Incorporating a company at home is simpler than doing it abroad. Why do many people choose to form companies in foreign countries? They find several good reasons for that:
- Favorable taxation ─ In some countries, taxes for businesses are low. A company registered in an offshore zone can be fully tax-exempt if certain conditions are satisfied.
- Enhanced fundraising opportunities ─ There are countries where the number of venture capitalists is higher than it is in your home country.
- Low company maintenance costs ─ Especially if you relocate to the foreign country where your company is registered, the operational costs may well turn out lower.
- New customers to buy your products/ services ─ By expanding geographically, you gain access to a larger number of consumers.
- Enhanced trust in your company ─ If you happen to live in a jurisdiction that has reputational issues, registering a company in a reputable country can make it more trustworthy in the eyes of investors, suppliers, partners, and clients.
- An opportunity to make international payments ─ Having a company in a foreign country, you can open an account with an international payment system (such as Stripe, for example) and make payments wherever you want.
Another advantage of registering a company in a foreign country is the opportunity to acquire legal residence in that country. Business owners have an easy time applying for residence permits in many countries.
Factors to Consider When Choosing the Jurisdiction for Your Company
Before you decide where you should put your company, you have to take several factors into consideration. These factors will directly affect your ultimate decision.
Simplicity of Company Registration Procedures
Even if you are happy with the taxation regime in a foreign country, you may face a heavy bureaucratic machine there. If registering a company in a foreign country is a demanding task, you may want to look elsewhere. In some cases, a foreign company can be registered remotely!
Tax System
This is one of the most important factors. Clearly, the lower the taxes and social contribution are, the better for a businessperson.
Your Business Areas and Objectives
It is often the case that a certain country is well-suited for some types of business activities and ill-suited for some other types. You should realize that some foreign countries might be no good for your business goals.
Political and Economic Stability
Registering a company in a country where political regimes change frequently does not make sense. A new regime may introduce some new rules that you are going to be unhappy with. The country’s economy should also be stable.
Mentality of the Local People
If you have a company in a foreign country, chances are that you will have to interact with local public administrators, business partners, customers, and so on. How effective the nitration is going to be depends on how close their worldviews are to yours.
You have to realize that the values and habits of Europeans, for example, are a bit different from the values and habits of people living in the UAE or in Hong Kong.
6 Steps Towards Registering a Foreign Company in 2024
The process of incorporating a foreign company can be divided into 6 steps:
- Choose the jurisdiction ─ Needless to say, this is a crucially important choice.
- Choose the company type ─ There are several types of companies but when people set up companies in foreign countries, they most often opt for LLCs. Apart from limited liability, the company founder can be of any nationality and no (or few) company officers are required.
- Clarify the tax regime ─ Please remember that there can be additional duties besides taxes. This is especially true for offshore jurisdictions: they don’t charge taxes but they charge company registration fees instead.
- Find a registered agent ─ To spare yourself the need to go through the bureaucratic jungle in a foreign country, you should find a reliable agent who will register a company for you. Besides, companies can be registered only via authorized agents in some countries.
- Collect the application documents ─ You may need help at this stage too because if your document package is incomplete, your application is going to be turned down.
- Apply for company registration.
Where Could You Register a Foreign Company?
Great Britain offers a number of advantages including the following ones:
- Fast and simple company registration process ─ A company can be registered in the UK remotely.
- Tax benefits ─ Corporations are taxed at 19% in Great Britain but if the income is derived from foreign countries, it is not taxed.
- Confidentiality ─ Depending on the form of company ownership, personal information about the company owners may not be available to the public.
- Attractiveness for investors. People from other countries love to invest in the UK.
One more reason to set up a company in Great Britain is a high level of legal protection. The British legislative system is extremely efficient.
Cyprus is not exactly an offshore zone but it offers some advantages typical of offshores. The corporate tax rate is only 12.5% in Cyprus and this is the lowest corporate tax rate in the EU. Because Cyprus is an EU member state, your company registered there can open bank accounts in other European countries too. Isn’t it a fantastic opportunity?
The UAE as a whole and Ajman Media City Free Zone in particular are attractive for foreign entrepreneurs. Very little has to be paid in taxes by the company registered in a Free Zone and a foreign national can be the sole company owner.
- Ajman Media City provides an opportunity to register a company at a small price.
- No corporate tax is payable if the resident company does not do any business with companies in the mainland UAE.
- No personal income tax is charged.
- You can engage in different types of business activities on a single license.
- Registering a company is simple in AMC FZ.
You can choose from 120 legal types of business activities in AMC FZ. Moreover, you can apply for a single license that allows you to engage in several businesses at a time.
Malta is a member of the EU, which gives it all sorts of advantages. At the same time, it’s a small country and the Government incentivizes foreign investors to put money in the country’s economy. Tax benefits and tax breaks of various nature are available to foreign investors in Malta.
Other advantages of setting up a company in Malta include the following ones:
- Fast company registration;
- A foreign company owner can enjoy the same benefits as local company owners do;
- Capital can be freely repatriated from Malta;
- When company shares are transferred from one person to another, no tax is due;
- Local banks offer services of superb quality.
Hong Kong offers the following main advantages to international entrepreneurs:
- The corporate income tax is 16.5% (not payable on incomes made outside the jurisdiction);
- Few additional fees and duties;
- Hong Kong-based firms are attractive for investors;
- There is no currency control.
These are only a few countries to consider. You have a much greater choice of options if you would like to register a foreign company.