‘One size fits all’ does not apply to offshore company formation. The choice will often depend on what your aims are, be it tax reduction, asset protection or wealth management on a larger scale. Here we take a look at the different offshore companies on offer and why they are used.
Offshore Corporations, which are also known as limited companies or IBCs. These are the most common type of offshore company, often used for tax-free trading, royalties/patents/copyright holding, investments (equities, commodities, forex trading) and overseas property holding. They are also used to shield the beneficial owners of offshore bank accounts, by making the company the account holder. The most private type of offshore company is a ‘bearer share corporation’ whereby physical possession of shares (rather than naming on a public document) denotes ownership. However, bearer share companies are becoming increasingly hard to find due to their association with money-laundering. Most offshore IBC’s can be incorporated within a few working days.
Offshore Limited Partnerships, which are also known as limited liability partnerships. The objective of a limited partnership is to separate the functions of ownership and control – which makes them great for asset protection. A limited partnership is managed by a general partner who has unlimited liability, and limited partners who are only liable for what they have invested in the partnership. An offshore company frequently takes the place of the general manager to protect the assets of the partnership’s investors. Limited partnerships offer better protection against seizure from creditors than a traditional offshore company.
Offshore Limited Liability Companies are relatively recent entities which combine the simplicity of a limited partnership and the limited liability of the corporation. Shareholder interests are protected like in an offshore limited partnership, and there are guaranteed safeguards against seizure from third party creditors. They can be managed by managers who may not be members, further increasing asset protection qualities.
Offshore Protected Cell Companies, Supreme asset protection vehicles which are useful for insurance and investment, otherwise called an incorporated cell company. Assets are segregated into various cells, and the assets and liabilities of every protected cell company are separate and apart from those of every other cell, and from the company itself. Furthermore the ownership, and even management, of every cell may be different from every other cell and from the company itself.
Offshore Specialty Companies – Created if the formation of a specialist company is required – they are usually engaged in offshore financial services such as offshore banks, offshore insurance companies, offshore investment funds, or offshore trust companies, all of which usually require special licensing.
Offshore Trusts or foundations are technically not companies often used in place of a will or to protect assets in advance from third party creditors. They are also great tax free investment vehicles when holding an offshore company.
As you can see, there is a host of different ways to set up a tax free company – so it’s always good to do your research before jumping in. You can find more detailed information about offshore company types, offshore company formation, prices and advice by contacting us.