This is probably the most frequently asked question when it comes to offshore companies. The selection of possible jurisdictions seems endless – from well-known countries like Switzerland, Singapore or the Netherlands to small islands and places that most people have never heard of, like Grenada, Samoa or Marshall Islands.
The answer to this question is very simple, but not what most people want to hear: There is no perfect, one-size-fits-all offshore company location. There are several reasons for that.
Why there is no perfect offshore company location
- Different people have different goals and motivations for going offshore. Your best offshore location will depend on your particular needs.
- It will also depend on your country of residence, your industry, applicable laws and treaties between countries.
- Everything in the world of offshore companies and taxes constantly changes. A country that seems best now may get blacklisted or change its laws next year.
Specific needs and objectives
People have different needs and objectives when setting up an offshore company. The first thing that comes to mind is reducing or eliminating taxes, but there are many other motivations:
- Lower cost of doing business
- Fewer accounting and administrative duties
- Addressing particular industry regulations and restrictions
You must know which of these motivations matter to you and what you want to achieve before selecting an offshore company location.
Your country of residence and other circumstances
Furthermore, the selection of an offshore company location must be made with respect to your existing personal and business affairs, such as:
- Your country of residence
- Your industry
- Your business model
- Your target markets (where your customers live)
- Your financing and banking needs
Make sure you understand any double taxation treaties and other bilateral agreements between your country of residence and the particular offshore country. Also make sure that your country of residence allows foreign companies to do business in your industry.
Changes in onshore and offshore laws and regulations
Offshore company rules and regulations change very quickly, as big developed nations have become more desperate to collect taxes and balance their public budgets in the recent years. Many offshore countries change their laws to comply with new requirements, they are being added to and removed from various black lists and new double taxation agreements are being signed.
As a result, an offshore location that was perfect (for your needs) last year may not be suitable now and, on the contrary, a country which you had never thought of can now become perfect for your needs.
Choosing the best offshore company location
In light of the above, asking the question “What is the best offshore company location” is not very useful, unless you add “for me” and “now” to the end. Before selecting a jurisdiction, make sure you have considered your needs and unique circumstances across all the key areas, such as taxes, anonymity, reputation effects, incorporation cost, accounting requirements and industry specific regulations.