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Offshore is a company registered by foreign citizens in a state with a favorable tax climate, which is not active in this country. From a legal point of view, there is nothing illegal in this, therefore they are actively used all over the world: according to rough estimates, about ten percent of all funds on the planet are concentrated there.

Background

How it works

Offshore - what is it, speaking in simple words? Some countries deliberately do not tax firms that are founded by foreigners. This allows attracting cash flow to the country and employment local population. Business owners register firms in these countries, and pay only small fixed fees, which replenish the budget. And the main activity is carried out in their homeland.

This is possible only because, according to international law, the company is an independent entity, and can be taxed only in the state in which it is registered.

Advantages

Restrictions and control

Of course, various states are trying to control the movement of funds flowing abroad, trying to make these operations more transparent. For example, .

In Russia, this list is used to track currency movements and control the activities of banks. Ukraine has its own list, with the help of which the expenses of firms are checked. If the funds under the expense item are transferred to offshore, the amount is not fully exempted from taxes, but only partially.

As long as there is a difference between the tax terms in different countries, there will also be an outflow of capital to the zone of least pressure from fiscal structures.

So offshore in this sense is quite a natural phenomenon, which will be used by people who are well versed in the laws of business.

What are offshore companies and how to work with them: Video

The modern world is rich in tax avoidance schemes - this is data distortion accounting, illegal use of tax incentives, fictitious barter, etc. Often large enterprises use intermediary firms registered in offshore zones. Offshore zones have been used since ancient Athens.

offshore(a term from the English offshore - “out of the shore”) is a territory where special conditions have been created for foreign companies when doing business when paying taxes, a simplified reporting procedure, and the possibility of registering a company for other persons. In simple terms, offshore companies are needed to enable them to avoid paying taxes effectively.

Offshore company

A company registered in an offshore zone with the provision of certain benefits is called offshore.. Its features:

• Control over this company is outside the offshore zone;
• The minimum amount of tax payment;
• High guarantee of anonymity.

offshore account

Offshore company opens offshore account, that is, in fact, an ordinary bank account, which serves both for the accumulation and for saving funds. Its advantages:

• The procedure for opening it is simplified;
• A minimum number of documents is required;
• High level privacy;
• Minimized checks by regulatory authorities;
• Banking operations are carried out without any particular risk.

This enables companies to save capital without much risk.

An offshore account can be opened by both a legal entity and an individual.

Offshore schemes

Offshore companies use different schemes of work. The most common classical scheme is the registration of a company. Foreign company, becoming the founder of the company, receives the right to dividends, which are subject to a minimum tax.

It is possible to register a company for the supply of goods, carrying out export-import activities, when the profit from this type of activity remains in the offshore zone, which allows you to artificially either raise or lower prices. The difference in the price of the goods is not controlled and is not subject to taxes.

Recently, banking has become popular. Successful businessmen open "their" banks. They can be opened under certain persons or one person. Offshore banks are created at minimal cost. Your own bank is convenient because it allows you to make payments with minimal taxation, gives you a wide opportunity financial planning. An important advantage of an offshore bank is the distribution of funds in different currencies when conducting foreign trade operations.

Offshore zones for conducting various types of business

Offshores are a kind of free economic zones. Below are offshore zones by types of advantageous locations.

• Reduced Taxation:
  UK, Cyprus, Scotland.
  Companies can legally avoid paying taxes.
• By business area:
  Holland, Latvia, Poland, Switzerland.
  In these countries, it is advantageous to register tourism companies, agriculture, IT-technologies, since taxation for such activities is optimal.
• Research in the field of high technologies:
  China, Singapore.
• To conduct an honest business:
  Cyprus, Switzerland, Estonia.
  These countries offer low taxation, successful development of companies without problems with the law.
• When choosing an offshore zone, it is necessary to thoroughly study the current laws of the country, carefully analyze your activities and correctly prioritize the selected offshore territory. For example, small states with a low level of development of their economy they have low reporting requirements, they have an annual fixed fee for state revenue, there is no register of enterprises, and strict anonymity. These countries are politically stable. For example:
  Bahamas, Belize, British Virgin Islands.
• Respectable offshore zones, on the contrary, impose increased requirements for financial reporting, provide tax benefits, maintain a register of enterprises. However, prestigious companies operate in these zones. For example:
  Cyprus, Hong Kong, Luxembourg, Switzerland.

