As a business owner, you may be interested in the idea of setting up an offshore company in a tax haven. As you can see, offshore has many advantages. However, like many entrepreneurs, you may be hesitant, as you are not sure whether it is really legal. We will answer this question for you: is the creation of an offshore company legal?
What is an offshore company?
An offshore company is a company established in a foreign country with no economic activity. As such, the legal entity is established in a place different from the residence of the entrepreneur or owner. This choice is usually made for tax reasons. This is because the host country has a more flexible and attractive tax regime.
In contrast, an offshore legal entity has nothing in common with a subsidiary. The latter usually carry out their economic activities in the country of incorporation. Offshore companies, on the other hand, are established elsewhere simply to optimise the tax regime. This includes income tax, inheritance tax and capital gains tax.
Many countries have set up such systems to attract investors. This is the case, for example, in Panama and Andorra.
It is perfectly legal to set up an offshore company
Contrary to what many people think, it is perfectly legal to set up an offshore company. However, in order for it to be legal, it must comply with many rules. Certain precautions must also be taken if you have an offshore bank account with a legal entity. Transparency is a prerequisite. Indeed, there should be no vagueness about the bank transactions.
The source of these transactions must be known. The declaration of all profits is another obligation that guarantees the legitimacy of the creation of the offshore company. However, it must be said that when an offshore company is set up, there are tax penalties. It is in fact a shell company