Advantages of International (Offshore) Legal Entities:
In simple terms, an International Business Company ('IBC', also known as Offshore company) is a Standard Limited Liability company which is used as a tool, by corporations and individuals through out the world to direct profits out of high tax countries and into specific jurisdictions or international financial centres, thus taking advantage of their low or zero tax regimes and their double tax treaties. The beneficial ownership and business activities of the international (Offshore) enterprise are usually outside the country of its registration.
Usefulness of International Business Companies:
There are many business activities which are best suited to be operated through an international entity. Below are some examples of such activities. In this case, a Cyprus registered IBC is assumed:
(a) Exports: If you export products to a third country, you may issue invoices via Cyprus. Therefore, you can pay less tax to your home country because the Cyprus Company buys at a lower cost and sells at a higher price. In Cyprus, you only have to pay 10% tax on your profits. You do not have to send the products via Cyprus – instead, you can deliver them directly;
(b) Imports: If you import products from third countries, you may issue invoices via Cyprus: In doing so, you pay less tax to your home country because the Cypriot company sells at a high price. Thus the profit which must be taxed in your home country is reduced. The profit in Cyprus is only taxed at 10%. You do not even have to send goods via Cyprus – your supplier can deliver directly to you;
(c) International trading (an international company can be used as intermediary to re-invoice exports and imports such as consulting to be provided by the Cyprus entity to a company in another country for a fee thus reducing the taxable profit of the paying company;
(d) International services companies (re-invoice services through an international company);
(e) International construction and/engineering companies;
(f) International transport/distribution companies;
(g) Royalty companies;
(h) Real estate companies;
(i) Shipping and ship management companies;
(j) Commission agents;
(l) Holding companies (receiving dividends from foreign subsidiaries);
And many other uses. Please go to Question 1 of our FAQ section for additional information.