Offshore company formation refers to the incorporation of a legal entity in any given offshore jurisdiction. The registration procedure is mainly the same as the one that investors must follow in any country where commercial law regulates corporate structures.
However, the exact offshore company registration procedure can vary from one country to another, on matters such as: 1) capital requirements, 2) number of required investors, 3) residency requirements, 4) available legal entities, etc.
In all cases, investors will have the obligation to set up an offshore bank account for their newly founded company and here, our team of consultants can be of assistance.
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What are the main steps for offshore company formation?
The basic aspects investors should be aware of refer to the incorporation papers of a company. Offshore company setup implies that the investors will choose a trading name that is available on the respective territory, and if the name is available, the legal entity will be issued with a certificate of registration.
Of course, the investors will have to decide on the legal entity of choice based on the factors mentioned above and once the decision is taken, it is required to draw and sign the statutory documents of the legal entity.
|What is offshore company formation||Offshore company formation simply refers to the process of incorporating a business in a country outside the one where the investor has his or her residency, and which provides very attractive tax advantages (in the form of many tax exemptions).|
Basic steps for offshore incorporation
– the incorporation starts by preparing the documentation required for company registration,
– selecting the suitable company type,
– opening a corporate bank account,
– submitting the minimum capital (where applicable),
– assigning a business address for the legal entity,
– registering with the local institutions,
– obtaining permits and licenses (required in certain cases/jurisdictions),
– hiring employees.
Top offshore jurisdictions
– the Cayman Islands,
– the British Virgin Islands, etc.
|Countries with lowest incorporation costs and fees||Some of the lowest incorporation costs are available in offshore jurisdictions such as Belize and Seychelles.|
|Offshore jurisdictions with highest registration costs||
The process of offshore company formation tends to cost more in countries such as Dubai or the Cayman Islands.
|The average duration of the incorporation process||
In most countries, the incorporation procedure can be completed in approximately 1 week.
|Setting up a corporate bank account (yes/no)||
|Duration of the bank account set up formalities||
Around 3-4 weeks.
|Offshore jurisdictions with the shortest incorporation||
In Panama and Seychelles, the incorporation can be completed in 1-3 business days.
|Offshore jurisdictions with the longest incorporation process||Longer registration procedures can be observed in countries such as Malaysia or Switzerland (7-10 business days).|
|The main registration differences from one offshore to another||
Differences regarding incorporation in various offshore countries can appear related to the following:
– the company types,
– the conditions investors must fulfill,
– the capital requirements,
– the types of allowed activities,
– bthe minimum number of investors,
|Tax advantages of offshore jurisdictions||
Many offshore jurisdictions do not apply taxes such as:
– withholding taxes on interest, dividends, royalties,
– they don’t charge the corporate income tax,
– they don’t charge the wealth tax,
– for instance, in the Cayman Islands the corporate income tax, the personal income tax, the VAT, the withholding tax, the wealth tax, the inheritance tax are not applicable.
|Lowest incorporation cost for offshore company registration||
$500-$700 (in countries such as Belize or Seychelles).
|Requirement to set up a business address in an offshore (yes/no)||
|Incorporation services provided by our team||
– our consultants can help investors in choosing a suitable offshore jurisdiction,
– assist in the registration formalities,
– provide legal representation in front of local authorities,
– assist in immigration formalities,
– find a suitable office,
– provide post-incorporation services (accounting, tax filing, etc.).
The offshore company registration can be done with the assistance of our team of consultants, as foreign investors are generally not required to participate in person in the incorporation formalities.
For this, foreign businessmen will have to sign a power of attorney, that will be used for the registration of the offshore company, as well as for other related procedures, such as the set up of an offshore bank account.
A necessary component of the process of offshore company formation is to have a registered address for the legal entity. In most of the offshore jurisdictions, it is also required to appoint nominee directors.
What is the cost of offshore company formation?
Foreign investors choose offshore jurisdictions for setting up a business for the many tax benefits available for companies. The advantages of offshore jurisdictions are mainly given by the tax exemptions which are generally not applicable in onshore countries.
However, in order to start the offshore company setup, the investors will have to prepare a minimum budget, similar with the one required in onshore locations.
The costs and fees will vary depending on the country where the investors will set up their business. In the list below, you can discover some of these costs:
- a cost below $1,000 can apply in offshore jurisdictions such as Belize or Seychelles, where the costs start from $890 and $950 respectively;
- costs above $ 1,000 are available in jurisdictions such as the British Virgin Islands (BVI), Panama or St. Kitts and Nevis, where the prices start from $1,290, $1,490 and $1,790 respectively;
- offshore company formation prices in Dubai start from $3,000;
- higher costs, of minimum $5,000, can apply in the Cayman Islands, which is a very popular destination for offshore incorporation.
In general, investors should prepare a minimum budget of at least $2,000 for offshore company registration. With regards to the duration of the incorporation process, one must know that it takes approximately 1 week.
However, this only refers to the basic steps for company formation setup, as other procedures can take a longer period of time. For instance, all the formalities required for the setup of an offshore bank account can take up to 4 weeks.
Depending on the jurisdiction and the field of activity, investors will also be required to obtain licenses and permits during the process of offshore company formation, and this can also take up to several weeks.
We invite you to watch a short video on the process of offshore company formation:
What is the duration of the offshore company incorporation process?
The time required for the process of offshore company incorporation varies from one country to another. In general, it takes a shorter period of time compared to the procedures imposed by onshore jurisdictions.
