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Because of the strong anonymity an offshore company can provide, if it is setup correctly, it is often misused for money laundering and other activities, which violate the tax regulations in most countries.

Almost everyone knows than an offshore company can be used to protect your assets and can also be used as a vehicle to avoid or minimize tax. In many cases an offshore company (eg. A company incorporated in Cyprus but operating in another jurisdiction) is legally formed to give the owner several benefits that are unobtainable through a local company. One such benefit is the right to obtain a loan in the name of your company. Many European countries forbid LLCs and LTDs to borrow money, as it is in violation with the tax authorities. However, it is of great benefit for a start up entrepreneur if he can get the protection of a regular LTD and still be able to finance the company’s activities, including his own salary.

How is it possible to get more money out of an IBC / Offshore Company, for instance in Cyprus?

It is actually easier than you might think. Normally you need to have approximately EURO 17.000 to form a LTD in a European country. There are exceptions to this rule but 80% of the time this will be the case. Once you have establish the company with 100% of the shares equaling a value of EUR 17.000 then you are unable to draw any of the money out from the company for yourself.

A Limited Liable Company needs to have the ability to be liquid and must assure its trading partners that you have at least have the EUR 17.000 in assets or cash in the company. If the owner of that company by law were able to just take out the money exactly before the company, for any reason, declares bankruptcy then it would favor himself.

With a Cyprus Offshore Company or any other offshore company you are allowed as a resident of a European country to take out loans against the company. Let’s say your company starts to generate a profit, you can then take money out of the company in two ways. One is as regular salary, which will cost you to up to 50% of your salary, as you will be forced to pay the tax authorities. This is undesirable and presents many business owners with a problem, they need to take money out of their business but they don’t want to pay the high tax rates associated with a salary. So what can you do in this situation?

The second way to take money out is as a loan against the company. This loan can be made over a period of 10, 20, 30 or even 50 years. Once the money reaches your account you need to report it to your local tax authorities as a loan. Because it is a loan, and not a profit or income it cannot be taxed.

I hope you fond this article informative. More tips and tricks for how to make the most from your offshore company setups are coming in the near future.
For Cyprus Offshore Company formation and Cyprus offshore bank accounts please contact cclogic.com

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This is one of the most common business questions of the modern time. The incorporation of offshore companies has continued to increase in popularity and it has never been as beneficial to incorporate an offshore company as it is in 2010. Thousands of online businesses have discovered the advantages of incorporating companies offshore and they are already experiencing major benefits such as tax exemption, tax reduction, asset protection and complete anonymity.

One of the biggest questions currently being asked, with all of the offshore jurisdictions available, is “which jurisdiction should I register my offshore company in?”
Different jurisdictions offer different benefits and it is important that you choose the jurisdiction that will offer the most benefits for your company. Below we will discuss 4 of the major offshore jurisdictions and the advantages they could offer you and your company.

Before we begin outlining the jurisdictions and their advantages it is important that you understand some of the terminology we will be using:
IBC = International Business Company, a term for offshore companies in almost any offshore and even onshore jurisdiction.

Offshore jurisdiction = Tax Haven / low tax jurisdiction. Mostly offshore jurisdictions are located on islands or in countries that have no corporate tax, or provide a low taxation rate while also offering privacy and anonymity protection.

TIEA = Tax Information Exchange Agreement. Model agreement on exchange of information on tax matters, developed by the OECD Global Forum Working Group on Effective Exchange of Information

The 4 offshore jurisdictions below were chosen, as they are 4 of the most popular jurisdictions for the incorporation of offshore companies and they offer a wide range of benefits to a miriad of different companies.

Belize:
Belize is located on the border of Mexico and can be the perfect place for those registering an offshore company who desire complete anonymity. Belize has a wealth of services that makes creating and managing an offshore company easy.
However, during the last few years Belize has started signing TIEAs with several important countries around the world. These countries include, but are not limited to, Australia, Belgium and the United Kingdom. This makes Belize less attractive for companies operating in any of the countries that have a TIEA with Belize.

The British Virgin Islands:
The British Virgin Islands (BVI) has long been one of the most famous offshore jurisdictions and thousands of companies have been incorporated in BVI over the last few centuries. Unfortunately, major changes during the past 2 years have made it unattractive for companies to incorporate in BVI. This is mainly due to the TIEAs they have signed with countries such as the USA, UK, Australia, The Nordic Council (Denmark, Norway, Sweden, The Faroes, Finland, Greenland and Iceland), New Zealand, Netherlands, Aruba, China, Ireland and France. You may notice that the mentioned countries have high tax burdens and it was from these countries that most of the companies came to incorporate in BVI.

In the past BVI was the home for many Financial Companies (for the purpose of managing investments), Forex Trading, Mutual Funds etc. It was quite simple to establish these types of companies in the BVI and avoid paying any taxes. Today this has changed considerably and many companies are choosing to stay away from the BVI.

Cyprus:
For most Europeans Cyprus is the No. 1 place to incorporate as Cyprus has the lowest tax rate in Europe. It does have various TIEAs and Double Tax Agreements in place, but despite this it can offer (with the right tax planning) many small, medium and large corporations huge financial benefits.
Cyprus is so attractive to companies and individuals as it is a part of the European Union, it is possible to use Nominee Shareholders and Directors (for anonymity) and it is also possible to avoid corporate tax (0% corporate tax) if the Cyprus Company is nonresident.

The Seychelles:
The Seychelles are well known in the corporate world, but not quite as famous as the previously mentioned offshore jurisdictions. To incorporate in the Seychelles takes less than 1 hour, and they haven’t signed any TIEAs with other nations at this point in time. They will eventually be forced to sign some TIEAs but it is likely this will only be with small, non-important countries.

The Seychelles have very simple regulations in regards to the operation of Financial Investment Companies like Forex Trading, Banking Services and E-Currencies, as well as Mutual Funds, International Trusts and much more. One of the most attractive features of the Seychelles is the low incorporation fee, which is less than EUR 500 for a fully incorporated Seychelles IBC.

You do not need to visit any of the above jurisdictions to register a company within them. It is also possible to open offshore bank accounts in all of these jurisdictions without visiting the country or the bank. Everything can be handled online so that you never have to leave your country but can still achieve the great benefits of having an offshore company.

We hope that the above has given you some useful information in regards to achieving the incorporation of your Offshore Company in the near future. As every company is different and seeks different benefits we recommend you get in touch with one of our professionals who can find a personalized solution for your company and who can guide you, step by step, through the entire process.