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Move business wisely. What to consider when choosing offshore jurisdiction?

Mar 30, 2017

It is not a secret that starting an offshore business or moving existing company offshore is a complex set of actions. An important part of selecting a jurisdiction is political and economic state of the country. It is not the crucial but overall state of the jurisdiction shows its perspectives. Unrest situation in the country, crises and rallies – these situations can scare investors away and make jurisdiction less attractive for business. Expensive company formation and operating can also be an obstacle for young entrepreneurs. Cost of company formation and annual charge for identity protection. This charge differs from jurisdiction to jurisdiction and if you need to pay more than company earns – it is not reasonable. Legal part also plays a big role in company formation. Comfortable offshore climate often depends on local regulations. Most considered branches are: asset protection legislation, confidentiality conditions, international business functioning rules, investment laws and taxes. Due to this, many worldwide-known offshore jurisdictions became popular: Cyprus, Switzerland, the UAE and other. Considering this point, it is useful to consult with international lawyer to choose the right jurisdiction for your business.

Taxation is one of the main reasons why business moves offshore. Nowadays, European Union is on the way to remove obstacles for small and mid-sized business, especially in taxation sphere. Local jurisdictions all over the Europe are now in charge of implementing their own tax reforms. This might bring business to different countries that are willing to lower pressure on business and raise its own economics. Harmonization of tax regulations and loyal conditions of cross-border trading might be a good reason for entrepreneur to choose this specific jurisdiction.

In the UAE overview we have mentioned $135,000 compliance requirements for starting a company. Does it sound unbearable? Small and mid-sized companies are not able to handle this amount of money and need to take loans or even give up the idea of forming a business. This means you should look for a more suitable jurisdiction when starting capital is low. For example, you only need 10,000 Euro to form a company in Italy. You can also use an advice of a professional tax lawyer to find a more reasonable jurisdiction for your business. He can also assist you with a transfer pricing advice. Transfer pricing rules include companies that function cross-border, within different jurisdictions. For full understanding of this process in the EU, you should be acquainted with “Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration”.

Legal asset protection is important but it is not panacea. Reliable banking facility without hidden obligations or payments is a big part of successful business. There are internationally reputed banks, like Bank of Cyprus, Piraeus Bank, America Bank, Pacific Private Bank and others, that are considered best for offshore companies. These banks offer high-quality customer service, technological solutions for privacy and safety, security for your assets and other advantages.

Some jurisdictions also have requirements for founders or executives of the company. For example, age restrictions or quantity of directors. Some company structures require minimum number of shareholders too. It is important to know the details because they are different depending on the country.

You, as an entrepreneur should understand the market you are working with. Choosing jurisdiction depends on language requirements of your clients and time zone of your target audience. Offshore jurisdictions mostly have enough proficient workers who are fluent in English, and they can cover international requests of the customers. 24/7 customer service is always a positive line in every company’s summary.

It is not easy to come up with final decision on your perfect offshore jurisdiction. We have shared the most essential moments that should be considered before starting a business. OffshoreLicense Ltd recommends you to choose a professional consultant who will take care of all nuances and make your formation process much easier. It is reasonable, to work with professionals who assist you with all hidden matters of offshore business planning.

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