INTRODUCTION TO OFFSHORE TERRITORIES

THERE ARE MANY OFFSHORE FINANCE CENTRES, WHICH ONE DO I CHOOSE?

The choice of offshore finance centre will depend on the purpose of the company but in general the centres can be divided into those suitable for commercial holding companies, those which although offshore and confidential have greater legal certainty and the personal "moneybox" company.

Commercial Holding Companies

These are used to provide a tax efficient route to pay dividends from a high tax jurisdiction to a low or no tax jurisdiction using a holding company as an intermediary. Suitability of the jurisdiction will depend on the provisions of a double taxation treaty between the holding company and the company from which the dividend originates. Denmark, UK, Netherlands, Luxembourg, Belgium and Switzerland would all need to be considered.

High Disclosure Offshore Centres which provide for greater legal certainty

We would include the highly reputable British Isles of Jersey, Guernsey and the Isle of Man together with the crown colony of Gibraltar in this category. In these territories, on incorporation, the company must file the names and addresses of the directors, secretary, shareholders and its registered office together the memorandum and articles of association. Any subsequent changes to the company's officers or new share allotments or change of registered office must be notified and filed at a public registry. In addition each year the company must file an annual return summarising its share capital, names and addresses of the shareholders, names and addresses of directors, secretaries, registered office and whether there are any charges against the company etc.

Whilst this compliance adds slightly to the cost of administration it provides greater legal certainty for companies engaging in real commercial transactions. Where a third party wishes he can check at a public registry whether the company is in good standing or whether the "purported" directors are the real directors of the company and have authority to properly bind the company. Availability of this information will be important to many companies dealing with overseas customers and suppliers.

Low Disclosure Jurisdictions

These tend to be situated in the Caribbean and surrounding areas and include territories such as Belize, British Virgin Islands, Bahamas etc. Their main product is the international business company (IBC). These highly flexible and cost efficient vehicles are best used as personal companies. The lack of publicly available information can make it difficult for them to trade with overseas customers and suppliers.

Summary

There are many jurisdictions to chose from and Fiduciary, who are experienced in this area, will be happy to advise with a free consultation.

Concepts of corporate taxation | Statutory Framework