Each offshore financial centre has its own advantages and disadvantages. At Saveontax we will attempt to simplify this decision for you by pointing out the salient points relating to each offshore company and financial centre.
For entrepreneurs, contractors, consultants and smaller companies the status of the offshore centre may not be of paramount importance and prices and on-going annual fees generally increase according to financial reputation. The Z/Yen Group carry out an annual analysis of financial centres which include onshore and offshore financial centres taking into account factors such as connectivity, speciality and diversity. New York and London usually are placed at number one an two and in relation to offshore centres and the following jurisdictions are also highly rated:
Hong Kong, Singapore, Luxembourg and Malta (onshore, where corporation tax is levied but zero rated for trading outside the jurisdiction)
Jersey and Guernsey (most highly rated zero tax jurisdictions)
Gibraltar, Bahamas and Mauritius (good reputation and governance) perceived offshore
Cayman Islands and BVI (ranked highly due to large corporate offshore funds business).
Nevis not ranked but is a similar Caribbean jurisdiction with great asset protection laws.
From a pricing and due diligence perspective Jersey and Guernsey can be ruled out as cost effective choices for most clients as these offshore centres are mainly used by Banks, Insurance Companies and Ultra High Net Worth persons where the due diligence process for account opening is rigorous and annual operational costs very high. This leaves Malta and Gibraltar as very credible and more affordable choices in Europe. Generally, if VAT intergroup trading is required then Malta is an excellent choice with an effective 5% corporation tax rate. Gibraltar non resident companies are not liable to pay tax in Gibraltar if they trade and bank outside the territory. On 21 November Gibraltar signed an amended Tax Information Exchange Agreement (TIEA) with the UK Treasury allowing for the comprehensive automatic and spontaneous exchange of information. Similar agreement have been signed by Jersey, Guernsey, Isle of Man and BVI. If you are a UK resident and anonymity is important then other jurisdictions should be considered.
One of the other contributing factors to choose the best place to open an offshore company is the location. The location is one which suits your requirements and can be set up at a reasonable price. It doesn't have to be in a place near to where you live but working in the same time zone is an advantage and this may be a factor depending on your type of business. You may require to hold board meetings or visit the bank in the offshore centre. Outside Europe, Hong Kong, Mauritius and Nevis are our preferred jurisdictions.
For example, if you are buying goods from China the best place to open an offshore company may be in a jurisdiction like Hong Kong where taxation is not liable if you do not trade in Hong Kong itself. Your Hong Kong company can purchase goods easily from China through an offshore bank account located in Hong Kong where they will be familiar with import and export procedures with China. Physically the goods may not need to be located and delivered to Hong Kong but your offshore company will be best placed to invoice your clients directly wherever they are located.
Anonymity is an important factor in choosing the best place to open an offshore company. You may require to conceal your ownership of your offshore company so that your competitors cannot see your business advances. For importers and exporters anonymity allows the beneficial owner to operate both retail and wholesale operations. Offshore companies are often used for asset holding purposes where either hostile of friendly take overs and acquisitions can be made anonymously.
For all highly rated jurisdictions, where compliance with international law is a prerequisite, the identities of directors and shareholders are made available on public record from the jurisdictions Company Registry. Using the services of a Nominee Director and Shareholder adds some protection but following the signing of Exchange of Information Treaties many offshore centres have now agreed to exchange information about the persons using financial services in offshore jurisdictions. In the case of Gibraltar, Jersey and Guernsey a special arrangement has been made with the Treasury in the UK to exchange information on residents who use financial services in the territories.
Delaware is often chosen as the best place for offshore company formations for anonymity reasons and low reporting requirements. Delaware has also become attractive to many Internet based businesses because of favourable tax laws and accessibility to US banking, PayPal and merchant accounts. However, Delaware's advantages are only available through a hybrid LLC company which has benefits like an offshore company only if it's beneficial owners are non-resident in the USA. A Delaware LLC should not trade in America itself as otherwise its owners may be liable to pay tax in the USA. As the USA is the largest location in the world for Internet business or e-commerce, a Delaware company may not be the best choice as the owner of an international website. Therefore it may be wise to set up the formation of your offshore company in a location where there is a small population and where you do not intend to trade. This is why many people chose company formation service providers in locations such as Nevis.
Nevis is a Jurisdiction which allows beneficial owners to carry out a wide variety of trades which may not be allowed in more prestigious jurisdictions such as Gibraltar and Malta. there are no requirements for a Nevis company to file any accounts or annual returns and the territory has implemented advanced asset protection laws which protect the identity of the beneficial owners of a Nevis company. At saveontax we have formed many Nevis companies with Malta bank accounts as as suitable vehicles for contractors, consultants and entrepreneurs to carry out their international businesses. Read more about Nevis
So now we have gone from the top rated jurisdiction to lower rated offshore centres and we hope that you are now able to choose the best place to open an offshore company.