As terms the words offshore business and offshore company have no precise legal, tax or general business meaning, as the word offshore often means nothing more than anywhere other than the place of physical location of the person using the word (i.e. overseas). The word offshore often implies an activity, business or arrangement which is in some manner not entirely legal. Therefore, it is important to understand that we use the words offshore business and offshore company as terms of definition in connection with matters that are entirely legal, such as the structuring of international business and family wealth management or tax planning.

Offshore simply means having a legal entity, in a jurisdiction (country) other than where you live, which has the ability to own assets. This entity can be a trust, a company, or even your own personal bank account. In other words "offshore" simply means somewhere else. It doesn't mean you have to live somewhere else, only that you control such entities that are. And why would you want to control a legal entity that exists in another country? For the privacy and tax advantages it affords. In that respect, the popular offshore jurisdictions are what are known as "tax havens" - places in which tax is legally not payable.

These jurisdictions are all over the world - places like Jersey, the Isle of Man, Belize, Turks & Caicos, The British Virgin Islands, the Cayman Islands, Bermuda, Panama, Malta, Antigua & Barbuda, Costa Rica - and even in the South Pacific in the Cook Islands and Vanuatu. Since the above description is quite complete, you may wonder why "offshore" is sometimes regarded as "sleazy" or undesirable. The truth is that neither your local banks nor your government want you to know about offshore instruments and the advantages they provide. They don't want you putting your money somewhere else. If you do, the local banks will lose your business, and the government will lose track of what you're up to. It's that simple. They believe you owe them, and they don't like it if you take your business somewhere else!

If you do repatriate your assets in the future, the government will certainly want its share at that time, but they don't want to wait in case you never repatriate them - which is quite possible. The government wants your money now. Credit bureaus want to know all about your financial transactions, so they can sell information about your finances to others - and any other personal data that they have on you. In other words, your financial affairs hold a lot of important information for those in power. If you make your affairs private - because you have instigated an offshore strategy, then this type of personal information will no longer be available.

This is the reason you won't see any advertising about the advantages of structuring yourself offshore. In many countries it is forbidden to advertise the existence of offshore investment funds - even though they perform far better than the ones you normally have access to. Why? Same reason, they don't want your money to disappear - and they don't want to lose out on financial information about you.

The word "offshore" has often been linked to crime. This is a deliberate strategy of government and other vested interests. Sure, some criminals may bank their ill-gotten gains in an offshore account - but that doesn't negate the benefit of being offshore as a law-abiding citizen. And what they forget to tell you is that many offshore banks have quite stringent controls on who banks with them - and have their own reputation to protect. It's not in any bank's interest to be known as a haven for criminals. Why would you want to go offshore? Well, it can be a means to legally decrease your tax burden. You may be able to defer, reduce and even eliminate taxes by following a carefully thought out strategy. You may want to do it for retirement planning - in this way your nest-egg will grow without being continually "trimmed" back by various withholding taxes. The power of compound interest works much better when you're not getting tax deductions! You may want to go offshore to protect your assets from forfeiture, litigation or even a particularly vindictive ex-spouse. Maybe you just have no faith in your domestic banks or currency (and why should you?). And one of the greatest advantages of being offshore is the privacy it affords you. No one else need ever know that you have money somewhere else. And unless you tell people, your privacy is complete - because the banks in offshore jurisdictions have strict secrecy laws and will not disclose any information about a client.

Typically, our clients utilise the following types of offshore companies to structure international business and for tax planning:

· Very low or zero tax offshore companies incorporated in jurisdictions often described as tax haven islands, such as the differing types of offshore company that can be formed in offshore company formation centres such as the BVI or British Virgin Islands, Belize or the Seychelles.

Companies incorporated in jurisdictions which offer both offshore companies and onshore companies and which may benefit from favourable tax regulation and / or special offshore company regimes.

Hong Kong, not typically regarded as a tax haven, has a favourable tax regime which effectively means that correctly structured, managed and administered Hong Kong Companies can be utilised for undertaking offshore business and international business without paying tax in Hong Kong provided that any profits arising are not made in Hong Kong. This type of tax regulation is known as "territorial taxation".

· The LLC or Limited Liability Company and the LLP or Limited Liability Partnership types of company.

