Offshore Company

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About 'Offshore Company'?

An offshore company is one registered in a country where it doesn't carry out any kind of economic activity. They are usually registered in tax havens.

When an offshore company is created, what is intended is to benefit from the conditions offered by tax paradises. The great advantages that offshore centers offer are: the secrecy of the information, important tax advantages, and that the assets will be protected. The names of the owners will be very difficult to trace. It should be noted that an offshore company doesn't have to be illegal if its existence is declared to the treasury.

If the company carried out any kind of economic activity in the country where it was established, it would become an onshore company, so it would have to pay taxes very similar to those of any country with a high level of taxes. The creation of an offshore one will avoid taxes such as Inheritance Tax, Wealth Tax or taxes on income and consumption.

In order to constitute an offshore company, the amount established in the offshore center will have to be paid. On the other hand, it will also be necessary to pay the legal intermediary or lawyer who will be in charge of carrying out all the procedures for the constitution of the offshore company. It should be noted that creating this type of company doesn't have major obstacles.

These companies don't carry out any type of economic activity and it's not necessary for them to hold shareholders' meetings or have employees. Unlike traditional companies, there is no obligation to present annual accounts, which means that accounting and auditing expenses aren't necessary.

Characteristics of offshore companies

Among the characteristics of offshore companies are:

- They don't carry out any kind of economic activity in the country in which they have been incorporated.
- The usual thing is that they are based in tax havens.
- Low taxation, that is, they pay very little taxes.
- There is no obligation to present annual accounts, so they don't generate accounting or auditing expenses.
- Easily and with up cost relatively inexpensive registration. It will be mandatory to pay for the services of the lawyer who is in charge of establishing them.
- Low annual maintenance costs.
- There is no obligation to hold meetings.

Advantages and disadvantages of an offshore company

Among the advantages of offshore companies are:

- They offer privacy: There is a high level of confidentiality. It's very difficult to locate your assets and their owners.
- Tax advantages: Whoever wants to pay less taxes can create an offshore company.
- Easy constitution: Quick registration and constitution procedures and relatively low fees.

However, there are also drawbacks:

- There are those who use this type of company to defraud the Treasury. Taxes are evaded that later end up falling on other taxpayers.
- Unfortunately, many offshore companies have been used to hide funds from criminal activities such as terrorism and drug trafficking.

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