Business owners have plenty of good reasons to take their businesses offshore, but how do they choose the right location? You need to weigh all the potential benefits and drawbacks of an offshore location carefully since this will be one of the most critical decisions for the future of your company.
Why Choose an Offshore Company?
Despite what you may have heard, there are plenty of benefits to setting up your business offshore. This is because it helps you take advantage of certain laws that protect your assets and reduce your tax burden. Offshore companies are growing in popularity as we move further into the digital age. If you’re a business professional who is considering the benefits of setting up an offshore company, it’s worth looking into!
Offshore Tax Benefits
When we talk about doing business offshore, we’re not talking about illegal activities like evading taxes or hiding money from the government. We’re talking about using local and international laws to benefit your affairs.
These laws are available to anyone who wants to use them, and we can show you how to set up your business in a perfectly legal and legitimate way. There are numerous benefits to doing this, from asset protection to cost savings.
The Best Places in Europe to Form Your Own Company
It’s a common practice for businesses to start up in their home country and then move to another when they begin to expand. Many companies are choosing to start up in other countries, which have lower incorporation fees. We’ll take a look at some of the best places in Europe in terms of incorporation fees, tax levels, and other factors.
Cyprus
Although Cyprus has recently raised its corporate tax rate to 12.5%, it is still often considered a tax haven due to the many benefits it offers investors and companies looking to incorporate in the European Union.
2003 was the year that the traditional offshore corporate structure was eliminated for all companies entering the European Union. Even though Cyprus no longer has this advantage, its financial market is still thriving due to the variety of tax incentives they offer for different types of companies. Non-resident companies are not required to pay taxes on profits made from foreign sources. This includes, but is not limited to:
- No tax on profits
- No tax on dividends
- No royalty payments
- No capital gains
- No withholding tax
- No wealth or inheritance tax
Malta
Malta has a full-imputation tax system, which means that corporate profits are taxed at 35%. As a result, each shareholder receives imputation credit for the taxes that the company has already paid when dividends are distributed from the company’s taxed profits.
This results in a reduction of the shareholder’s tax burden to 0% – 5%.
Taxes paid by a participating holding company are fully refunded to shareholders when distributions are made.
However, there is a Value Added Tax (VAT) rate of 18% applicable to companies trading within the EU. Maltese companies also benefit from some other tax benefits, including:
- Low corporate tax rate of just 5%
- Participation exemption on dividends and capital gains
- Double taxation treaty network covering over 60 countries.
Brčko, Bosnia and Herzegovina
Although it may sound strange, this small country in Southeast Europe is very welcoming to business owners and investors. One of the main reason why it’s such a desirable destination for establishing a company is because of the low-income tax rate of only 10% and 0% dividend tax.
Some of the other benefits are:
- Exemption from utility fees for displaying the company
- Reimbursement is equal to the total amount of money used for new investments
- Reimbursement of court fees for registration of a business entity, and more.
So, we hope that this text has given you a little idea of what to expect from our project. We aimed to compare popular destinations with undiscovered ones, and we can assure you that Brcko is a place with a wealth of resources and skilled experts that can help you grow your business and reach your goals. We will try to continue to inform you about the progress of our work, but in the meantime, you can familiarize yourself with a little more information about our project here.