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Life after offshore

07/ 08/ 2018
  In the articles Transformation of Non-Resident Banking Services in the EU and Farewell Offshore we discussed the difficulties of cooperation with banks and the use of offshore companies in modern realities. However, life does not stand still and business continues to work. Therefore, in this article we will discuss what to prepare for and how to act after the final acceptance of the fact – your  offshore company is no longer applicable in the business process. Growth rates First of all, we take into account the significant rise in the cost of registration and content of the new structure, as well as the cost of servicing the corporate account. IN SOME CASES, THE SERVICE COSTS WILL BE INCREASED BY THE GREATER COMPARED TO THE BENEFIT FROM THE WORK OF A NON-RESIDENT COMPANY, AND ITS USE IS WRONGFUL In addition to standard expenses for the services of a nominal director, compulsory accounting support and delivery of reports, in 2018 a new, important and rather expensive expenditure part – Substance (confirmation of the companys real presence in the country of its registration) becomes especially relevant. So far, not all banks adhere to this rule, and open accounts without confirmation of Substance, or are willing to formally verify the reality of the existing office in the country of registration, requesting only a lease of office space. HOW SHOWS PRACTICE, IN LATEST FUTURE MINIMUM PHYSICAL PRESENCE IN THE COUNTRY OF COMPANY REGISTRATION WILL BECOME NECESSARY Choosing a country of registration Lets see what can be the most ideal for your business in terms of its registration, management, control and cooperation with banks. Accessibility and, for example, proximity to the center of your vital interests is the first and most significant factor in choosing a region (country) for registration of a new non-resident company. IF YOU LIVE AND MAKE THE MAIN BUSINESS IN UKRAINE, PAY SPECIAL ATTENTION TO THE COUNTRIES OF THE EUROPEAN UNION The problem is that it is not always possible to remotely conduct business, monitor processes and communicate with various authorities. Moreover, in the process of complicating the activities of non-residents, the need for presence in the country of registration will increase many-fold. We do not exclude options for representing a companys interests by a trustee, or hiring responsible employees and organizing an office in the country of registration, but any business requires control from its owner. There are many options for jurisdictions and forms of ownership of non-resident companies, but now we are not talking about recommendations for any of them. IMPORTANT TO UNDERSTAND ONE – IT SHOULD BE JURISDICTION WITH THE REQUIREMENT OF MANDATORY SENDING OF THE FINANCIAL REPORTING, AND BE PREPARED TO GENERATE, LET THE SMALL, TAXABLE PROFIT AT THE COMPANY NON-RESIDENT The second important factor is the selection of a serving bank. Ideal option - the opening of a corporate account in the country of registration of the company. Many foreign banks can not provide a high level of service and remote access to all banking services, to which we are accustomed in Latvian, Cypriot and other banks. You can not get the usual services remotely – by phone or Skype, by writing to a chat or messenger. IN SOME BANDS THE CONCEPT PERSONAL MANAGER IS ABSENT AS SUCH When choosing a bank, we advise you, first of all, to familiarize yourself with the maximum possible set of services and options for remote maintenance. However, be prepared to periodically visit the office of a foreign bank or ensure the presence of an authorized representative. Pay attention also to the reliability of the bank in which you plan to open an account. Examine the bank ratings, find out who acts as the founder of the bank, where correspondent accounts are opened, etc. If for some reason you do not want or can not open an account of a non-resident company in the country of registration, when contacting the bank, make a link to the business in this country. This option will be ideal. Before choosing the country of the servicing bank, review the list of its counterparties. The opening of a corporate account in a country in which there is a binding on business activities is a plus when considering a package of documents by a bank. The willingness to conduct activities transparently is the third factor. Taking into account the exchange of tax information and the requirements of banks to identify the actual ultimate beneficiary of the company, we recommend that you go through a formal procedure for registering a new company. For example, to receive an electronic individual license of the NBU (for citizens of Ukraine) with the subsequent declaration of a non-resident company. EARLY OR LATER, ALL INFORMATION WILL BE AVAILABLE FOR STUDYING IN THE COUNTRY OF YOUR RESIDENCE One of the options may be to change your tax residency / obtaining permanent residence / residence permit or a working visa in a comfortable jurisdiction. The recommendations suggested above are designed for stable and long work of a registered non-resident company. We do not give concrete examples, tk. every business is unique, and it requires a unique solution. Specialists of the Law Agency Absolute for over 10 years provides services in the field of international tax planning, consulting support for the registration of non-resident companies, interaction with foreign banks. For each client, we prepare an individual solution that meets its business requirements. We value your time and save finances!