For offshore businesses, the procedure can be completed in a matter of days, while the standard registration procedure can take several weeks. In the list below, you can learn about the duration process in several offshore countries:
- in Seychelles, the incorporation can be completed in approximately 2-3 business days;
- in Panama or Hong Kong, the procedure can be completed in 1-2 business days;
- the offshore incorporation in Singapore can take up to 5 business days;
- the procedure can take longer, more than 1 week, in Malaysia, where an offshore legal entity can be registered in 7 to 10 business days;
- Switzerland also has a longer registration process compared to many offshore jurisdictions, as a business can be incorporated in 10-12 days.
Although the offshore incorporation procedure is basically the same in all countries, certain differences can appear, as each country has its own corporate laws and tax systems.
In most cases, the main differences appear in the required capital and in the types of taxes foreign investors have to pay. Therefore, although incorporating an offshore business can have many tax advantages, some countries will require a lower initial investment than others.
For instance, investors who are seeking for the cheapest offshore company formation destination can look at the overall tax burden. While some jurisdictions do not apply any type of corporate taxes, some charge specific taxes in certain conditions, while others apply them in all cases.
Jurisdictions such as Belize, British Virgin Islands, Seychelles, the Cayman Islands and so on, which are known as top destinations for offshore incorporation, usually charge a tax of 0% to businesses that operate as offshore companies.
Other countries, such as Switzerland or Singapore, will charge offshore businesses for their income.
In determining which is the cheapest offshore company formation destination you also have to take into consideration the capital requirement imposed by the law of these jurisdictions. While the country may not apply corporate taxes, investors may have to prepare an initial inflow of capital for the same jurisdiction.
Therefore, our offshore company formation services are designed in such a way that foreign investors will understand the real image of an initial investment that has to be made in a certain jurisdiction of choice.
In some cases, immigration procedures must be completed prior to the arrival in the country and this implies additional time necessary for actually starting the investment, but also certain fees and taxes for the issuance of the required paperwork (visas, business permits, etc.).
To these, investors must calculate the taxes and fees charged for the registration of the company and any other obligations that the offshore company may have to comply with – such as hiring employees, assigning an official place of business (the latter is a legal requirement in United Arab Emirates).
Therefore, costs with employment must be calculated, but also the costs of running an office in the respective jurisdiction. As such, you can receive our offshore company formation services, which include information related to any of the above.
We can also help you in the process of offshore company formation with bank account. Having an offshore bank account is necessary for all companies, including offshore companies.
However, the procedure for offshore company formation with bank account can slightly vary from one country to another and here, our consultants can be of help.
Why open an offshore company in Seychelles?
Each offshore jurisdiction provides certain advantages and the decision to opt for offshore company formation in a certain country should be based on the characteristics of that country, along with the investment preferences of the investor.
Seychelles is one of the main destinations for offshore incorporation given that the country has a very simple incorporation procedure, but it also offers one of the most tax advantageous systems. Seychelles is comprised of 115 islands and it had become an independent country in 1976.
Since then, it became one of the top financial centers in Africa. Some of the main reasons for incorporating here are:
- very rapid incorporation process – it can take around 24 hours to incorporate a legal entity;
- investors benefit from privacy guaranteed by the law, and only few corporate details are available on the public records;
- many tax exemptions, which are applied as long as the business incorporated in Seychelles does not develop any business activities related to Seychelles;
- top quality banking services – whether you will open an offshore bank account or an offshore merchant account, you will benefit from modern banking services;
- very simple requirements for businesses – companies are not required to file for taxation and they need to pay a yearly license fee, charged at a fixed rate of $100.
You must be aware of the fact that although the incorporation procedure is very easy and it is completed in a matter of days, when you will open an offshore bank account, more time will be required, as the bank account procedures can take around 3 weeks in Seychelles.
In general, the set up of an offshore bank account takes minimum 2 weeks, regardless of the country of choice.
Why open a business in Belize?
Another very popular destination for offshore company formation is Belize. Belize provides similar conditions as the ones available in Seychelles and it is also one of the offshore jurisdictions where the overall registration costs are low.
For company registration, some of the conditions are presented below:
- investors do not have to meet any residency requirements;
- the company can be set up with just 1 shareholder;
- there are no reporting requirements;
- the incorporation procedure can be completed in a matter of hours, maximum 1 day;
- the investor can be a natural person or a legal entity;
- there aren’t any restrictions on the ownership of the company.
For a company registered in Belize, the investors must also open an offshore account, this being one of the minimum requirements imposed by the laws of each country, when starting the incorporation process.
Regarding this matter, you must know that when you will open an offshore bank account in Belize, the following documents will be necessary:
- a notarized document of the incorporation papers of the company incorporated in Belize;
- the notarized certificate of incorporation;
- the completed application form provided by the bank;
- notarized copy of the passport of the shareholder;
- information on the residency of the applicant.
If you wish to set up an e-commerce business, you will need an offshore merchant account. Our team can help you choose a merchant account that is most suitable for your business. There are various fees that are imposed based on the business activity of the company.
It must be noted that the merchant account providers will accept high-risk businesses, which are generally not accepted by the bank. You can rely on our team to get in touch with the best merchant account providers, that will offer the services that are most suited for your business activities.
For more details, we invite you to contact our specialists, who can help you incorporate a business in an offshore jurisdiction.