Offshore companies are very versatile when it comes to their business options and areas of work. We see offshore activities in large companies, family businesses and individual clients. Clients that engage in offshore businesses operate both locally and internationally in a variety of business activities such as: art, agriculture, banking, construction, distribution, electronics, import, engineering, tourism, hotel business, manufacture, export, show business, textile industry, trade, etc. Keep on reading to discover in more detail the benefits of an offshore company in specific cases.
- International trade
International trade is particularly popular for offshore companies established in low-tax areas. Companies in this case benefit in tax savings when they perform intermediation in international transactions. When an offshore company acquires products from one country and then sells them in other, profit can be accumulated in an offshore company bank account without previous taxation of profit.
For transactions within the European Union, the majority of offshore companies are established in Great Britain. For this type of business, it is imperative to register a tax number-VAT. For example, if for a UK company the source of products is located in France and they plan to sell products in Italy, the UK offshore company has to notify the French company of its VAT number, in which case the French company will not add tax on the added value on the price. After that the UK company has to get the VAT number of an Italian company and will not have to add tax on the added value on their price. This way of tax-free business is possible only in certain types of business structures.
Creating expenses with a company established in a low-tax jurisdiction can be one of the ways to transfer funds and decrease your tax basis in a jurisdiction with otherwise high taxes.
Companies and individual users regularly use offshore companies for their investments. They use an offshore company to purchase bonds and other investment products, and property in funds is invested in banks and equities. Many clients organize their health insurance and pension rent savings over their offshore company.
Individuals with high income often use their offshore companies to invest in different markets in different countries. Through such a holding company, they achieve a high level of privacy and decrease expenses that would otherwise happen due to organizing and maintaining business entities in every individual country. In regard to that, offshore companies can also be used to plan an inheritance to cut down on the period related to proving the validity of testament.Choosing a politically and financially stable jurisdiction decreases the risk that a client can encounter in his own country or other third unverified jurisdiction.
Individuals who get a provision for jobs performed in construction, engineering, the airplane industry, finances, programming, the movie industry or other forms of show business can achieve significant savings if they establish a dislocated offshore company. Such a company can arrange jobs and perform professional services outside of the country where an individual physically resides. This way income tax will be significantly decreased.
- Holding companies
In a case of dividend payment, the offshore company will achieve significant savings because it is registered in a 0% region. For example, a company registered on Mauritius can invest in companies established in India and use the benefits of bilateral agreements signed by these two countries (that in practice means a tax free business).