If you are not very familiar with the subject, you will encounter the concept of offshore companies mainly in a negative context. However that is not the case. Therefore, it is worthwhile to clarify what is the true meaning of offshore.
What does offshore mean?
Many people like to suggest that companies registered in exotic locations are offshore companies, but that is far from the reality. The term “offshore” is derived from Anglo-Saxon law and literally means “beyond/over the shore”. In today’s world, offshore companies are companies that carry out most or all of their economic activities abroad, and not in the country in which they are established.
Offshore consulting in Budapest
In our professional experience, we have noticed that there are many legends and misconceptions about offshore companies, so we also do offshore consulting.
On global level, the regulation of offshore companies has changed tremendously in recent years. In the fiscal language, a controlled foreign company is synonymous with an offshore company, but this must always be individually examined to see if the conditions are met. The legal avoidance of qualifying as an offshore company requires extensive professional work, as complex rules must be applied. To simplify the relevant EU regulations significantly, a foreign company is considered to be an offshore company only if:
- its owner is more than 50% subject to Hungarian corporate tax,
- does not pay at least 4.5% income tax in the country of registration.
So, if a foreigncompany is 49% owned by a domestic company established in the EU, then the foreign company is not an offshore company even if it does not pay tax..
It is important to note that setting up and running an offshore company is not illegal at all.
One of the key areas of our services is international, overseas taxation, where we strive to take every opportunity to keep our clients’ tax costs to a minimum.
At Crystal Worldwide Group, we have highly-qualified legal professionals working to bring our clients’ tax planning to the optimum level. This requires up-to-date knowledge of international and domestic company law to fully serve all of our clients’ needs in offshore consulting.
Foreign company formation
You don’t even need to travel abroad to set up international companies. We help our clients choose the most optimal option through offshore consulting. The most typical locations are:
- United Arab Emirates (Dubai)
- Hong Kong
- Marshall Islands
- New Zealand
Based on the above, we can say that many companies established abroad are not offshore companies. If you are doing business in international markets, it might be very beneficial for you to start a foreign company to optimize your income streams.