Offshore Company Formation Types
Offshore corporations can take many forms but are generally some form of company with limited liability. The most popular of these structures are the International Business Company (IBC), Limited Liability Company (LLC) or any structure which closely resembles one of these two types of offshore companies.
International Business Company (IBC)
The International Business Company is a product of special legislation in many jurisdictions such as Seychelles, Belize, Panama, Bahamas and the British Virgin Islands (BVI), to name a few. IBC entities are characterized by the following:
· no taxation on foreign earned income
· limited liability of its members
· exemption from local taxes and stamp duty
· privacy and confidentiality
· simple company formation
· limited or no ongoing filing requirements
· inability to trade within the country in which it is domiciled
Whether or not actually called an IBC, this type of company is the prevailing entity used by those setting up an offshore company.
The IBC is popular for holding offshore investments, international real estate and as a personal services company for expatriates working abroad. Most of the time these companies do not qualify as a tax resident for the purpose of accessing double taxation avoidance treaties.
Seychelles Special License Company (CSL)
This is a hybrid offshore/onshore company that is allowed to transact in Seychelles as well as abroad at a reduced tax rate of 1.5% on its worldwide income. The CSL qualifies as a tax resident of Seychelles; thus being able to access the growing list of double taxation treaties signed by Seychelles with China being especially popular. The Seychelles CSL is being utilized as an investment vehicle into markets where it is able to capitalize on the lower withholding rates negotiated in the double taxation treaties signed by the Republic of Seychelles.
Limited Liability Company (LLC)
The offshore LLC is very similar to the popular offshore IBC as both are limited liability companies. This company formation is popular in Nevis and the USA where the Delaware LLC is especially popular as an offshore company. Many of the traditional characteristics of an offshore IBC such as anonymity and tax exemption on foreign derived income are similar with the offshore LLC. By all practical purposes, the offshore LLC closely resembles the offshore IBC in everything but name.