These classes of company are used for offshore business, international business and tax planning because they have the advantage of limited liability but the flow-through characteristics of a partnership for tax purposes. By this, we mean that profits are divided among the members, in proportion to their respective holdings, and are taxed in their hands.

In some circumstances, if all the members or partners are non tax resident in the domicile of the LLC or LLP company and no business is undertaken in that country, neither the LLC or LLP company nor the members or partners will be subject to tax in the company's country of establishment. Such companies are said to be "fiscally transparent" and examples include US LLCs, the Isle of Man LLC and the UK LLP.

· Companies incorporated in the many onshore countries which have tax regimes that are by statute tax advantageous for specific international purposes.

The world of offshore is more complex than the black-and-white tax world inhabited by the media; offshore business consists not only of tax havens but also of onshore high tax countries competing fiercely to attract international companies and individuals with all manner of tax planning regulations and opportunities. These tax advantageous regulations are used for a wide variety of tax planning business, such as:

o Double tax treaty planning relating to dividends, interest and royalty payments.
o The establishment of holding, international headquarter treasury and finance operations.
o Specialist business, for example, leasing.
o Personal and family wealth management and tax planning.

In fact, almost all countries offer tax regulations of one kind or another to encourage inward investment.

International tax advisers have long been aware of the opportunities which exist for improving overall tax efficiency by using the special low tax regimes offered by high tax countries seeking to encourage international business. However, successful implementation of such structures is dependent on a wide variety of issues, often relating to matters such as anti-avoidance provisions, double tax avoidance, controlled foreign company and management and control tests and provisions, transfer pricing, thin capitalisation, participation exemptions, capital gains tax and a myriad of other ever-changing tax regulation. More recently, the weapons contained in the armoury of the tax collectors have been supplemented by exchange of information treaties and provisions.

So today the offshore world includes the expert implementation of specific tax advantageous structures domiciled in high tax onshore countries as diverse as the UK, Portugal, Singapore, Greece, Belgium, Austria, Spain, Switzerland, Luxembourg and the Netherlands.

Individuals and corporations go offshore for a number of reasons:

· Save tax
· Protect wealth
· Reduce risk
· Maintain privacy
· To avoid unnecessary regulations or bureaucracy.

International Trading - By interposing offshore companies into international trading transactions it may be possible to accumulate profits arising out of these transactions.

Holding portfolios of Stocks, Bonds and Cash - Cash assets are held offshore, and may earn deposit interest gross or be placed in collective cash funds.

Holding Investments in Subsidiary or Associated Companies - Capital gains arising from the disposal of particular investments can be made without taxation. In the case of dividend payments, reduced levels of withholding taxes can be achieved through the use of a company incorporated in a zero or low tax jurisdiction that has double tax agreements with the contracting state.

Utilizing Double Taxation Treaties through Intermediary Holding Companies. Companies wishing to invest in countries where a double tax agreement does not exist between both countries can establish an intermediary company in a jurisdiction where there is a suitable treaty.

Privacy and Wealth Protection - High net worth individuals gain privacy and save on professional fees by using offshore companies as Personal Holding Companies. These entities may be suitable for inheritance planning and reducing the costs and time delays in probate.

Personal Service Companies - Individuals who provide professional services, such as contractors, entertainers, aviators, film executives etc., can realize considerable savings where fees earned are accumulated tax free in Personal Service Companies based offshore. Payments may also be structured to minimize income tax.

Property and Land Ownership - Offshore entities are regularly utilized to own property and real estate.

Employment Companies - Payroll costs and travel expenses may be reduced by paying employees working overseas from your offshore base. This may also provide tax relief and social security saving benefits for the employees.

Patent, Royalty + Copyright Holding - Intellectual property including computer software, technical knowledge, patents, trademarks and copyrights, can be owned by, or assigned to, an offshore company upon acquisition of the rights. The rights can then be franchised to companies around the world and the resultant income can be accumulated offshore. A carefully selected jurisdiction can withhold taxes on royalty payments with the commercial application of double tax treaties.

Financing - Offshore companies can be established to fulfill an inter-group treasury management function.

Stock Market Listings and Capital Raising Exercises - Many large corporations in economically and politically uncertain countries often diminish the perception of risk by moving ownership of assets and the base of their operations offshore.

The users of offshore facilities fall primarily into the two categories of individual and corporate users.

Individual users include

· High net worth individuals.
· Expatriates and emigrants.
· Owners of businesses.

