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Substance for offshore company

How to get the minimum substance for offshore company?

2020-10-07
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To find out what is the substance for an offshore company, you can consult with our IT-OFFSHORE specialists. Recently, many countries have started to fight against tax planning schemes. In order to fight against the unfair use of organizations - pacifiers, the requirements for the actual presence of companies have been implemented.

What is substance

Many foreign firms are established in order to enter new markets, reduce costs and optimize tax payments. Currently, many states have decided to fight against evasion - one of the important criteria for evaluation is the minimum substance or actual presence of an offshore company.

The substance is a set of attributes, inherent in a standard company that is really conducting business and is not fictitious.

Substance implies the presence of the firm:

  • An office that has been acquired or leased;
  • A director who is not nominal and has actual authority;
  • Secretary, staff;
  • Contacts in the form of telephone or fax;
  • Internet pages, etc.

In recent years, companies that do not have real economic content have experienced problems with their operations. For example, the requirements of banks to open accounts for offshore companies are becoming stricter. Companies that are empty may not obtain a tax resident certificate. It is assumed that over time the requirements for the availability of a substance will become even more complicated.

Factors that affect the Substance

For a firm to be considered as an actual operating institution, it is necessary for a legal entity to meet a number of the conditions. Compliance with certain parameters will allow to prove to the tax authorities that the company is not only registered offshore, but also operates within the jurisdiction.

What parameters authorities pay attention to in order to assess the actual presence of the company:

  • Availability of registration in the relevant territory;
  • Registration of a real office;
  • Management is carried out from the territory of the country of registration;
  • Reporting is kept, kept in the country of registration.

Attention is drawn to the presence of competent staff and directors, their work experience and education. It is desirable to create a working website for the company. Each country may have different criteria and requirements.

The substance is required in any country where the company is registered. This condition is relevant for classical offshore companies, as well as onshore companies that offer favorable conditions for starting a company.

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