Offshore companies are simply called differently in different countries. The most popular name is IBC – International Business Company. Other names You may come across are non-resident companies, exempt companies, special license companies, etc. In British Virgin Islands, after the introduction of a level zero-tax for all business in 2004, the official name for all new companies is simply a Business Company. Regardless of the name, all of those entities are independent corporate bodies or what is called "juridical persons", with their tax benefits prescribed by the actual laws of their registration country. Quite often, the name known and used in popular sources will not exactly be the name You would find in the law. For instance, regardless of the official new name "BVI Business Company", most people would still call it the old fashioned way – as International Business Company.
International Business Company
IBC is a tax neutral offshore company. Some jurisdictions have set strict regulations for the activities that these businesses can endure. Even though it is exempted from tax in the IBC incorporation state, it may require paying taxes in the country of citizenship. The company need not pay any taxes except the agent fee and registration taxes. All income earned from foreign sources are exempted from tax payment. Local sale within the domicile country is prevented. There are also numerous other benefits like the maintaining the privacy of the owner name and extensive capacity to run different businesses. It is also possible to present bearer or registered shares. The company can also set up a local registered office or agent.
Trading Offshore Company
Companies involved in import or export can establish their business as an offshore company and then deliver the products directly to the customer from the manufacturer. It gives the benefit that the profit amount remains completely tax-free. In such an enterprise it is necessary to choose the location with proper connectivity for ease of documentation and shipment clearances. With the European countries, the most popular locations sought by trading companies has been the Isle of Man and Cyprus. Enterprises in both these areas can get VAT registration. Any cross-border business transaction that is initiated by the offshore company in Cyprus can zero in on its VAT charges from either end.
Offshore Companies for Probate and Privacy
People with a high net worth have to pay huge sums in taxes for their properties in the homeland. They usually like to spread out their assets purchases across different countries. Such people bring their property purchases under a trust or an offshore holding company so that in case he dies, the property distribution will come under the governance of the state in which the business entity is registered and established. In the absence of a governing entity, the property will have to undergo the probate laws of every particular place where he/she has bought property. Such top notch players no do not like others to know about their owning. Offshore companies come with a good deal of privacy and reduced legal proceedings and fees.
A person who owns property and businesses will face issues of inheritance taxes when he dies. When the ownership and business management comes under an offshore trust, there would be no tax implications on the property inherited.
Shipping Companies
Tax implications on shipping ventures can be cleanly avoided. Every ship charter and other profit inducing activities are carried out free of taxation. According to the rules set by the government of several states, the offshore shipping companies are liable to follow the rules according to the country whose flag sways on the mast of the ship. The most loved jurisdictions for such overseas shipping companies has been mostly Panama, Isle of Man, Gibraltar, BVI, Delaware, and Cyprus.
Company Offering Professional Services
Professionals in various fields like artists, computer, movie and other allied services lose a good deal of money they earn as taxes. The amount that is spent on tax may be huge for people working day and night, and they can save their hard earned money by establishing and managing all services through a professional offshore company. It works like a personal service company. Any income that is made from the professional entity can be reinvested in the same area of jurisdiction which will enable for further tax deductions. The professional can sell his service based on his expertise, even outside his country of residence and that fees that come in is clubbed through the foreign enterprise. This helps to reduce tax quickly.
Patent and Copyright Management Company
In typical cases, the original copyright holders have the sole rights to the patent and there no sub-licensing powers given to the partners who buy the license. By using an intermediate patent offshore management agency, the company can also sub-license the patent in addition to the right to use the copyright. Once the foreign company gains the copyright, it can open up requests for sub-license to others who are willing to use the patent from around the world. Such offshore patent companies try to acquire the license at the patent pending stage as the initial capital investment would go high once the patent receives recognition. The benefit of such a foreign establishment is that if a person plans to make some major invention, he initially sets up an offshore company and transfers the patent rights to that company. So any revenue that comes in the form of royalties is tax-free as it is in the name of the offshore company.
Offshore companies are being set up for different purposes, and each one has its purpose. There are no specific criteria to define a certain enterprise as more beneficial. There have been some prime areas recognized as the best for setting up and managing these offshore companies based in the niche area of operation. An experienced attorney who is well versed in foreign business managements can provide input based on the jurisdiction of the state.
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