Attention!

An offshore zone should be distinguished from a free economic zone. If a company operates outside its territory, then this is an offshore zone, if it is a free economic zone on its territory.

Pros and cons of offshore

The main advantages of using offshore:

• Tax incentives or no taxes;
• Protection of financial investments;
• Minimal risk;
• Minimum cost;
• High privacy;
• Simplified legislative regulation.

The main disadvantages of using offshore:

• Distrust of offshore enterprises of global companies;
• Difficulty in obtaining a bank loan;
• Risk when choosing an economic zone;
• The close attention of international bodies to the companies of interest to them, which can harm the prestige of doing business.

Offshore zones are controlled by the International Monetary Fund and some banks from around the world.

Individuals and corporations, seeking to protect their assets, with the help of offshore companies are looking for a safe place to carry out their activities and allocate finances, as well as trying to reduce tax payments to a minimum.

When choosing an offshore zone, it is necessary to carefully study the laws of the country. Do not forget that many states are concerned about the mass distribution of offshore companies. Some states have a blacklist of offshore companies. Tight control is exercised over the companies from this list.

You will learn what offshore is, what schemes exist for working with offshore companies, and also where and how you can register an offshore company

Good afternoon, dear readers! Dmitry Shaposhnikov is with you.

Today we will talk about such a concept as "offshore".

All that the average Russian knows about offshore companies is that the oligarchs hide their money from taxes there. But is it really so?

Who and in what cases is it beneficial to deal with offshore companies today and how to choose the right one?

Let's look at this topic in more detail, because it is possible that this knowledge can be useful to us in the future.

1. What is offshore - definition and history of occurrence

The literal translation from the English term "off shore" sounds like "out of the border" or "out of the coast".

In simple words, I will define this concept.

offshore is a company that does not conduct commercial activities in the territory of the country where it is registered.

Offshore zones are states that create a preferential taxation regime for business structures and representatives of private capital up to full tax exemption.

Commercial institutions of other countries receive preferential terms for transactions in a foreign currency for this state. In other words, if you don't want to pay taxes, go offshore.

This term also refers to international organizations operating in tax-exempt zones.

In the world economy, this is a stable and widespread practice that provides merchants with a certain economic freedom and creates a kind of room for maneuver.

The concept of " open offshore" means to transfer financial assets, business or part of it to foreign territory.

The correct spelling of the term is "offshore" with two "f", although sometimes even in the scientific literature there is another option - "offshore" with one letter.

This phenomenon has deep historical roots. Even in ancient times, merchants often organized sales outside the cities, in which there were too immoderate tax duties.

In the Middle Ages, European merchants sold wool exclusively in Flanders, not in densely populated England, where government fees reduced profits to zero.

AT new history There are more and more examples of offshore business: for example, the first North American merchants preferred to transact in Latin American countries in order not to fall under fiscal dependence on the English crown.

For the first time in legal practice, the concept of "offshore" in its modern sense was used in one of the court sessions in Britain. The second birth of the term took place in the second half of the 20th century. In one of the newspapers, this word dubbed the activities of a successful commercial company that transferred its assets outside the country.

Russian commercial structures gained access to foreign territories with reduced taxes in 1991 after the collapse of the USSR. During this period, the first representative of offshore business appeared in the Russian Federation in the person of a Swiss company, now almost forgotten.

Offshore registration has become extremely popular among domestic entrepreneurs - large and small firms, sometimes with a dubious status, received a legal opportunity to evade taxes.

Today, offshore business schemes continue to enjoy some popularity, although the attitude of the state to such activities has become tougher. However, in some situations, the withdrawal of assets to foreign accounts is the only way to keep the business.

Example

After changes in Russian legislation regarding the organization of bookmakers and gaming establishments in 2014, most companies of this kind legally moved their activities to foreign territories.

Offices continue to accept bets from Russian players, but their official registration addresses are the Netherlands, Antilles, Cyprus, Belize and other exotic countries with loyal tax laws.

2. Advantages and disadvantages of opening an offshore company

The main advantage of moving a business to offshore zones is as follows: the company gets the opportunity to repeatedly increase the net profit from its activities by legally reducing taxes. This is the main answer to the question why offshore is needed.

