Despite the global trend of de-offshorization and information warfare in certain media outlets, offshore companies remain an excellent legal tool for business protection. Among the classic offshore jurisdictions, the small Caribbean island of Nevis has rightfully held a leading position for several years.
Experts from International Wealth, the leading website about the offshore industry, told us why this jurisdiction is so attractive for foreign investors, what advantages it provides, the features of offshore company formation with bank account and other nuances.
What is an offshore company?
An offshore company refers to a foreign legal entity registered in a special jurisdiction with a favorable tax regime and benefits, known as an offshore zone. Such organizations have the right to engage in international business activities while being fully or partially exempt from fiscal obligations in the registration territory.
In addition to the advantageous tax regime, offshore companies enjoy several other benefits, including:
- minimal or zero taxation
- fast registration due to flexible legislation
- high level of confidentiality regarding beneficial owners’ information
- low level of registration and administrative expenses for maintenance
- asset protection
- absence of currency control
- simplified requirements for financial reporting.
In some jurisdictions, the possibility of obtaining residency or citizenship is also provided, subject to certain conditions.
Why choose Nevis for offshore company formation?
Nevis is a small tropical island of volcanic origin located in the Caribbean Sea, forming part of the Leeward Islands. It is a constituent part of the island nation of the Federation of Saint Kitts and Nevis and an independent member of the British Commonwealth.
Since 1983, Saint Kitts and Nevis has been an independent state with a form of government known as a constitutional monarchy. The royal authority on the islands is represented by the Governor-General, while the government is headed by the Prime Minister. Nevis has its own parliament, the Nevis Island Assembly, consisting of 8 representatives.
The legal system of the island nation is based on common English law. However, its corporate law is based on the legislation of the state of Delaware (USA) and incorporates elements of American and English law.
The most common use of Nevis offshore companies in international business is for asset protection and tax optimization. This Caribbean jurisdiction is well-suited for such purposes due to its optimal combination of compliance with international legislative acts and minimal requirements for entities established by foreign investors.
Among the key advantages of Nevis offshore companies, the following can be highlighted:
- Absence of taxes on profits, property, capital gains, inheritance, wealth, and dividends. It’s worth noting that these tax exemptions apply only if the company conducts business outside the jurisdiction.
- Quick and relatively inexpensive process of incorporating a legal entity. With a properly prepared and submitted document package, the registration process takes 1-2 days.
- No requirement for a minimum share capital. However, a recommended amount of USD 50,000 with a minimum issuance of 50,000 shares at a nominal value of USD 1 is indicated. The share capital can be deposited at any time.
- Minimal requirements for directors and shareholders. Only one director and shareholder are required for company registration, and it can be the same legal or natural person. There are no requirements for tax residency or citizenship either.
- High level of confidentiality. According to local legislation, the registering authority is not authorized to demand disclosure of personal data of beneficial owners and shareholders. All registers are closed, and the disclosure of information is possible only by order of the local court.
- Asset protection. This is one of the key advantages of the jurisdiction. Nevis has strict laws protecting assets from creditors, government entities, and legal proceedings from other jurisdictions. Court rulings from other countries do not have legal force here.
- Issuance of bearer shares is allowed, provided that these securities are exclusively held in a registered office within the jurisdiction.
- No requirements for mandatory accounting and auditing. Offshore companies are not obligated to maintain and provide their accounting records.
- Minimal administrative expenses and annual fees to maintain active status.
- Opportunity to obtain residency or citizenship through investments. Nevis has had a program for granting second citizenship through investments for approximately 30 years, subject to specific conditions.
What type of offshore company can be opened in Nevis?
According to local legislation, foreign investors have the right to establish companies of various legal forms. However, the two most popular forms are the International Business Company (IBC) and the Limited Liability Company (LLC).
The IBC form is widely known and successfully utilized in international business. The establishment of this type of legal entity in Nevis is governed by the Nevis Business Corporation Ordinance 2017, with amendments adopted in 2019.
Before registering an IBC, it is important to consider that this type of legal form imposes restrictions on certain types of activities, such as insurance, trusts, banking services, currency operations, and others.
An LLC is a hybrid legal form that combines the principles of a joint-stock company and a partnership. One of the main advantages of an LLC is the ability to protect assets on an international level. Additionally, due to its flexible structure, this legal form is well-suited for structuring international organizations.
In Nevis, the activities of such companies are regulated in accordance with the Nevis Limited Liability Company Ordinance 2017, with the latest amendments from 2019. The rights and obligations of LLC members are governed by the operating agreement.
Although these two legal forms are very similar, there are some differences between them. Let’s highlight the most significant ones:
- As mentioned earlier, the creation and operation of these types of entities are governed by different legislative acts.
- The government fee for registration varies between the two. Establishing an International Business Company tends to be slightly cheaper.
- The IBC form allows for the use of double taxation avoidance agreements, which is not applicable to LLCs.
- For the registration of an LLC, only one director is required, whereas a minimum of three directors is needed for an IBC.