In the articles “Transformation of Non-Resident Banking Services in the EU” and “Farewell Offshore” we discussed the difficulties of cooperation with banks and the use of offshore companies in modern realities.

However, life does not stand still and business continues to work. Therefore, in this article we will discuss what to prepare for and how to act after the final acceptance of the fact – your  offshore company is no longer applicable in the business process.

Growth rates

First of all, we take into account the significant rise in the cost of registration and content of the new structure, as well as the cost of servicing the corporate account.

  • IN SOME CASES, THE SERVICE COSTS WILL BE INCREASED BY THE GREATER COMPARED TO THE BENEFIT FROM THE WORK OF A NON-RESIDENT COMPANY, AND ITS USE IS WRONGFUL

In addition to standard expenses for the services of a nominal director, compulsory accounting support and delivery of reports, in 2018 a new, important and rather expensive expenditure part – Substance (confirmation of the company’s real presence in the country of its registration) becomes especially relevant.

So far, not all banks adhere to this rule, and open accounts without confirmation of Substance, or are willing to formally verify the reality of the existing office in the country of registration, requesting only a lease of office space.

  • HOW SHOWS PRACTICE, IN LATEST FUTURE MINIMUM PHYSICAL PRESENCE IN THE COUNTRY OF COMPANY REGISTRATION WILL BECOME NECESSARY

Choosing a country of registration

Let’s see what can be the most ideal for your business in terms of its registration, management, control and cooperation with banks.

Accessibility and, for example, proximity to the center of your vital interests is the first and most significant factor in choosing a region (country) for registration of a new non-resident company.

  • IF YOU LIVE AND MAKE THE MAIN BUSINESS IN UKRAINE, PAY SPECIAL ATTENTION TO THE COUNTRIES OF THE EUROPEAN UNION

The problem is that it is not always possible to remotely conduct business, monitor processes and communicate with various authorities. Moreover, in the process of complicating the activities of non-residents, the need for presence in the country of registration will increase many-fold.

We do not exclude options for representing a company’s interests by a trustee, or hiring responsible employees and organizing an office in the country of registration, but any business requires control from its owner.

There are many options for jurisdictions and forms of ownership of non-resident companies, but now we are not talking about recommendations for any of them.

  • IMPORTANT TO UNDERSTAND ONE – IT SHOULD BE JURISDICTION WITH THE REQUIREMENT OF MANDATORY SENDING OF THE FINANCIAL REPORTING, AND BE PREPARED TO GENERATE, LET THE SMALL, TAXABLE PROFIT AT THE COMPANY NON-RESIDENT

The second important factor is the selection of a serving bank. Ideal option – the opening of a corporate account in the country of registration of the company.

Many foreign banks can not provide a high level of service and remote access to all banking services, to which we are accustomed in Latvian, Cypriot and other banks.

You can not get the usual services remotely – by phone or Skype, by writing to a chat or messenger.

  • IN SOME BANDS THE CONCEPT “PERSONAL MANAGER” IS ABSENT AS SUCH

When choosing a bank, we advise you, first of all, to familiarize yourself with the maximum possible set of services and options for remote maintenance. However, be prepared to periodically visit the office of a foreign bank or ensure the presence of an authorized representative.

Pay attention also to the reliability of the bank in which you plan to open an account. Examine the bank ratings, find out who acts as the founder of the bank, where correspondent accounts are opened, etc.

If for some reason you do not want or can not open an account of a non-resident company in the country of registration, when contacting the bank, make a link to the business in this country. This option will be ideal.

Before choosing the country of the servicing bank, review the list of its counterparties. The opening of a corporate account in a country in which there is a binding on business activities is a plus when considering a package of documents by a bank.

The willingness to conduct activities transparently is the third factor. Taking into account the exchange of tax information and the requirements of banks to identify the actual ultimate beneficiary of the company, we recommend that you go through a formal procedure for registering a new company. For example, to receive an electronic individual license of the NBU (for citizens of Ukraine) with the subsequent declaration of a non-resident company.

  • EARLY OR LATER, ALL INFORMATION WILL BE AVAILABLE FOR STUDYING IN THE COUNTRY OF YOUR RESIDENCE

One of the options may be to change your tax residency / obtaining permanent residence / residence permit or a working visa in a comfortable jurisdiction.

The recommendations suggested above are designed for stable and long work of a registered non-resident company. We do not give concrete examples, tk. every business is unique, and it requires a unique solution.

Specialists of the Law Agency “Absolute” for over 10 years provides services in the field of international tax planning, consulting support for the registration of non-resident companies, interaction with foreign banks.

For each client, we prepare an individual solution that meets its business requirements.

We value your time and save finances!

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