High net worth individuals are generally those clients with disposable assets in excess of two million dollars.

Expatriates are, in the main, individuals who are living away from their home countries, either on overseas contracts of employment or as retirees, whereas emigrants are individuals who have permanently moved from one country to another in pursuit of a better quality of life and/or business interests.

The category of 'owners of businesses' relates predominantly to proprietary businesses where the shares are held by family members.

Corporate users include:

· Multinational companies.
· Conglomerates.
· Shipping companies.
· Financial institutions.

Individual users

Whilst the profiles of individual users are diverse, they would include, amongst others:

· Individuals enjoying inherited wealth.
· Entrepreneurs and industrialists.
· Businessmen and senior executives.
· Entertainers and authors.
· Sportsmen and other personalities.
· Inventors, engineers and designers.
· Owners of intellectual property rights.
· Medical practitioners and other professionals.

Traditionally, such users originated from Europe, North and South America and certain African and Australia-Asian countries. Over the last decade, however, clients falling into this category have increasingly come from the Eastern European countries, the CIS, the Indian sub-continent and the booming economies which make up South East Asia and the Pacific Rim.

Individual users utilize offshore facilities for the following reasons:

· Tax planning. Estate and investment planning.
· Pre-immigration planning.
· Confidentiality and privacy.
· Security.

Corporate users

Most modern corporations, be they medium sized companies pursuing international expansion, multinational companies, conglomerates, shipping companies or financial institutions, are market driven and many have been able to establish and maintain their competitive edge by efficiently structuring aspects of their operations through offshore centers.

Holding companies, foreign direct investment companies, mixing vehicles, royalty companies and treasury management companies are but a few examples of the types of companies that have been established by corporate users in offshore centers.

Treasury management operations would typically include cash management, capital raising exercises, the provision of finance to subsidiaries and risk management. Corporate treasurers often apportion their cash resources between their subsidiaries. This process, known as 'netting', is regularly undertaken from an offshore center.

Many corporate users have favored establishing a physical presence in offshore centers, which, in addition to treasury management, are utilized for

· Regional headquarters.
· Marketing, trading and administration centres.
· Re-export, trans-shipment and pre-positioning.
· Manufacturing and assembly plants.
· Transportation and distribution.

Freeports, export processing and special economic zones have continued to attract corporate users. Mauritius, which has in excess of 600 companies operating in its Export Processing Zone, Jebel Ali, in the United Arab Emirates, the Isle of Man and Madeira have all been successful in attracting multinational and large companies to establish physical presences.

The individual and corporate users of offshore services are, diverse, matched only by the wide range of benefits that offshore centers offer.

An apostille is a special seal applied by an authority to certify that a document is a true copy of an original. Apostilles are available in countries, which signed the Hague Convention Abolishing the Requirement of Legalization of Foreign Public Documents, popularly known as The Hague Convention. This convention, created in 1961, replaces the time consuming chain certification process used so far, where you had to go to four different authorities to get a document certified.

Why do I need one?

If you open a Swiss bank account by mail, the bank will not see the original of your passport. The people who process your application in the back office will have to check that the copy is correct. Each bank has devised its own way of establishing whether a passport copy is acceptable to open an account. Some banks will accept a passport copy if it has been authenticated (legalized, certified) by a notary public, but most will require that the document bears an apostille.

Where can I get an apostille?

Each country party to the Hague Convention designates an authority within its territory that can issue apostilles. For example, in the USA, it is the office of the state's secretary. In practice, you should contact a notary to get an apostille. Please note that some notaries may not be familiar with this procedure - they may propose you an ersatz that they are more familiar with. If it does not bear the term "APOSTILLE" in big, that's not it. Also, you don't have to explain why you need an apostille when dealing with your notary - just tell him what you need. Finally, please bear in mind that there are some countries that did not sign this treaty yet and thus no apostilles can be obtained.

What are apostilles normally used for?

An apostille can be used whenever a copy of an official document from another country is needed. For example for international marriages, adoptions, inheritance, but also for plain contracts. The apostille is an official certification that the document is a true copy of the original. It does not certify that the original document's content is correct, however.

What should I do if I can't get one?

If an apostille is required to authenticate a copy of your passport, the bank will accept no substitute. If you cannot get one, contact us to see if there are alternative ways of legalizing your document. Don't try to get just any type of official seal - this won't work and the bank won't open the account.