Offshore Wealth Planning: How to Get Started?

Perhaps you’re a European, Canadian, or Asian looking to incorporate in generous US tax havens like Delaware, Nevada, Wyoming, or the many other low tax income tax paying states. You could be an American looking to diversify your wealth and/or open your company up for more lucrative business dealings in countries that require you to have a business entity and bank account on their shores.

In other cases, certain investors require your business be registered in a specific country or state to have the opportunity to be funded by them.

Regardless your reason for seeking offshore banking information, this guide will help point you in the right direction toward the resources you’ll need to start a business and/or setup a bank account overseas.

Advantages of incorporating overseas

There are many benefits in offshore incorporation, namely:

• Adds a level of professionalism to the business.
• Gives you the ability to open an official corporate bank account.
• Allows citizens of many countries around the world to operate a business without paying heavy taxes on profits gained from the business.
• Creates a level of distance (padding) from you and the business, which may not be afforded to you in your home jurisdiction (E.g., protection from bankruptcy, lawsuits, and issues like civil unrest and unruly government’s seizing company assets in financial crises.)
• Ability to attract investors who deal with overseas companies exclusively, and access to lucrative investment opportunities like commercial real estate, manufacturing, and others.

Best places to set up an offshore company

This is a tough question to answer blindly, without knowing the individual needs of each reader. For instance, some countries like Bermuda, Caribbean’s, British Isles, Switzerland, Singapore, and others are perfect tax havens for most people around the world — provided you’re not a US citizen.

For asset holders domiciled in non-US countries, you may also want to consider the US, as the jurisdiction is one of the strongest offshore jurisdictions in the world. America offers many low tax states — such as Wyoming and Delaware — to incorporate a business in, and protect your wealth.

In some cases, you even need to set up a company in one jurisdiction and open an account in another. For example, the Double Irish Dutch Sandwich strategy adopted by many big companies like Apple and Facebook involves offshore structures in Ireland and the Netherlands to make it work.

How to set up an offshore business

Rules will vary, depending on where you’re seeking to do business and protect your wealth using an offshore bank account. However, the first step toward setting up an offshore bank account will require several similar steps; though each will have slight or even large differences.

Choose a structure

The first step is to choose a business structure. Though in some havens overseas, foreigners will only have one or two options available to them, particularly if there’s nobody with citizenship in that country with a significant stake in the company. In many cases, the type of business you’ll be running will only give you a single option to choose from.

For instance, in the US you have the following structures to choose from:

• General partnership
• Limited liability corporation
• Non-profit

You’ll need a registered agent to set the process in motion, in the state you wish to incorporate, and they’ll act on your behalf to help you choose the best option for your business needs.

Conversely, in the Cayman's, there several common options for setting up an offshore company on their sandy shores:

• Limited liability
• Partnerships
• Segregated portfolio
• Trusts
• Local ordinary (these require majority ownership by Cayman citizens)
• Special economic zone companies

Paperwork

There are mountains of paperwork required, in most cases. While this might seem daunting at first, the registered agent you choose will do most of this legwork for you. Aside from the agent’s fees, there will be fees associated with the various filings leading up to the establishment of your business.

It can take as little as a day to complete this process if you have all the information required to set up your business such as a business name, structure, etc. Others will take a week or even a few weeks to complete the paperwork and filing processes.

In general, you’ll need to do the following in most countries and states that welcome foreign ownership of a business:

• Choose an appropriate business type — usually with the help of a registered agent if you’re unsure.
• Obtain a registered agent — this can be done online, but most countries will require they (the agent) have a physical business address.
• Choose and register a business name — in many cases, such as incorporating in the state of Delaware, you have the option to reserve your business name for 120 days if you’re not ready to form a business, but are planning to do so soon, or are contemplating but haven’t made a firm decision to set up shop yet.
• Assembling incorporation/formation forms — these will detail the nature of your business, including industry, how you conduct business, and who you do business with.
• Certificates of good standing — this will be required in most countries in order to obtain an offshore business bank account, essentially ensuring the local government has deemed you eligible to do business in that state.

How to set up an offshore business bank account?

You may have found this how-to in search of a personal offshore account. In that case, each country, state, or province will have varying rules. For the most part, they’ll want your personal information such as that found on your ID such as a driver’s license and passport. Copies of both documents will usually be required to open any foreign account. In most cases, foreign banks will also need access to your banking details, such as average balance, credit history, and proof of income (Ie., pay stubs).

When it comes to a business bank account, rules vary across the board, but with foreign offshore banking reporting requirements like FBAR, FATCA, CRS, and other country-specific income tax reporting laws, the rules are constantly changing. All countries will want to see your passport if you’re from a country that participates in the FATCA (Foreign Account Tax Compliance Act) agreement. Most will also want to see a certificate of good standing or similar document stating that you’re eligible to do business in the country you’re incorporating in.

The cost?

The cost to incorporate an overseas business run from $500 to $3,000 (USD). This money covers the filing fees with the local government, and any filing and search-related fees the registering agent or agency will charge you.

The cost to set up a foreign bank account costs less but varies much more widely. Fees range from a few hundred dollars, to well over $1,000.

Conclusion

As mentioned above, deciding whether going offshore is the best strategy for your wealth planning is just the first of many steps. While setting everything up is a straightforward process, deciding which jurisdictions, which type of investment vehicles, and what offshore structures you need — to name a few — may require you to consult and partner with an agency. In fact, some jurisdictions are serving new clients via agencies only.

That said, if you’re ready to move forward with your plan and want to learn more about the possibilities for securing your wealth overseas, you can get started by contacting us for a free consultation.