Company Formation Services Complete List Of Offshore Company Types
There is a myriad of reasons to set up your company offshore; the most important
reason for many are the tax advantages, but for others the asset protection and diversification strategies are key, and the privacy and business incentives are frequently cited as reasons for going offshore.
However, many of these benefits are mitigated or at worst, unavailable, if companies choose the wrong structure for their offshore investment business. Here is a complete list of the different types that company formation services can create for an organization.
Trading Company
The most common type of offshore investment business, a trading company takes advantage of the taxation environment in one country to conduct business with lower operating costs. This company is usually affiliated with a supplier company in a 'parent' country, who will send the goods directly to an overseas buyer but use the offshore company to handle the paperwork. The customs duties etc are usually more than covered by the taxation savings, as seen by many business consulting services.
Investment Holding Company
These are used to accumulate funds free of tax, since most offshore financial centers do not assess capital gains tax, and even high tax jurisdictions such as Australia and Japan do not charge non-residents capital gains tax. Company formation services and offshore banking investment firms can help split dividends between jurisdictions to obtain the most favorable result.
Intellectual Property Company
Royalties from intellectual property rights are subject to withholding tax in many countries, however an offshore company set up to receive these royalties can do so tax free, depending on the jurisdiction.
Management Company
With the lower cost of operations in some countries, it makes sense to take advantage of the economic environment for operations like maintaining data centers, doing R&D, advertising and performing warranty services or claims. Having your own organization set up by business consulting services means that you don't have the uncertainty of outsourcing. Payment for services generally does not attract withholding tax, also.
Fund Management Company
Sophisticated investors in a position t deal with high risk investments may find that this sort of company suits them.
Property Owning Companies
Companies set up to hold property can help their parent companies avoid capital gains tax and inheritance taxes, and make it easier to change property ownership by utilizing the share transfer method.
Shipping/Aircraft Owning Companies
Crewing, compliance and tax costs can all be reduced by having company formation services set up a shipping or aircraft owning company.
Personal Service Companies
Any contractor who earns a substantial fee for their work, and is therefore subject to higher taxation by their home government, can make significant individual savings by setting themselves up as an employee of their own offshore company, and paying themselves a wage through the company at the most tax advantageous time in their home country.
Employment Companies
If you are an expatriate worker on contract terms, having part of your salary paid into an offshore investment business maybe especially advantageous. Superannuation can also be increased by this means.
by: Gregory Smyth
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