the Foreign Office and the Foreign Embassy.
What is Virtual Office?
Virtual office it’s not only an image of your company, business cards, but also the trust of your clients and a sign of gravity and reliability of the company. Virtual Office is not expensive, but very necessary attribute in business. You may spend thousand of pounds advertising, but you may do it much easier and cheaper – using a Virtual Office.
Arlington Corporate and Trust Services Limited can offer you a wide range of services from:
Mail and fax forwarding service
- Telephone answering services
- Document re-mailing service
- Meeting Room Hire
- Mail and fax forwarding service
Your company will be provided with a prestigious street address and a domestic fax number.
All mail or fax correspondence addressed to the Company will be attended to and forwarded to the client. The type of forwarding (mail, courier, fax, email) and its frequency can be chosen by the client. Mail handling costs and charges (at cost) are applicable on to of the fixed annual service fee. These costs may vary, depending on the volume of correspondence.
Document re-mailing service
This service enables you to prepare and send out Your commercial documents (like invoices or commercial offers) from Your company’s office. Such documents shall be sent to us in electronic format (doc or pdf) with respective intended recipients and their postal addresses clearly indicated in the body of such documents. Unless agreed otherwise, we will not provide signatures on any such documents. Documents will be printed “as is” and mailed as indicated. We will wish to verify the contents of the documents and will not distribute documents in pre-sealed envelopes. In addition to the fixed annual service fee, handling charges will be applied to each outgoing unit of correspondence (letter or package).
Telephone answering services
A shared domestic telephone line will be used to take calls and telephone messages on behalf of Your Company. This service will provide You with a local telephone number, which You can show in Your corporate stationery. Call handling service is only available during the official business hours in the country of presence.
One telephone line will be used to provide the call handling service to a reasonable amount of unrelated companies. While the incoming call will not be automatically answered in any particular company name, if this service has been engaged, we will confirm upon request that the caller has reached the office of the particular company. We will also request the caller to state his business and leave his contact information. We will ask to take message and, if such message is provided, it will be forwarded to You electronically.
Normally, we will not engage into any interactive and detailed business communication on behalf of your company over the telephone, and we will not make any business representations or statements as regards Your company’s business. Any calls may be recorded for further reference purposes.
Meeting Room Hire
Arlington Corporate and Trust Services Ltd is also able to provide conference rooms which are available for rental on an hourly, half-day or daily basis all are supported by excellent on-site catering.
How does Bookkeeping Service work?
There are three ways in which we can assist you in relation to bookkeeping.
- When you want us to carry on all necessary work including processing of primary documentation, producing sales invoices, preparing of purchase ledgers and sales ledgers, maintaining registers of accounts etc. Additionally we compile and submit financial statements including calculation and submission of corporate tax return to the authorities.
- When you provide us with correctly processed and classified primary documentation. Additionally we compile and submit financial statements including calculation and submission of corporate tax return to the authorities.
- When we only compile and submit financial statements including calculation and submission of corporate tax return to the authorities.
What does an audit assistance service include?
- Recommendations on selection of audit firm
- Serving as an intermediary between an audit team and the client
- Explanations/recommendations re audit requirements, documentation, financial terminology
- Audit fee negotiating
What are your fees and charges?
Our arrangements are usually negotiated on a bespoke basis as we accommodate the wide range and variety of tasks we undertake for our clients. Standard scale is available upon request. However, rates would differentiate depending on the type of jurisdiction, its structures and complexity.All our fees are reviewed regularly to ensure they are competitive and fair towards both parties.
What if I have more questions?
Please give us a call so we have an opportunity to answer any questions you may have or discuss our services in more detail.