An offshore company has its registered office in a country other than the resident county of it owners.

Offshore companies are typically in a jurisdiction, which imposes minimal tax on the company's income or even allows complete tax exemption. Restrictions on the company's activities exist: (It is not allowing it from trading locally or in the local currency etc).

Offshore companies provide other benefits: Confidentiality and anonymity in one's business dealings. I.e. The company may hold expensive assets (of which you are the shareholder). If the company is not obliged to disclose the shareholders, there will be no evidence of the identity of the beneficial owner of the assets.

Anonymity could allow one to protect assets against any possible interference from one's home country's authorities.

Assets (cash deposits, stocks, shares, yachts, property) held by an offshore company in various countries can be easier to manage.

In the case of death, the passing of wealth is simplified with an offshore company, because one needs only to obtain probate in the country where the company is registered, and not in all the countries the assets are located. Only shares will be transferred not the company's assets.

Specific circumstances and the individual's requirements will determine the most suitable offshore jurisdiction.

Choosing a politically stable jurisdiction with a good reputation is primary. It would be difficult if not impossible to open an account with a reputable bank and even conduct business operations if the jurisdiction of the county chosen was seen as non reputable.

Legislation in its home country as well as laws protecting the company's investments with banks in that chosen jurisdiction country are an obvious advantage. The presence of professionals: lawyers and International bankers/consultants is an important factor in the running these companies.

There are two types of offshore companies:

Type A companies pay no taxes, except for an annual statutory charge.

Type B companies are where a low rate of income tax actually applies. In this case the company will have added advantage of existing double tax treaties (such as Cyprus).

The second option is more expensive to establish and maintain, but will enable it to extract income from one country and receive it in another with minimum taxation.

The nature of business will determine which type A or B is best i.e. Income from dividends & interest would indicate the need for type B having access to double tax treaties.

Some useful links

• Jurisdictions
• International Business Companies - Cyprus
• Incorporation Fees
• Double Taxation Treaties