Reasons for forming a company
There are two primary uses for offshore companies:
- Investment holding; companies which hold passive assets such as investment portfolios, bank deposits, real estate etc.
- Trading; companies which hold operating assets for trading or other business related purposes. Such companies typically may be involved in import/export, joint venture arrangements, patent rights, royalty collection, consultancy service or employment contract companies etc.
The reasons for forming such a company may encompass:
- a desire to make investments or engage in business activities whilst maintaining anonymity
- a desire to avoid estate taxes and, in certain instances capital gains or other taxes
- a wish to limit personal liability with respect to business undertakings e.g. real estate
- the prevention of sequestration of assets or forced repatriation of assets
- exchange control contingency planning
- a degree of inheritance planning.
A private holding company established in Jersey or the British Virgin Islands can be a highly advantageous vehicle, affording confidentiality, taxation planning and administrative advantages.