Deciding to invest offshore is a crucial decision, but also, a smart one that many investors are turning to lately. By investing offshore, you’re affording yourself many financial benefits and security for your assets and personal information that would otherwise be privy to your government. These benefits include currency diversification, asset protection, less tax, wealth management, and increased privacy protection.
Making the decision that offshore investing is best for you is merely just the tip of the iceberg. Next, you’ll need to determine which offshore jurisdiction and what financial service best suits your needs.
How do you choose the best offshore jurisdiction?
Offshore jurisdictions are also referred to as tax havens and provide a wealth of benefits to international investors. Here are some characteristics a good offshore jurisdiction should have.
- No taxation in place for offshore companies operating outside the offshore jurisdiction.
- The offshore company laws in the jurisdiction protect the company and shareholders.
- There is no obligation to present any annual financial statements or accounting records.
- Offshore banking is readily available.
- Banking secrecy laws are in place.
Offshore jurisdictions like Anguilla and Belize provide all these benefits. Both countries are tax havens with strict privacy laws to protect foreign investors. They have also become very modernized in its internet and international calling services which ensure that you have total access to your offshore financial institution from wherever you are, whenever you need to. Anguillan investors can enjoy instant and secure offshore company formation services with ACORN (Anguilla Commercial Online Registration Network), a state of the art company registration system.
After deciding upon a jurisdiction for your investment, you must select an offshore company formation that fits your situation best.
Which offshore company is better, the IBC or LLC?
Most offshore tax havens provide offshore investors with two types of companies – IBC (International Business Company) and LLC (Limited Liability Company). Both types of companies protect their members from any personal liability incurred from the debts of the entity by creating a layer of legal separation between the owners of the company and the company itself. But, there are still many notable differences between the two that give each company a distinctive edge depending on what your goals are.
IBC
The IBC or International Business Company is a tax-neutral offshore company that is formed under the laws of a jurisdiction. The IBC cannot conduct any business within the jurisdiction it was formed. Any profits earned by the IBC are free from any corporate taxes in the offshore jurisdiction.
IBC’s provide complete confidentiality for the owner of the company since no personal information of the owner is necessary to be publicly filed with the government. Instead, only the information for a registered agent is required. As a legal entity, IBCs are free to engage in different businesses and activities such as buying real estate.
IBCs are the most commonly used companies for offshore banking in order to conduct international trade and investment activities.
Here are some activities IBCs are free to conduct:
- Buying and selling goods and services;
- Hold bank accounts;
- Operate businesses;
- Ownership of real estate and intellectual property.
LLC
An LLC or Limited Liability Company is a hybrid between a partnership and a corporation. An LLC has the same flow-through characteristics of a partnership where all income of the company flows through to the owners or investors; but it is like a corporation since it is limited liability and the owners are not personally liable for any debts of the company.
An LLC doesn’t issue shares and is managed by its members. Unlike an IBC, an LLC isn’t limited to conducting business solely outside of the jurisdiction of which it was established. An LLC has no restrictions on where it can conduct business.
Because an LLC doesn’t issue shares, it distributes dividends to its members. The distribution of these dividends is set out in an operating agreement and is not directly related to the value of a member’s contribution.
If you’d like to further discuss how each of these companies can benefit you, or which offshore jurisdiction will suit you best, contact the offshore financial experts at ICS.
