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Consultations on taxation

 

FAQ

What are offshore companies for?

The main areas where offshore companies are used are cross-border trade and property management. Offshore companies act as mediators in export and import transactions enabling the mediator to keep a part of the profit. In some cases, foreign partners may prefer trade through offshore companies, especially when political relationships between the countries are not friendly (Russia and the Baltic States) or when there are restrictions in currency settlements (Belarus).

In property management, offshore companies are mainly used for ensuring confidentiality. Offshore companies may be shareholders in companies of high tax rate countries and receive dividends on beneficial conditions by using benefits prescribed in double taxation avoidance agreements.

Most ships and yachts are traditionally registered in countries enabling foundation of offshore companies.

What is needed for acquiring an offshore company?

First, the country and the name of the company need to be decided. It is recommended to use the services of our consultant upon choosing the country.  In case of some countries it is possible to select a name from a list of ready-made companies. Of course, it is always possible to found an offshore company with an original name. It does not affect the price. A copy of the passport and the address of the authorised person is needed to prepare the authorisation. To open a bank account, a letter of recommendation from a bank where the client already has an account and a confirmation of the home address which can be any utility bill is required additionally.

How long does it take to found an offshore company?

A shelf company in Panama can be acquired in one day. Usually it takes 2–3 weeks to found a new company and to prepare the authorisation. In case of shelf companies in other countries (besides Panama), it also takes approximately 2 weeks to prepare the authorisation and the documents.

Why are nominee directors and shareholders necessary?

In many countries there is a rule that if a company is directed in that country, it becomes a resident of that country together with an obligation of registration and accounting. Therefore it is often not practical to be a director of an offshore company, but to trust a nominee director with that duty. The nominee director is placed in a country where no such obligation exists.  Being a shareholder in an offshore company also brings about an obligation of registration in many countries and even the need to declare retained profit.

How can I trust the company with a nominee director and shareholder?

We offer nominee directors and shareholders whose reliability has been verified and who we can vouch for.  The nominee director will issue an undated letter of resignation and by insertion of a date he or she will be officially resigned. This enables removal of the nominee director, if necessary, also ex post facto. The company is actually directed by the client by means of full authorisation by which he or she can open and manage bank accounts, conclude contracts etc. The nominee director doesn't even have to know where the company's bank account has been opened. The nominee director also lacks the right to dispose of the company's bank account.

The nominee shareholder holds the company's shares under a Deed of Trust where he or she declares lack of proprietary interests and rights with regard to the company's assets and assumes an obligation to act only pursuant to the instructions of the actual owner.

Why is an Apostille necessary?

Banks and other administrative agencies require for documents signed abroad certification that they are signed by persons authorised for that purpose. These signatures are usually certified by a local notary. The notary's competence is in turn certified by an Apostille, which constitutes a label according to form or an impression of a seal, issued by the Ministry of Foreign Affairs or another authorised body of the relevant country. Most of the countries have acceded to the international convention which recognises the validity of documents certified with an Apostille and they need no further certification.

What are the maintenance costs of an offshore company?

The first year's maintenance costs are already included in the foundation package. If the company is in need of accounting services (Great Britain, Cyprus), it has to be paid for additionally. As of the second year, a fixed annuity which varies by countries shall be paid. It includes state fees, local registered agent's fees, cover director's and shareholder's fees. Banks or other authorities may demand an updated authorisation document or an extract from the registry. These are paid for separately.

Are bearer shares possible in case of offshore companies?

In principle, bearer shares are possible for companies in some countries such as Panama and Belize. But the company's local registered agent needs to know who holds the bearer shares. Also, the banks often refuse to open accounts for companies with bearer shares. It makes using them rather senseless. In order to ensure confidentiality, a nominal shareholder is recommended to be used instead.

When does the registration of an offshore company have to be renewed?

Registrations of offshore companies are renewed after a year as of the acquisition. A renewal fee is needed for payment of a state fee, and also for the fees of the registered agent and the nominal director/shareholder.

If the registration of the company is not renewed in due course, the state fee increases 25–100%. If the state fee is not paid within a year after the due date, the company is excluded from the registry. Offshore companies can be restored, if necessary, within 5 years after the exclusion. In that case, a restoration fee and the annuities for all years unpaid shall be paid. If the registration of the company has not been renewed, new authorisations are not issued and a certificate about the company's good standing cannot be obtained from the registry.

What should be done when the offshore company is no longer needed?

If the registration of the offshore company is not renewed (the annuity is not paid), it will be excluded from the registry after a year. However, it is also possible to liquidate the company officially. It is a paid process and takes from a few months up to a year depending on the country.

 
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