Operation and cost of an offshore company

Operation and cost of an offshore company

To prepare well for the creation of an offshore company it is essential to know how it works and the main principles. The term “offshore” comes from English and literally means “off the coast”. When we call an offshore company we are talking about a company that is located outside the country of tax residence. However, the term is primarily used to refer to companies located abroad in a country offering tax advantages and greater confidentiality.

What budget does it take to create an offshore company?

The tariff is precisely one of the interests that push many leaders to create an offshore company.
This type of structure is relatively inexpensive to set up. It’s possible to create your own offshore company with a budget of less than 500 €. Nevertheless, the prices are very varied from one destination to another and in some countries this kind of structure cost more than € 2,000, which remains affordable.

On the other hand, we mustn’t forget that in addition to the offshore company it is imperative to open an offshore bank account in the name of the company. The cost of opening such an account can range from € 200 to € 2,000 (even in Switzerland) to which are generally added Nominee costs of over € 200. In all cases, be sure to compare these costs with the tax reduction resulting from the implementation of this device.

How does the offshore company work?

The main interest of an offshore company is of a tax nature. The goal is to choose a destination where the tax system is lower. In this case, the amount of corporate income tax is very low if not zero. This attractive tax system is a plus for the long-term vision of your entity. Because beyond the financial aspect, there is also the positive psychological aspect on the entrepreneur.

The greater the fiscal and administrative pressure, the more the serenity of the entrepreneur will be weakened. In this sense, if you no longer have this pressure, then you can really use your time and energy to productive tasks: developing a product, setting up a new network of partners, finding new customers, etc …

Naturally, this lighter taxation results in an accounting system which is also greatly simplified. For example, in many offshore destinations a simple up-to-date cash flow is sufficient without having to keep the accounts up to date.

Finally, the offshore company is also created to take advantage of the jurisdiction of the destination country. Here, the interest is to find a country guaranteeing the anonymity for the leaders and the shareholders, but also the secrecy.

Written by Vincent Ashton