It is clear that this type of business development has more advantages than disadvantages, otherwise accounts and offshore business would not enjoy such stable and widespread popularity.

Offshore advantages (+)

Below I will give you a few advantages of offshore business.:

1. Low or zero taxes. Often the laws of most countries are such that they do not allow companies to develop normally and bring stable profits in their native territory.
2. Opportunity to expand the geography of business. Working in a foreign market contributes to the acceleration of the company's growth.
3. Capital accumulation abroad. The ability to have cash accounts in foreign territory and use finances exactly when you need it.
4. Business management through a trustee. To work offshore and manage a business, the owner of the company does not have to be abroad - all legal and financial transactions can be entrusted to a trusted person.
5. Reduction of legal risks. An offshore company is a full-fledged subject of the international market, subordinated, first of all, to the jurisdiction of the country in which the company is registered.
6. Fast business registration. Registration of companies in offshore occurs at an accelerated pace. Everything is arranged in such a way that necessary documents took a minimum of time.
7. Flexible choice of the form of doing business. When creating an offshore, the owner of the company himself chooses the form that is beneficial for himself commercial activities from the proposed list.
8. Ease of opening and preferential operation. The company's costs for opening an offshore company are minimal - in addition, in some countries there are no audit requirements.
9. Security of information about an offshore company. No one has the right to receive information about a company in an offshore zone, except in situations where such a right is granted by a court decision.

Keeping money offshore is safe, profitable and completely legal, however, the method also has its drawbacks. If you do not know, you should definitely consider a way to bring them abroad.

Disadvantages of working with offshore companies (-)

In addition to the advantages of offshore business, there are also disadvantages.

Here are a few of them:

1. Increased attention to offshore companies from international law. International legal structures pay close attention to companies operating under such schemes.
2. There are risks. When choosing a territory, extreme caution should be exercised: there is a certain risk of completely losing business.
3. Negative image. Many large corporations refuse to work with enterprises that conduct their business with the involvement of offshore companies.
4. Difficulty in obtaining loans. Companies with foreign accounts are often unable to obtain large loans.

A significant part of the disadvantages can be neutralized if you cooperate with reputable professional firms involved in the registration of offshore enterprises. Knowledge of laws and international legal experience also helps.

3. Offshore schemes - TOP-10 most popular schemes

Let's move on to the main question - how to withdraw money offshore? Preliminarily, of course, it is necessary to determine the feasibility of such a decision.

If you really think that registration abroad in an offshore zone is the only option for the company's development, then proceed. If in doubt, look for other ways to increase income.

A separate type of procedure is the liquidation of companies through offshore: this event is used in the presence of large debts and the need to quickly and without much hassle to liquidate a legal entity.

If you have an open company, for example, in the form of a limited liability company, then it can be liquidated in the usual way - we already wrote. The same procedure can be carried out through offshore.

10 popular offshore schemes

It is worth saying that the mass interest in offshore companies has somewhat subsided in recent years, which is associated with the global tightening of foreign exchange controls and the global course towards the transparency of capital movements. However, offshore is still the easiest and most reliable way to withdraw cash assets abroad.

Scheme 1. Using offshore companies to organize export-import relations. Officially, the company leaves its native territory, but in fact continues to be present on the market, importing and exporting products.

At the moment, this scheme is the leader among all others. But there is a nuance: the fight against the transfer pricing policy at the legislative level, can significantly undermine the benefits of the export-import option.

Scheme 2. Creation of a holding company created for operations with production, monetary and other assets. This scheme successfully combines privacy and tax breaks.

Scheme 3. Offshore company as title owner of real estate – effective tool, allowing for confidential ownership combined with tax benefits.

Scheme 4. Investment in own business using separate offshore instruments. The option provides the opportunity to finance your company without extra tax fees on the invested amounts.

Scheme 5. Offshore as a tool in the stock market and other valuable assets is a favorite scheme of exchange players and private investors who want to minimize tax deductions.

Scheme 6. Offshore via the worldwide web. It is extremely difficult to determine the location of such an object; it is just as difficult to tax it. The most promising scheme for today.

Scheme 7. Offshore funds: a favorite scheme for retired big businessmen. Good way protection from the consequences of turbulent youth in the form of contenders for inheritance and property.

Scheme 8. Organization of an insurance company financial company or a bank. World financial system could not leave the possibility of tax planning unattended - companies with large monetary assets are especially interested in fiscal easing.

