Different Facets of an Offshore Company
When it comes to flexibility in business operations, an offshore company has many advantages. It can enter into different kinds of business arrangements and enjoy reduced tax benefits. Although tax exemptions are provided by countries hosting offshore companies, business owners are still not exempted from paying taxes in their native country.
To better enjoy the benefits of an offshore company, it is very important to seek the professional advice of accountants or tax advisors who will be able to reconcile the different statutes promulgated in both the offshore company host country and the beneficial owner’s motherland.
An offshore company can take the form of a trading company that deals will distribution, exportation and/or importation, procurement, or sales. It can serve as an intermediary between the manufacturer and end-users by acting as buyer and seller. This business arrangement is beneficial for third-party owners of such trading transaction.
An offshore company can also serve as a conduit for procuring goods from outside sources and for distributing local goods to the foreign market. This buy-and-sell arrangement often results to higher trading profits that are often tax-exempted. Savings derived from non-tax payment can be used to further grow the business through development and reinvestment.
Professional Service Company
Contractors and consultants who are offering freelance services will be most benefitted by forming an offshore company and entering into contracts to offer professional services to potential customers. The owner/contractor can receive payment through service remuneration and save the rest through tax exemptions often accorded to offshore companies. The offshore company can also employ the services of entertainers, consultants, authors, and designers and enter into contract negotiations on their behalf. By doing so, the company is given the right to collect payment as stated in the contract and pay the professionals based on their agreed price. Furthermore, liabilities incurred will be limited to the company with no ill-effect to individual members of the company.
Offshore investment companies can pool funds from different sources and use the same as foreign investment or deposit. The returns from such ventures are tax-exempted, thus providing the offshore company maximum benefits from its earnings. The privacy of the offshore investment company and everyone involved in it is also protected. In addition, investment instruments that offer tax exemptions are especially useful in countries where there are high withholding tax deductions and capital gains tax. Savings from these taxes plus the income tax exemption in the host country will allow investors to accumulate more financial assets to expand their businesses.
Patent/Copyright/Royalty Holding Company
Original owners of patents, copyrights, trademarks, or know-how can assign the same to an offshore company through sub-licensing. The offshore company can then use the said assigned right to conduct business in other countries and collect the necessary fees related to the use of patents, copyrights, and similar instruments. Offshore companies engaged in this business can be exempted from paying royalty tax twice when the business is conducted with another country where the host country has double-tax treaty.
In the same manner, offshore companies can operate in countries with tax-free environment to run internet businesses like hosting and website operation. Offshore companies mostly benefit by selling non-material product online. In this day and age of computers and the internet, online business is considered the most practical use of an offshore company.
Offshore companies operating as a shipping business helps in getting rid of direct or indirect taxation related to the business. Profit accumulation is possible in tax-free environments by owning or chartering ships. More tax benefits will be enjoyed by registering chartered or owned ship under the jurisdiction of the offshore company host country.
Property Holdings and Ownership Company
Offshore holding companies can own subsidiary shares in countries that impose high taxes. If there is a treaty on double taxation between the high tax country and the host country, offshore companies can avoid some, if not all, withholding taxes.
Disposal of international property holding may entail higher expenses. But when concluded with an offshore company, resell can be completed quicker and without much expense incurred by the seller. Transfer taxes, legal fees, and other duties that are often charged by the state can be lessened.
Offshore companies can be used in many ways beneficial to your existing business. They can be used in many ways for tax planning, investment holding and for accounting royalty income.