A bank that is located outside the country of residence of its depositors is known as an offshore bank. Typically, most offshore account holders are non-residents of the bank's jurisdiction. The popularity of offshore banking is due to the various advantages it offers in comparison with national banking, such as greater privacy, easy access, little or no taxation and protection from political, local or financial instability. While the term originated in the Channel Islands, offshore from the United Kingdom, and while historically most offshore jurisdictions are located on islands, it is now used to refer to all banks offering the above-mentioned advantages, regardless of their location. For example, banks located in Switzerland, Luxembourg and Latvia are often referred to as offshore banks.
Benefits of having an offshore bank account The main advantages of having an offshore account, and the reasons for offshore banking's growing popularity, are:
Convenience and flexibility — the process of opening an offshore bank account is significantly faster and more convenient than when dealing with national banks. Many companies now specialise in offering a full-service package for those looking to open a bank account in a specific offshore jurisdiction. Multiple currencies — having several accounts for different currencies allows you to diversify risk associated with your home currency and profit from exchange rate fluctuations. Little or no taxation — some offshore banks are located in jurisdictions called tax havens, where taxes on inheritance or income are levied at a lower rate or not at all. Greater secrecy — an alternative term for a tax haven is secrecy jurisdiction, because most offshore banks offer higher levels of secrecy than are available in other countries. This is possible thanks to legal provisions in these jurisdictions prohibiting the disclosure of a client’s personal and account information to the authorities, except in the event of a criminal complaint. Disadvantages of having an offshore bank
The United Arab Emirates or the UAE offers a unique combination of a high-quality lifestyle, a fast-growing economy and high standards of comfort and safety. The UAE authorities have established a strong reputation for the country as a global business hub by creating different zones for company formation and commerce. For example, the UAE's free trade zones, or simply free zones, were designed to boost international business and are usually industry-specific or attached to ports or airports.
These free trade zones offer the opportunity to establish an offshore company in a location with highly developed infrastructure for the banking and financial sectors, business, tourism and entertainment. The free trade zones offer high standards of living, security and stability, in addition to facilities for children and young people such as nurseries, schools and international colleges. One important limitation to mention is the prohibition on trading within the UAE market. A free trade zone offshore company can operate in the local business market only through a local distributor.
Another very good reason for choosing the UAE as the right place for your company formation is that offshore companies benefit from attractive legislation protecting investors' interests and special tax regimes with 0% VAT, corporate and income tax. Like many Middle Eastern countries, the UAE earned most of its wealth from the oil industry. While the oil industry is no longer the main source of income in the UAE, the country can still afford to allow tax-free living in order to attract international companies and a workforce that enriches and diversifies the economy further still. The vice president and prime minister of the UAE once stated that his country would never adopt an income tax as a way to tackle the deficit. Furthermore, no tax is levied on capital gains, inheritance or rental income.
Offshore companies established in one of the free trade zones are required to conform to the laws of that zone. Also, the incentives can vary; most of the free zones offer 0% corporate income tax as one of their many incentives, provided that the company does not trade with residents of the jurisdiction.
Following IMF suggestions that applying VAT could help diversify the UAE's economic resources, it has been announced that 5% VAT will be introduced in the UAE from 1 January 2018. Certain food items, education and health items, bicycles and social services will be exempt from VAT.
The UAE's economy is steadily growing and is projected by the IMF to expand at a rate of 1.5% in terms of real GDP in 2017 . It is currently the third-largest re-exporter in the world, and the Abu Dhabi Fund for Development is considered to be one of the largest stabilisation funds in the world. What's more, Dubai has undertaken various measures to develop all sectors of its economy, thanks to which oil revenue now accounts for less than 20% of total income, with the rest coming from the business and financial sector, air travel, tourism, transport logistics and education.
The UAE accounted for 62% of all private equity investment in the Middle East and North Africa by value and 34% by volume of deals in 2016. These positive changes were driven mainly by a great increase in investment in technology-related sectors — FinTech, IT and ecommerce in particular. The number of disclosed private equity investments reached 244 (the highest figure since 2008), with the largest deal of 350 million USD raised by Careem, a regional provider of transport services headquartered in the UAE.
