Offshore corporate setups have recently been the subject of a great deal of public debate – sadly, much of it uninformed or unfairly biased, so let’s start from the basics- what is an offshore holding company?
Typically, this type of company is set up to passively hold shares in another company, and this can have a variety of applications. Offshore companies are typically not used to operate a business, although they can be integrated into a wide variety of business arrangements.
The most attractive quality of offshore holding companies are the tax advantages. If incorporated using the right structure, it can minimize withholding taxes when dividends are paid to the holding company – potentially allowing shareholders to receive passive income that is exempt from taxation.
But this setup also has privacy advantages. Owners who are not keen on being tied to a particular business, can choose to set up an offshore company to be used solely as a holding company, because typically, offshore companies are incorporated in jurisdictions which do not have a public register of directors, shareholders or ultimate beneficial owners.
In few words, offshore holding companies are synonymous with reduced tax and high confidentiality. This does not mean that an offshore company formed in a tax-free country automatically circumvent complicated tax regulations that are in force in the country the business is operating in – normally be a high-tax jurisdiction – but correct use of an offshore company can reduce or indeed completely eliminate tax that would otherwise be payable.
Incorporating in such offshore jurisdictions which are tax and hassle free allows start-up businesses to grow faster. It’s a complex process, full of potential pitfalls. This makes getting expert advice specialised in the country of domicile a crucial step before incorporating an offshore structure.
Sounds confusing, right?
Leave it up to company incorporation experts, Fairwinds Management, to incorporate your new offshore holding company. Choose from a number of advantageous jurisdictions including the Seychelles, Belize, RAK (Dubai) and other locations.