Sooner or later, after you start receiving any significant incomes from your investment activities, you get into planning of your taxation matters. Although a private investor in most countries is normally taxed at a lower rate than a legal entity for the same type of income, an offshore company is often taxed even less or not taxed at all.
Consider Set-up and Maintenance Costs of an Offshore Company
When deciding whether to incorporate or not and in what jurisdiction, a private investor is having in mind tax optimization as a primary goal considers the costs of the set-up and further maintenance of an offshore company.
Most Popular Tax Haven Jurisdictions
Most popular jurisdictions to incorporate with the purposes of tax reduction famous for their zero taxation and cheap set-up and annual costs are well-known tax-havens, such as Dominica, Belize, St. Kitts & Nevis, Seychelles, Panama, Anguilla, BVI, Marshall Islands. They often call them also “offshore jurisdictions”, by the reason that their legislation provides for existence of offshore or non-resident companies, i.e. companies incorporated in the jurisdiction but working and originating its income outside of the territory of that particular jurisdiction and exempt from taxation on their worldwide income.
In most tax-havens, you can incorporate starting from US$ 800 and pay minimum annual fees of about US$ 400 with no financial reporting requirements.
Offshore Advisor gives you an opportunity to incorporate in Dominica for only $890. This is a unique package for starting a legitimate international business company with a bank account. The total price for services included in the package is even $150 lower than our regular first-hand fees, when ordering separately. If you’re looking for an offshore company with an offshore bank account, this offer is definitely worth looking into – read more.
However, the above number of states is also well known to tax authorities of any country, and in some cases their “tax-haven” image might not be the best partner for your purposes.
Offshore Company with a Moderate Level of Taxation
Having this in mind, a private investor may decide to incorporate an offshore but choose a jurisdiction with a moderate level of taxation and reporting, for example, Cyprus or Gibraltar, or even the United Kingdom or USA. When working off the territory of a certain country you have enough space to build your business the way when no or minimum taxes appear to be due in that country.
You can register an American LLC for as much as US$500 with obligation to pay further US$150 of registered agent & governmental annual fees, but don’t forget that even if no taxes are imposed on the LLC’s foreign income, a financial reporting is still required, and this incurs you in significant extra expenses annually.
Another example for this category is Cyprus, where you can incorporate having spent about US$2000 and further pay 10% corporate income tax and about US$1500 of annual maintenance (governmental fees, accounting, audit, etc).
Expensive Offshore Jurisdictions with Positive International Reputation
There are also quite expensive tax-free or low-tax jurisdictions with a very good international reputation, such as Luxembourg, Liechtenstein or Switzerland. However, you may be required to pay up the authorized capital of at least US$50,000 upon incorporation and further annual maintenance may easily exceed US$20,000.
You should keep in mind that a corporate bank account is also required for your offshore legal entity, and offshore-banking service has its price as well. It can be charges for the bank account opening, maintenance, internet-banking fee and charges for wire transfers, payment card costs and the list is not complete. All the banks are very different in their tariffs. You may be required to pay 150 EUR as an opening fee but get a 50 EUR as a monthly account maintenance fee, or you may get your account for free but be required to keep a minimum deposit of at least US$1000.
We brought very approximate figures above just to give you an idea of how much it can be. Should you be interested in real prices, you are welcome to contact our consultants.
With our assistance, you can easily count how much you spend and save and resolve, whether you need to incorporate an offshore business and where to open a bank account.