An international business company (IBC) is a tax-exempt legal entity that is most often registered to optimize taxes and expand business horizons. The tax neutrality of such a corporation allows you to significantly reduce financial costs and, in some cases, choose a country for incorporation with the ability to apply additional benefits under the DTT (Double Tax Treaty).
Experts from International Wealth, a top offshore industry website, helped us understand all the ins and outs of international business companies, including how to open a company, its benefits, the best jurisdictions for incorporation, and much more.
Features of international business company
The main distinguishing feature of IBC in international business planning is low or no taxes on profits received from foreign sources. IBCs are ideal for investors and entrepreneurs who want to protect their assets, get privacy, and optimize taxes.
When choosing a country of incorporation, it is necessary to take into account the legislative norms of this state, as well as relations with the FATF, OECD, and the EU. It is very difficult for a company from a blacklisted country to open an account with a respectable financial institution.
Benefits of registering an IBC include:
- Low taxes or their complete absence. In most countries, IBC income tax varies from 0% to 10%.
- Good business environment and loyal conditions at the legislative level: minimum legal requirements, no obligations at the place of shareholders’ meetings, access to world markets, protection of the founders’ privacy, and so on.
- Simplified IBC registration procedure, including remote format.
- Minimum requirements for authorized capital, which in some jurisdictions is determined by the price of one issued share of 1 US dollar.
- Wide range of opportunities for the modernization and restructuring of an IBC between different niches, as well as access to redomiciliation of the company to or from another state.
- An IBC can be formed by one individual/legal entity who becomes its shareholder, beneficial owner, and director.
- Access to professional officers’ service is open. In case of an urgent need to manage a business without a personal presence, there is always the opportunity to hire a professional director.
- Privacy of the company owner, shareholders, and directors. 100% anonymity is no longer available, as most countries have introduced Registers of companies, shareholders, and beneficial owners. However, most of them remain out of public access, and data is transferred only in the event of a serious accusation against the legal entity.
- IBC is a powerful tool for asset protection, both in the case of property transfers to funds and trusts and in the conduct of international business.
- Currency flexibility from holding to diversifying assets in any currency, which cannot be said about ordinary local companies in other states.
- Access to licensed niches such as Forex, gambling, and brokerage. You can obtain an offshore license, subsequently registering an international company in such countries as Hong Kong, Vanuatu, Malta, Cyprus, the Cayman Islands, and others.
- Minimum reporting and auditing requirements. Of these requirements, you can only meet the obligation to store and maintain accounting records in some jurisdictions and for specific types of offshore companies. At the same time, it is unnecessary to file a tax return since all income reporting is carried out at the source of profit, that is, in another state.
How and why to register an IBC
As a rule, the process of registering a legal entity in the form of an IBC takes place in an accelerated mode. The main stages of incorporation include:
- choice of jurisdiction depending on the business niche and founder’s country of tax residence
- choosing a bank and opening a corporate current account
- submission of documents through a registered agent or in-person
- obtaining a license (if the activity relates to insurance, banking, Forex, and gambling areas, as well as other niches that require permission)
- preparation of the Articles of Association and other constituent documents
- identification of all shareholders, directors, and beneficial own
- payment of the registration fee
- confirmation of financial viability and business reputation (most often required at the account opening stage).
The scope of activities of international business companies is diverse:
- international trade
- asset protection, including through trusts
- protection of intellectual property
- investment activities
- financial licensed niches.
In which country is it better to open an IBC
This question cannot be answered unambiguously. It all depends on many factors, including the founder’s country of residence and tax residency, the field of activity, the purpose of incorporation, and much more.
For example, Cyprus and the Netherlands are suitable for forming a holding, and registration of an IBC with zero taxes is available in Seychelles or the Marshall Islands. The same can be said about the field of activity, each of which corresponds to specific jurisdiction with the most favorable conditions.
- Many countries offer to open an international business company, including those that do not belong to low-tax havens:
- Great Britain
- USA (some states)
- Marshall Islands
- Saint Lucia
- Panama, and many others.
To choose the most suitable jurisdiction for your business needs, as well as to simplify the process of registering an international business company as much as possible, it is best to take the help of professionals such as International Wealth experts.
After all, for your company to work effectively, you need to carefully analyze the laws of various jurisdictions, tax rates, requirements for beneficial owners and shareholders, necessary documents, and other points. International Wealth experts have extensive experience setting up offshore companies, so they can easily find the perfect option for you.
Another critical point is opening a bank account for your new company because, without this, you simply will not be able to carry out business activities. Experts will help you choose a respectable financial institution with the lowest fees for your runover and number of transactions.