Manufacturing is the largest economic sector in the world, which is also one of the most important, directly and indirectly accounting for a large part of all economic activity and all jobs worldwide. It processes items and is dedicated to either creating new goods or adding value by producing finished goods for sale to customers or intermediate goods to be used in the production process. After the industrial revolution that began in Britain a few centuries ago, labour-intensive textile production was successfully replaced by mechanization and the use of fuel. Today, manufacturing creates jobs, technological development and an increase in international investment.
For this reason, some jurisdictions are leveraging manufacturing output and value-added exports to increase their operations, business performance and revenue, and to address the challenges and opportunities that manufacturers face every day in conducting their businesses.
According to Deloitte's 2016 Global Manufacturing Competitiveness Index, China, the United States, Germany, Japan and South Korea are ranked as the top five most competitive manufacturing countries in the world. These countries generate about 60% of global manufacturing GDP.
China Canada and its provinces compete on a global scale for investments that result in low production costs, low wages for factory workers, and the adoption of globally popular product mandates. As a result, there are some significant trends in Chinese manufacturing that can easily be highlighted. These trends include creating a globally competitive, expansive manufacturing business model, helping to create a competitive business environment for manufacturing in China and increasing sales in domestic and overseas markets. This fact can encourage start-ups to grow, invest and compete with other successful manufacturing companies.
United States The United States is successful in attracting investment in many of the world's most active industries, such as aerospace, auto assembly, pharmaceuticals, to name a few. The USA has signed an agreement with Germany to implement a dual vocational training program for the advanced manufacturing sector. US business policies focus primarily on technology transfer, sustainability, monetary control, and science and innovation, giving manufacturing companies (automotive in Detroit and high-tech in Silicon Valley) a competitive advantage.
Germany Germany retains a relatively high share of manufacturing exports. The country provides long-term support in government-sponsored science labs and national programs created to foster manufacturing innovation in areas such as solar and wind power and renewable energy (renewable energy sources accounted for 28% of the country's electricity generation in 2014). In addition to an energy revolution in the manufacturing industry, the country is striving to phase out nuclear energy.
Japan Japan has a technology-intensive manufacturing sector that dominates the global manufacturing landscape in most advanced economies. The country maintains manufacturing competitiveness as there is a close link between manufacturing competitiveness and innovation. Japan has strong potential to become one of the most advanced manufacturing jurisdictions in the world. The Robot Revolution Realization Council was established in the country in 2014 as part of the Japan Revitalization Plan, introducing infrastructure and energy resources for next-generation vehicles. Japanese companies account for 50% of the global factory robot market.
South Korea As the world leader in the manufacture of liquid crystal displays (LCD), smartphones and memory chips, automobiles, and the world's largest shipbuilder, South Korea is actively pursuing growth in free trade agreements with more than 50 countries. The country invests heavily in education and produces a large number of researchers every year. It is also known that supporting manufacturing innovation in South Korea with venture capital investments to boost high-tech startups is identified as a strategic priority.
In general, taxation system in France is determined by the French Parliament votes setting the kinds of taxes which can be levied and the rates of the taxes which can be applied. Taxes are then collected by the central government, local governments and social security association (ASSO). All the people who have their tax residence in France are subject to French tax, no matter if they are natural or legal persons either living in France or just have their homes, principal residence, workplaces or economic interests in France – they are all treated as taxable. Moreover, despite of the nationality, a person who is a tax resident in France is also taxable on his or her worldwide income.
There are various types of taxes in the country such as taxes on production and importation, value-Added Tax or VAT which is a consumption tax, which applies to goods and services located in France, tax on petroleum products, taxes on wealth, including local property taxes on real estate, capital gains taxes which are payable when assets are disposed, taxes on the sale of buildings (in addition to local taxes), inheritance, gifts, assignment of businesses and registration of vehicles (total taxes should not exceed 75% of income) as well as succession and gift taxes which apply to gifts and inheritances.
Income taxation in France Income taxes in France include corporate tax, income tax for individuals, tax for social purposes which is a calculated tax on all income available to individuals in a year and is a subject to industrial and commercial profits, land income, non-commercial and agricultural profits, salaries/wages, pensions/annuities, movable income, capital gains. These taxes are usually payable in the year after the income is earned by filing a French tax declaration stating the total taxable income received. The declaration should be filed by the normal filing deadline.
Personal income tax Applies to all the incomes gained during any individual business activity in the country. However, those tax payers whose personal net income does not exceed €7,920 are exempted from the income taxation. It is calculated in accordance with the total income of the household which is equally distributed between each member of the household.
