December 08, 2011

What's an Offshore business?

You heard about OFFSHORE before?

It's used in oil companies, and you think that it's not related to you?

Check at Wikipedia and you'll find:

The term offshore company is ambiguous. It may refer to either:

  • A company which is incorporated outside the jurisdiction of its primary operations regardless of whether that jurisdiction is an offshore financial centre (sometimes known as a non-resident company) i.e. a Canadian company may be 'offshore' for the purposes of a USA citizen ; or,[1]
  • Any company (resident or otherwise) incorporated in an offshore financial centre, i.e. offshore jurisdictions

And what's interesting for me now is the second definition.

So, why going somewhere other than your place to register your business?
And what makes offshore financial centers so special?

The main thing is that those countries, in order to attract businesses, they don't collect taxes if you are not resident doing business registered in those countries but your business is out.

As example, if you are a US citizen resident there. And you have a business registered in Seychelles. Than all business activities are tax exempt.

That should be great if you want to move goods through countries as in the case of online business, consulting business and some authors and artists would do the same.

So what you'll really win?

Let's see a case closer..

Imagine that you are an author of a book, and you are from the EU.
Your books will be published through the world in other languages.

So in this case, you'll make a business which will own the rights of publishing your book. You gave it to your own company. And your company will sell those rights to publishers and get profits.

By the end of the year, you don't need all your profit as salary! You are hiring Consultants, Publishers, Ad campaigns or what ever.

Regular businesses will pay taxes from their benefits, in this case, you'll save this parentage of the profit.

Note. you should not forget about your personal revenue taxes in the country you're living in. This is something different from your business taxes.

If you think that off-shoring your business and you want to get in, check this, you'll be able to do all that even without leaving your home: