In the absence of an advantageous tax system in their country, more and more business leaders are now turning to offshoring. Creating an offshore company can be a quick and easy procedure just as it can also generate headaches. Hence the interest of using a lawyer for offshore company. But is this step mandatory?
Why create an offshore company?
When you are at the head of a company, you are aware that taxation is binding in the country. Making profits is increasingly difficult with the different charges you have to pay throughout the year. And if installing your business abroad, in a fiscally interesting country, was the solution?
Many managers are still reluctant to outsource their business , especially for fear of a decline in the quality of their services, counterfeiting or security risks. Only, their fears are unfounded, because the creation offshore company reserves them more advantages than disadvantages. The Tax Lawyer Toronto happens to offer the best support here.
The first benefit of setting up an offshore company is tax optimization. This is the first motivation of all those who embark on this experience. In France, the tax is based on two elements: residence and territoriality. By setting up your company abroad, you will be free from the problem of residence. No income tax will be levied on you. You will only have to pay a token amount each year, called the annual government license. The amount of this one does not exceed 300 €.
Another advantage of offshoring is anonymity . In addition to tax advantages, offshore jurisdictions also offer a major advantage: they ensure the confidentiality of the business and anonymity of leaders. Thanks to the Nominees, you have the possibility not to reveal your identity in the contracts. This protection can extend to the banking sector if you decide to open an offshore bank account.
But beware, some countries have signed automatic information exchange agreements (EAOI). They are therefore obliged to reveal the identity of the owners of all bank accounts opened in their institution to the tax authority of the country of residence.
Another advantage of the offshore company is the simplification of administrative procedures and the flexibility of management. The leaders particularly appreciate the fact that offshore jurisdictions do not require their accounts to be made public. In addition, management costs are more affordable in tax havens.
Who has an interest in creating an offshore company?
Offshoring may be advantageous in every respect. However, not everyone is a winner with this system. Creating an offshore business is only worthwhile if the tax burden in your home country is particularly high. As mentioned above, we create an offshore company, especially to avoid too restrictive taxation. But when do you say you pay too much tax? When you pay more than 15% of corporate taxes, you can say that you are heavily taxed.
Because of this tax burden, the payment of expenses and wages becomes complicated. It can even happen that the profits made are used to give life back to the activities of the company. In this case, there is no doubt. The creation of an offshore company is the solution.