What is an offshore zone and offshore countries?

What is an offshore zone and offshore countries?
5 min read

When deciding to open their own business, entrepreneurs take into account a number of factors: the company registration procedure, accounting requirements, specifics of taxation, control by the regulatory authorities, and so on. Having studied all the requirements of national legislation, many come to the conclusion that it is more profitable to establish a company in an offshore zone. It is a state or its part, where special conditions of registration and taxation for non-residents are valid. Let's understand what an offshore zone means, and how the companies opened here work. In particular, hiring offshore web developers to work for a company somewhere in the states has been very popular recently.

Historical background

For the first time the world met the offshore zones in a broad interpretation in the middle of the XX century. It was then when a US company got rid of the excessive tax burden by registering its operations in another country. However, the concept itself has deeper roots. Even the ancient Greeks understood that they could get rid of dues if they carried goods not directly but bypassing Athens. Hence the name - "offshore" can be translated as "far from the shore". This definition was relevant in ancient times and retains the same meaning until now: most offshore zones are secluded islands. By creating favorable conditions for the registration and operation of foreign companies, they attract funds to the budget and provide the population with additional jobs.

Features of offshore zones

The main purpose of jurisdictions is to create the most favorable conditions for foreign companies to do business. Hence the specific features of the zones. First of all, these are the territories isolated exclusively by law. The geographic and regulatory boundaries often do not coincide, since the country as a whole may not represent an offshore zone but allocate only part of its territory for it. Second, there is a lack of unification. What is an offshore zone and offshore countries? There are no unified standards, instead there are many classifications. Each country regulates the requirements, rules and norms at the legislative level. Classical zones are often characterized by a ban on resident activities within the country of business registration. This protects the domestic producer. Among the peculiarities of jurisdictions one should also mention absence of currency control and the need to keep records, confidentiality of information.

Goals of working in offshore zones

Clients who apply to Prinancial to open a company in a favorable jurisdiction have different goals. Among the most common are:

  • Reducing the tax burden. Optimization of payments by registering a company in a country with a favorable law guarantees the company lower costs and ensures better financial performance.
  • Simplification of accounting. In offshore zones, depending on the type of jurisdiction there may be simplified rules for the reporting or there is no need to keep records at all.
  • Purchase of real estate. Very often, the functioning of foreign companies is associated with the purchase of premises in one of the most attractive countries for the client. If you have not yet decided on the list of those countries, the employees of "Prefinans" can recommend you profitable areas.
  • Optimization of export and import payments. Most offshore zones have double taxation avoidance agreements.
  • Preservation of anonymity of investments and money transactions.
  • Protection of property and insurance against financial risks in conditions of national instability.

It is reasonable to use offshore zones for conducting business when owning:

  • holding structure;
  • investment company;
  • A firm engaged in export-import activities;
  • a captive, reinsurance organization
  • intellectual property, and so on.

Advantages of working offshore

Registering a company in a zone with a favorable legal climate provides a lot of advantages. In addition to the above-mentioned tax optimization, company owners get the opportunity to work without disclosing information about themselves. This is due to the closed registers or the use of nominee representatives - the "Prinancial" experts will help with the selection of candidates. Registering a company in a developed country does much to enhance its prestige, opens up access to world markets, developed banking system, strategically important collaborations and so on.

Among the advantages is the simplicity of registration. It is difficult enough to open a business. Sometimes the procedure can take a long time, and the entrepreneur will have to deal with a lot of bureaucratic moments. In offshore zones everything happens quickly (sometimes counting in days and even hours), and if we entrust the registration to "Prifinans", it is even easier. Our employees have enough experience and knowledge to provide advice and accompany the process of creating a business in any zone.

Commissions, mandatory fees, account maintenance and other costs in the country of registration, as a rule, are also lower. To these advantages we can add loyal legislation, economic and political stability of the country of capital location.

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