It is believed that more than 50% of the world's financial assets are placed in offshore banks, trusts and funds. Every year the number of incorporated offshore companies grows and offshore business is constantly expanding. This article explains the reasons why offshore company formation may be advantageous in many situations for individuals and corporations worldwide.

An offshore structure can provide the following advantages:

- Tax optimization;
- Asset protection;
- Absence of exchange controls;
- Privacy and confidentiality;
- Opportunity to use nominee directors and shareholders for comparatively low prices;
- Simple bureaucratic procedures.

Offshore business entities are used not only with the aim of legal tax optimization, but also for many other purposes. It is important to emphasize that not every company registered in any offshore jurisdiction may be effective in this respect. If the offshore company is not structured and managed in an appropriate manner, some of its activities may be illegal even if its owner wished to use it for a good purpose. Therefore, it is important to evaluate a number of issues before incorporating and operating an offshore company for any number of reasons.

Many clients around the world utilize offshore companiey formation, including small private or family entities, as well as large international corporations. These entrepreneurs are involved in different business activities, including but not limited to trading and distribution, consulting, banking, brokerage, investment fund and trust management, energy, building, art, film industry, hotel business and many others. This article provides several examples of how and in which sphere an offshore company may be used.

International Trading

It is often advantageous to implement an offshore company into a trading business model, which may act as an intermediary of a producing/buying and distributing/selling process. In many cases, such an offshore company formation provides an excellent tax-optimization opportunity in addition to confidentiality, asset protection and profit maximization.

International Investments

In investment businesses, an offshore company usually acts as an intermediary, which formally owns an investment portfolio. In addition, it is advantageous to use offshore companies for heritage management, tax optimization and asset protection purposes. However, it is necessary to remember at all times that every offshore company of each particular offshore jurisdiction is different from an offshore entity registered in another offshore country. In order to use an offshore company legitimately, to bring desired results, it is advisable to cooperate with an offshore business advisor, who has adequate knowledge and expertise in different offshore jurisdictions. It is important to choose an offshore jurisdiction which is politically and economically stable, as well as to understand that particular country’s laws, in order to choose the most appropriate type of company and structure it in compliance with the existing regulations, while at the same time extracting the maximum profit.

Personal Companies

Persons involved in entertainment or film industry, as well as building, IT and technology, finance, consulting, medicine and other economic spheres may benefit from the use of an offshore company in terms of tax optimization and, thus, profit maximization. However, it is not always legal to utilize offshore company formation for just any tax optimization purpose: The proper structure must be created in cooperation with a professional offshore financial consultant. A private person should seriously consider an agreement with such an offshore company, which regulates their relations, guarantees provision of agreed-upon services and provides the necessary professional support during the whole cooperation period. As a result, the proceeds of a business activity are received by an offshore company which then pays an individual for his work. The funds kept by the offshore company may often remain untaxed in a 100% legal context.

Intellectual Property

It is possible to register different types of intellectual property including copyrights, patents and, trademarks through an offshore company, which then enters in relations with other companies that wish to use these intellectual property rights. An offshore company may receive and accumulate proceeds of this type of business.

Estate Holding

Use of a correctly structured offshore company in the appropriate jurisdiction may significantly minimize taxes when buying a property or receiving it as a gift or heritage. In such a case, an offshore company becomes an effective asset protection instrument. It is, however, important to remember that not every offshore company may provide these benefits, and it is necessary to investigate each situation individually, in order to determine the most effective strategy for reaching the set objectives.