As the world becomes more connected and accessible, incorporating your business offshore is increasingly useful.
Every nation has different tax codes, so if you find yourself wishing you paid less, had more privacy, or had increased flexibility, incorporating your corporation abroad might be the solution for you.
But, what are the best jurisdictions for incorporation?
5. The Netherlands
Although the Netherlands lands in spot number five on our list, there are some serious advantages to incorporating your offshore company in the Netherlands.
Generally, Dutch businesses can expect to pay a general 19% corporate tax rate on their profitable income. The tax rate is increased to 25% for profits that exceed 200,000 Euros.
However, if your corporation does not have activity in the Netherlands, then your entity is not taxed at the corporate level.
This means you can actually incorporate in one of Europe’s key economic centers without paying any corporate taxes.
On the other hand, companies that have an office, employees, or a significant number of customers in the Netherlands may be taxed by the Dutch government.
The Netherlands also boasts a secure banking system and a robust judicial system.
Additionally, in continental Europe, the Netherlands is among the quickest countries to incorporate a business.
After you turn in the documentation, the approval process only takes a few days. If you are a citizen of the European Union or the European Economic Area, you can open a business in the Netherlands just like a local would.
4. The Republic of Cyprus
The island nation of Cyprus boasts a low tax rate, quick incorporation, and many tax incentives.
With a bustling free market and efficient tax code, Cyprus is an optimal jurisdiction for offshore corporations.
One crucial advantage is that the corporate tax rate is only 12.5%. This is one of the lowest rates in the European Union.
Additionally, the Cyprus tax code offers exemptions on earnings from interest, dividends, and disposable securities.
Furthermore, corporate expenses are tax-deductible. (Except for entertainment expenses, which have an annual limit).
Cyprus also has over 40 tax treaties to help protect you from double taxation.
Incorporating a corporation in Cyprus is easy and relatively fast.
Some of the requirements include:
- A representative address in Cyprus
- A head office located in Cyprus
To be incorporated, your company only needs one director and a shareholder. Foreigners are allowed to act as a director or shareholder.
The filling process can be completed in English, which is also the majority language of the island.
3. The United Arab Emirates
Historically, the United Arab Emirates came to prosperity via oil, but now the UAE is emerging as a location for tourists, foreign investors, and offshore business.
What makes the UAE so attractive to investors around the world?
Companies incorporated in the UAE pay zero personal and corporate taxes (unless they are an oil company or a foreign bank).
There are also no VAT or sales taxes, so doing personal business in this jurisdiction is highly tax efficient.
Moreover, the UAE is also considered to be safe and stable for doing business by many global investors. In recent years, the United Arab Emirates was awarded first place in the region for ease of doing business.
English is also widely spoken in the UAE, making the country an approachable location for English proficient investors and business owners.
Importantly, a new law put in place in December 2020 allows foreign investors to own 100% of a UAE limited liability company.
There are various licenses and options to explore in the UAE, but some of the most popular are:
- The Free Zone limited liability company
- A private shareholding company
- A public shareholding company
With a corporate tax rate of 0% and a stable economy, the UAE is a location worth considering when incorporating your business.
2. Seychelles
Seychelles is another jurisdiction with many benefits for incorporating your offshore corporation.
First off, Seychelles levies zero corporate taxes. This can mean huge savings for your company when properly structured.
The jurisdiction also emphasizes banking security and privacy for firms incorporated there.
Another critical advantage of Seychelles is privacy. The names of company directors and shareholders are not recorded in the public registry.
Confidentiality, security, and tax efficiency are all major benefits of Seychelles.
Conveniently, Seychelles makes incorporation easy.
Only one shareholder or owner is needed to incorporate. Plus, a business plan for the proposed company and a few other standard documents are required.
Also, foreign investors can easily obtain a residence and work permit.
The incorporation fees are minimal, and there is no capital required to open a business in this jurisdiction.
Even better, the approval process only takes 3-5 days.
Seychelles also has over 45 treaties with countries from around the globe that prevent double taxation.
With zero corporate taxes, a high-level of privacy, and a simple incorporation process, Seychelles is seriously worth considering when incorporating a business abroad.
1. Vanuatu
Finally, the Republic of Vanuatu is one of the top jurisdictions to incorporate your offshore company. The small archipelago country has:
- Zero corporate taxes
- Zero personal income taxes
- Zero capital tax
- Zero wealth tax
- Zero estate taxes
Likewise, offshore bank accounts in this jurisdiction do not have to pay taxes on interest earned.
But that’s not all, companies incorporated in Vanuatu pay no taxes on income earned outside the country.
Additionally, it has some of the strictest banking privacy laws in the world.
In simple terms, Vanuatu is a pure tax haven.
Incorporation in Vanuatu is straightforward. All you need is an owner, a shareholder, and a secretary (this can be the same person), three proposed names for the business, the number of shares of each shareholder, and basic personal identification information.
What’s the next step?
Now you know the top 5 jurisdictions for incorporating your business. However, there are no cookie-cutter solutions when it comes to offshore structuring.
Which jurisdiction is best for you depends on a variety of factors, including where you have tax residency, bank, and plan to do business.
To set up the optimal offshore structure, schedule a complimentary consultation with our team.
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