The phrase “offshore company incorporation” means incorporating a company in another country other than your own. While a company can be incorporated in any country in the world, tax professionals advise doing so in a country which does not compel paying income taxes on their profits.
There are several countries which do not tax their corporations when they engage in offshore commerce which make them an ideal candidate for offshore company incorporation. Consult with a lawyer, accountant, or other tax professional about which countries are tax free before doing offshore company incorporation. While there are countries with no income taxation, other countries only tax income generated within their borders. That is why the term “offshore” is so important as these countries will not compel the payment of income taxes for their offshore company incorporation as long as their income is truly made offshore.
Besides avoiding paying income taxes there are other reasons for considering an offshore company incorporation. One reason is having privacy in one’s financial affairs by selecting a country which allows anonymous ownership of legal entities such as corporations and private foundations. Ultimate privacy can be achieved in a country where the offshore company incorporation can use “Bearer” stock certificates rather than corporate share certificates having a specific person’s name on it. The word “bearer” as opposed to a person’s name means whoever possess the bearer shares owns them. Bearer shares can be passed to a new owner in minutes allowing for a fast transfer of ownership of the offshore company incorporation. No one can know who owns the offshore corporation until they can see who has the bearer shares.
Another reason for an offshore company incorporation is estate planning. The problem with simply leaving a will upon one’s death is that requires a civil court to probate the will which can become very expensive and takes up a lot of time. Avoiding probate in order to pass on assets to the heirs is a very desirable reason for setting an offshore company incorporation. Transfer ownership to every asset to different offshore corporations so that all eggs are not in one basket. Then simply leave the bearer shares in trust with a law firm, accounting firm, or a trust company with instructions to deliver the bearer shares to the heirs upon death. This is the fastest and cheapest method to avoid probate. Offshore company incorporation could be done for each asset such as real estate, bank accounts, securities, antiques, jewelry, and vehicles. The reason for this is to isolate every offshore corporation from the others in case the corporation gets into legal trouble exposing its assets to seizure from government tax authorities, ex-spouses, civil lawsuit plaintiffs, and creditors.
Offshore company incorporation can lower or legally avoid income taxes, provide financial privacy, and work as a probate avoidance estate planning tool.