Corporate income tax This type includes annual tax made by corporations and other commercial entities and can be applied to approximately 1/3 of French companies with a standard rate of 33.3% and generally based on company’s turnover.
Capital gain tax Capital gain tax needs to be paid on the sale of land, buildings, and shares. It includes 19% capital gains tax and a 15.5% social charge which is 34.5% in total. In addition, there is also a supplementary tax on large gains. It comprises 5 different French tax rates depending on the amount of profit gained.
Residence tax This tax applies to all buildings which have such extras as gardens, garages, private car parks etc. needs to be paid by any person who has a residential unit at his or her disposal.
Land tax The property tax on built lands is applied to properties built in France. The taxable properties consist of all permanent constructions, i.e. buildings (blocks of flats, houses, workshops, warehouses, etc.). The tax base is equal to 50% of the notional rental value of the building (i.e. the value set by the tax administration) and on land/location value. There are many exemptions and exceptions. In 2005, the product amounted to €17.73 bn.
Professional tax This tax concerns people who are self-employed in France which amount is calculated by multiplying the taxable net by the rates approved by each local beneficiaries (communities and organizations) within limits set by national legislation.
The EU Blue Card is sometimes compared to the US Green Card. The blue color is said to be the color of the European Union flag, for this reason the map should be blue. Its purpose is to give non-EU/EEA citizens a work and residence permit. It offers people the right to fit into the socio-economic landscape and embark on a path that leads to permanent residence in Europe. Put simply, people can live and work in Europe without restrictions if they have a Blue Card.
Purpose of introducing an EU Blue Card It was introduced by the European Commission in 2007, proposed and implemented in 2009 and issued by 25 countries that are member states of the EU. According to Eurostat data, in 2016 most work permits issued were registered in Germany (more than 17,000), France (more than 700) and Poland (more than 600).
The second purpose of the EU Blue Card is to make Europe a more attractive destination for professionals from outside the European Union. A special EU Blue Card program has been created for all EU member states with the exception of Great Britain, Ireland and Denmark, which invites highly qualified people to the EU states. This scheme aims to make Europe the world's most popular migration destination.
This can be guaranteed through equal salaries and working conditions for foreigners, freedom of movement within the Schengen area, socio-economic rights, favorable conditions for family reunification, permanent residence prospects and freedom of association. Obtaining the EU Blue Card has several main benefits. These include very high chances of a permanent residence permit, which entitles you to any kind of employment under easier conditions, equal rights and equal opportunities to work in Europe's largest economy and a huge business market, and easy travel opportunities.
Prerequisites for applying for a Blue Card Although the same basic criteria can apply to all 25 member states of the EU, there are smaller additional criteria that are determined by each member state for itself. In principle, the Blue Card can be applied for if three main requirements are met. These are: non-EU nationality, educational or professional foreigners (highly qualified or skilled workers, researchers, students and trainees) and with an employment contract or binding job offer (seasonal workers, internal transfers). A person can be considered a highly skilled worker if they have an employment contract of at least one year and if they can meet the conditions listed below. If a person is able to meet these mandatory requirements, they will be given an online profile on the EU Blue Card network, which has a dual function – to consult foreigners with employers to offer them an employment contract and to allow foreigners to change their employment contract to submit applications.
In recent years there has been a shortage of workers, which is noticeable in areas such as medicine, technology, computer science (IT), natural sciences and mathematics. This means that foreigners who work in the areas mentioned usually have a better chance of receiving the EU Blue Card.
In addition, a person who is self-employed or an entrepreneur can receive the Blue Card if they have sufficient financial resources, have a business that has a positive impact on the economy of the host country and can generate an economic interest that is active in the host EU -Member State is low.
When applying, it is important to consider the time frame it will take to gather all the required documents. It usually takes 4-6 months to prepare all the required documents. Some countries arrange appointments with the relevant embassies or consulates in foreigners' home countries, others offer online applications that can be filled out by foreigners themselves or their employer or a law firm. It is expected that after applying, the person will have to wait up to 3 months for the processing to be completed.
In some countries, Value Added Tax (also known as Value Added Tax) is levied on the sale/purchase of certain goods and services. In general, it can be defined as a consumption tax that is estimated and levied based on value added. Normally VAT is considered to be destination based as the application of VAT depends on the jurisdiction of the seller and the buyer. It must be noted that VAT accounts for almost 20% of the total amount of tax levied worldwide.