Scheme 9. Registration of an offshore company by the owner of a yacht or vessel. An excellent option for tax optimization of both personal profits and income from commercial activities. A vessel under a particular flag provides many financial and sometimes political advantages.

Scheme 10. Offshore company as the owner of copyright or intellectual property.

All options are used depending on the specific circumstances, goals and capabilities of the person concerned.

If you are going to organize an offshore and use the described schemes, then you need to familiarize yourself with the offer. Below are a few words about this concept.

Offer- an offer from a company interested in organizing an offshore company from a foreign side.

Such a proposal is also varied in content and form.

If you cannot or do not want to open such a company on your own, then you can purchase ready-made offshore companies. Now there are many offers on the Internet from companies that provide such services.

4. The main offshore zones of the world

The geography of offshore zones is very diverse, but the most popular of them can be grouped into the following regions:

• the Caribbean;
• island states of the European zone - Jersey, Maine and others;
• Cyprus and Gibraltar;
• Switzerland and Luxembourg;
• Asian countries.

Each region has its own advantages and characteristics.

Below we will briefly consider the advantages and disadvantages of organizing a company in each of the zones.

For example, in the Caribbean, there is no need for reporting and auditing, and entrepreneurs themselves can count on complete confidentiality.

Cyprus and Gibraltar are characterized by a mandatory tax rate and insist on auditing companies. This simultaneously increases the prestige of offshore enterprises in these regions, but increases the cost of their organization.

Switzerland and Luxembourg also have offshore tax, but under certain circumstances you can not pay it. The organization of companies in Asian countries involves mandatory registration and a certain tax percentage (usually low).

A more visual representation of offshore conditions in different countries is shown in the table:

№	Country	Registration fee, USD USA	Income tax, %	Peculiarities
1	Cyprus	2 500	12,5	Mandatory audit
2	Scotland	2 200	20	Mandatory Checks
3	Canada	2 600	4,5	No reporting required
4	Hong Kong	2 500	16	Financial report required
5	British Virgin Islands (BVI)	1 900	Not	Audits and reports are not required
6	Luxembourg	23 200	29	Mandatory reporting
7	UAE	18 900	Not	No reporting required
8	Switzerland	18 900	12	Mandatory reporting
9	Cayman islands	7 500	Not	No reporting required
10	Malta	5 000	5	Mandatory audit

It is up to you to choose in which zone to register your offshore company. As can be seen from the table, there are no ideal options, each has its own advantages and disadvantages.

5. Pitfalls in dealing with offshore companies

The negative aspects of offshore business have already been partly mentioned above - close attention from international organizations, limitation in credit matters.

The offshore zones themselves do not hide their activities - these are the official centers of international commerce.

However, all territories of this kind are divided into two groups:

1. Completely closed for outside control.
2. Zones with minimum benefits.

Absence single list offshore territories indicates an ambiguous attitude to this phenomenon of the subjects of the world community.

Each country has its own "black list" of such zones, the purpose of which is to increase control over the movement of currency and force partner banks of offshore companies to create additional reserves for the transferred finances.

The presence of tax havens on the planet is not encouraging government bodies countries from which the financial assets are withdrawn. Under the pressure of the "powerful of this world" tax breaks in European countries are gradually leveled. Liechtenstein, Luxembourg and Switzerland are no longer so attractive for the withdrawal of assets.

6. FAQ - answers to frequently asked questions about offshore companies

These questions are most popular with start-up entrepreneurs and current company executives. Here I will give an answer to the most popular of them.

Question 1. How to open an offshore company?

Majority Russian companies Those wishing to open offshore companies turn to intermediaries. This option saves time and allows you to conclude an agreement taking into account all legal subtleties. It is clear that this service is not free.

If interested party decides to carry out the procedure on its own, then each jurisdiction provides those who wish a complete list required documents and terms of the offer.

Question 2. Where to buy a ready-made offshore?

You can buy a ready-made offshore in a company that sells this “product”. There are dozens of such organizations in the world: in particular, you can find a suitable option on the website Worldwide Incorporation Services. This resource provides a quick selection of almost all the most relevant modern jurisdictions.

Question 3. What is deoffshorization?

Deoffshorization– reducing the influence of the offshore factor in Russian business.