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Apart from tax and less regulation what are the benefits of registering a company offshore? I also mean why would one register a company offshore and the incorporate a subsidiary in the country where they operate what are the benefits of such? (Apart from tax and less regulation)

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    Regulations of any place a subsidiary actually operates will need to be followed regardless of the parent corporation's location. Commented May 17, 2022 at 2:32
  • Can the subsidiary and the holding company raise funds at the same time, each following their respective jurisdictions laws? So that the company can benefit from the laws of both countries at the same time?
    – YulePale
    Commented May 17, 2022 at 2:43
  • This is not a forum but a Q and A site. You can edit your question. You might add this to your question after you work on it to clarify your question. Commented May 17, 2022 at 2:45
  • Okay, will do so. Thanks.
    – YulePale
    Commented May 17, 2022 at 2:51
  • What else is there beyond tax and regulation which defined broadly enough pretty much includes all of the law?
    – ohwilleke
    Commented May 18, 2022 at 20:10

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Some reasons for using an offshore jurisdiction, presented hopefully without judgment -

Tax

  1. As well as lower tax rates, there is the chance of ingenious schemes involving tax reliefs between different jurisdictions - the famous "Double Irish", "Dutch Sandwich", "Single Malt" are examples.
  2. Tax can be simpler in some administrative respects. The Isle of Man, for example, wants you to file an annual tax return, and you have to have business accounts, but you don't have to file the accounts or have them audited. And when there are fewer categories of tax to deal with, with simpler rules, the tax return is easier to do.
  3. When there are subsidiaries in many countries, having the hub in a low- or zero-tax jurisdiction can reduce the tax paid on complex multinational asset flows. The same applies to a joint venture between independent companies in different countries. This goes by the marketing name of "tax neutrality" (not the same as "tax neutrality" in setting tax policy, confusingly). The theory here is that taxes are still being paid in the appropriate places, when the revenue is generated, but aren't also being incurred artificially by essentially "internal" transfers.

Company structure and liability

  1. Offshore jurisdictions can be looser on requirements for company formation (e.g. allowing a sole director who is the same person as the sole shareholder, or having no minimum share capital). They may be less strict about background or solvency checks, and can sometimes allow much faster registration, even within minutes. Winding up a company can also be easier. That can have some advantages in the use of special-purpose temporary companies, such as the "limited duration company" that's offered in Bermuda, the Cayman Islands, and elsewhere.
  2. They may offer novel devices for limiting liability, such as a Guernsey "protected cell company". For example, if you are running a lot of different investment funds with different risk profiles, and one of them crashes into huge liabilities, its creditors might seek recompense from your other, more solvent, funds. But in a PCC model they are isolated: even though each cell is owned and operated by the same people, local law treats their assets as independent. The same applies for something like operating a fleet of vessels where each one can belong to a separate cell.
  3. Likewise, insurance regulation may let a company establish a "captive", a special-purpose insurance company set up exclusively for the parent company's needs. This is comparable to self-insurance (a large wealthy organization acting as its own insurer) but has financial and regulatory differences.

Privacy

  1. In the past, but less so these days, offshore companies could be used to shield the identity of the true owners of some asset. This is still relied upon in many cases, but the tide is against it in terms of international anti-money-laundering and anti-terrorism efforts. So it is harder to hide from a government, even though you can often still hide from an ordinary inquisitive person.

Cultural factors

  1. Many offshore jurisdictions attempt to provide other aspects of a business-friendly environment, such as promoting access to financial services, legal services, dispute resolution, and so on. The comparative advantage can be large if you're coming from another country with less developed institutions.
  2. Sometimes, for a joint venture between companies from different countries, they'll want to pick a neutral third place, and an offshore jurisdiction is a natural choice due to the other factors above.
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  • Worth noting that most tax havens in the carribean do have the UK as there official law giver. Also the channel islands are part of the UK
    – Neil Meyer
    Commented May 17, 2022 at 18:38

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