Substance at the lowest price for a classic offshore company

A substance is the actual presence of a company in the country of its incorporation. In other words, it is the actual activity at the address of legal registration. Nowadays, most countries impose similar requirements on foreign companies due to the tightening of international policy in the field of anti-money laundering and tax evasion. At first glance, it is simply impossible to carry out offshore activities, as it contradicts the idea of an offshore and minimizes all its advantages. However, it is not as simple as it seems at first glance.

Generally accepted criteria

Jurisdictions that have not implemented the principle of substance have long been blacklisted by the EU. This means that companies registered on their territory periodically face difficulties in dealing with international banks, business partners and bear serious reputational risks. It is not easy to assess the real presence of a company in a country, so most countries have developed a system of universal criteria:

• incorporation of the firm in the territory of jurisdiction;
• an existing office in the country of incorporation;
• actual presence in the jurisdiction of persons managing the business;
• a corporate account with a local bank;
• a functioning website;
• staffed by qualified employees;
• timely preparation and correct storage of financial and tax reports.

Obviously, a competent entrepreneur can create a "nominal" business. Its provision will cost a little more than doing business in a classic offshore zone, so when choosing a jurisdiction to register a company, you need to make a thorough analysis of entrepreneurial goals and needs. Offshore zones allow foreign companies to provide different levels of presence; they may depend on local legislation, type of business and its size. Consulting professional lawyers of IT-OFFSHORE will help to understand all the nuances and with the least losses to ensure that offshore 2020 is the best place to do business.

The requirements of the popular offshore zones 2020

From this year on, Belize is asking only those foreign companies that work in insurance, finance, management or banking services to prove their level of presence. Other entrepreneurs registered in the territory of the jurisdiction, formally it is not necessary to do so, but recent changes in legislation is still slow to push all businessmen to the idea of compliance with international standards.

In Bermuda, companies engaged in leasing, shipping, insurance, finance and large holding companies are required to provide services. In the Cayman Islands, the need to confirm the level of presence does not depend on the type of business, but on its legal form. Requirements have been tightened only for foreign companies and local LLCs and LLPs. By contrast, the British Virgin Islands requires proof of actual economic presence from all companies incorporated in its territory.