Register an offshore company or buy a ready-made offshore company?

Registration and purchase of ready-made offshore companies is a favourite method used by many business people around the world to reduce taxes and avoid complex legislation regulating foreign economic activity. The benefits of offshore companies are also obvious for the offshore zone itself — a state or part of its territory with special status that provides foreign entrepreneurs with favourable business conditions, including mandatory exemption from most taxes or complete replacement of all taxes with a fixed offshore fee of EUR 100–300. To understand correctly which offshore zone to choose when offshore company registration or purchasing a ready-made offshore company, it is useful to review the classification of offshore zones and the time required to register an offshore company in those territories.

For a beginning business person who has not previously worked in Europe or in foreign economic activity

It is always difficult to determine independently which offshore zones are best for a particular situation in order to decide whether to register a new offshore company to order or agree to purchase a ready-made offshore company. The priority question is undoubtedly the purpose of the offshore company, and more precisely how soon you need the offshore company to begin operating and benefiting its owner, and how important confidentiality and the “prestige” of the jurisdiction are. Registration of an offshore company with a name corresponding to the goods supplied or the profile of foreign economic activity may provide advantages if there is a particular brand or clear business direction that the offshore company should reinforce, even through its name confirming to potential counterparties the “correctness” of the transaction. Operating through the cheapest ready-made offshore company with a name that is clearly unrelated to the activity may call into question the ability to work with serious business partners — it is difficult to imagine a metal seller giving the name Blue Sky Transint Ltd in its payment details. There is no association with metal or trading. Therefore, each time a decision is made whether it is better to buy a ready-made offshore company or register one to order, it is necessary to ask who, besides you and your related enterprises, will see the offshore company’s details (for you it makes no difference — any name will do), whereas when someone decides whether or not to make an advance payment to an offshore company, every detail matters. Business people value clarity in business and understand the need for tax optimisationbut will prefer to deal with those who take all possible options into account, offering an offshore company as a payment option.

For a company with foreign capital and joint ventures

Quite often, owners of companies with foreign capital choose offshore countries that make it possible, on the one hand, to avoid double taxation (not relevant in Ukraine, but potentially useful when working with other countries), and on the other hand, to open a subsidiary or representative office in order to minimise certain taxes. Registration of an offshore company to order should be carefully planned; with large financial flows it may make sense both to register companies to order and to purchase ready-made offshore companies for specific one-off transactions so that there are no overlaps.

Offshore company registration: what is needed to register an offshore company with your chosen name

Cannot decide what is better — purchasing a ready-made offshore company, registering a new offshore company, or perhaps using foreign enterprises in an offshore structure? It is important to take the following points into account:

1. The features of the tax system of the country where you plan to buy or open (register) an offshore company or a representative office of a foreign enterprise;
2. Guarantees of confidentiality of information about the owners and directors of offshore companies;
3. The location of the offshore zone in which registration of the offshore company is planned;
4. Company law registration rules and permitted types of offshore companies;;
5. Amounts and payment deadlines for offshore fees or licence contributions for offshore companies;
6. Requirements for audit, storage of accounting records and financial statements of the offshore company.

Registration of offshore companies as an instrument of tax planning is recommended for the following types of activity:

• export of any products, and in some cases import;
• reinsurance, life insurance and pension provision;
• confidential holding of funds and transactions with them;
• conducting international trading operations outside the country of residence of the authorised person — the beneficial owner;
• purchase of real estate and land in Europe;
• inheritance matters;
• registration of ships and minimisation of annual maintenance payments.