LISTING ON STOCK EXCHANGES AND CAPITAL ATTRACTION OPERATIONS
Many large corporations seek to reduce their risk by transferring the active registered offices they possess from politically and economically unstable countries to offshore zones. Luxemburg and Bermuda have become the registered offices for many companies wishing to change the location of their activities.
Offshore companies are constantly being used to attract monetary funds when taking out loans and issuing bonds. These structures can reduce the taxes on the interest paid out at a source of income since other countries, for example, the United Kingdom, collect such taxes for interest paid out to non-residents for unlisted bonds. In such cases, it is also very important to consider double taxation agreements.
FINANCES
Offshore companies can be founded to perform the function of the management of the treasury of the companies of a single group. The interest paid inside the group can be taxable but frequently the tax rates for interest differ from the established corporate income tax rates. The interest payments reduce the taxable profit; therefore, the consolidation of the interest received in an offshore financial company can provide tax saving advantages.
Many large companies found connecting offshore companies to concentrate dividends from their subsidiary companies and to make maximum use of tax credits.
In some countries, losses from the conversion of foreign currencies cannot be written off as tax reducing expenditures. After founding a subsidiary financial offshore company, which experiences the losses from the conversion of foreign currencies and is later liquidated, the investments made and lost by the parent company can be included as an expenditure item.
Offshore companies are frequently used in foreign company acquisition structures, international company restructuring, real estate acquisition, when making other investments, and when carrying out other corporate financing projects.
Offshore structures are also used for leasing, especially in those cases where the offshore company has a good deal of funds, which, if they are not invested, must be repatriated and taxed at the high tax rates for corporate income.