Whenever you decide to do business in the EU, you will surely face the question of VAT number registration. VAT issues are complex. Nonetheless, all EU member states follow the EU VAT Directive, so each EU country has drawn up its own legislation regarding VAT requirements and reporting.
Once the company is registered for the VAT number, it has to regularly submit its VAT report, which contains information about the incoming and outgoing invoices, regardless of whether they were issued/received from other EU counterparties or non-EU partners or not . Most importantly, all transactions must be declared in the VAT report, including invoices that have 0% VAT applied.
Mandatory VAT registration for EU companies There can be several conditions when an EU based business is required to register for VAT and file VAT reports. In most EU jurisdictions, VAT registration should be done in the following cases:
Through thresholds When a company registered in the EU makes a certain turnover, it has to register for VAT. The thresholds for mandatory VAT registration are set by the VAT legislation of each EU member state. For example:
€16,000 in Estonia, €30,000 in Austria, 1,000,000 CZK in the Czech Republic, etc.
In general, all jurisdictions can be divided into classic offshore, low-tax jurisdictions and prestige jurisdictions. The prestige of a jurisdiction corresponds to its rank, which is determined by considering and evaluating information from the International Sanctions List, the OECD Gray or Black List and the EU Jurisdiction White List as well as data on the development of financial markets to determine whether the jurisdiction is FATF AML is deficient and whether there are money laundering concerns. These are the basic criteria that matter in determining whether the jurisdiction is prestigious or not. It cannot be considered prestigious if it is on a financial blacklist.
Austria, France, the United Kingdom, the United States of America and Switzerland are among the top five most reputable jurisdictions for incorporating a company.
A general overview of Austria Registering a company or start-up in this territory allows the owner(s) to participate in all projects initiated by the Austrian government. The basic company types available are LLC, ULP, PJSC, PLLC, LLP, and JSC.
Taxes: The income tax rate is 25%, with a minimum corporation tax of EUR 500, plus 20% VAT and a capital tax that varies between 0.8% and 1%. If the subsidiary is registered within the EU, the tax rate on dividend income is 0%; if not, it is 25%.
Austria has agreements with more than 90 countries that enable companies to avoid double taxation. It has no exchange control. This jurisdiction ensures the confidentiality of business data.
A general overview of France France is a respectable jurisdiction that allows your company to offer products and services bearing the mark of a European company. The basic legal structures available are SP, GP, PJSC, PJSC, LLC, CLS and LLPE.
France offers a number of options: the ability to obtain credit from French banks, the ability to obtain a residence permit, no taxation for companies registered in the country doing business outside of France, and no exchange controls. France has agreements with more than 89 other countries that allow companies to avoid double taxation.
A general overview of the United Kingdom The UK is considered a respectable jurisdiction due to its high level of legal protection, a simple and transparent tax system, the ability to charge VAT and the availability of nominee services.
The basic company types available in the UK are PC, Limited Warranty Company, ULC and LLC. Again, there are no tax obligations for UK registered companies operating exclusively outside the country. Corporate tax rates depend on profit (between 20% and 24%). The UK has agreements with more than 100 countries that allow companies to avoid double taxation.
A general overview of the United States of America The US offers a respectable, highly trusted jurisdiction for a company to register, allowing it to offer products and services bearing a US company's trademark. This jurisdiction imposes no tax obligations on entities designated as non-resident and also permits nominee services. There is no taxation for companies incorporated in the country that do all their business outside of the United States.
The basic legal structures available are private contractor, corporation, branch of a foreign corporation, representative office of a foreign corporation, partnership, LLC, joint venture, or LLJSC.
A general overview of Switzerland The good reputation of this jurisdiction is based on several factors, such as strong business development, a dynamic economy and a track record of innovation. The most important corporate forms available in Switzerland are LLC, ULP, JSC, Commandite Partnership and Subsidiary.
Switzerland offers a high level of confidentiality, the world's leading currency, mechanisms to avoid double taxation, a reasonable tax system with tax rates depending on residence, income level and legal form of the company, tax optimization opportunities and the opportunity to set up service companies that can for the administration used for the business activities of the parent company and can serve as the overseas offices of international companies.
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