The number of those who want to register a company in the offshore zone has increased. It is a normal market phenomenon, however, the situation with the use of offshore companies over the past couple of years has changed.

1) Changes in the banking system

First of all, the company acts as a tool for settlements. Loyal earlier Baltic banks have already changed their policy regarding offshore companies: denial of opening accounts, substantially higher bank rates, more stringent monitoring of transactions involving companies from offshore jurisdictions.

Yes, not all the banks withhold servicing of offshore companies, but there is also a reputational risk of using such a bank (many banks often refuse to make payments to offshore banks) or material risk (an offshore bank is not a guarantee of the integrity of funds).

2) Changes in taxation matters

Everything is simple here: in many countries there is a tax on repatriation, which is imposed on transactions with offshore companies. For example, if company A paid for services or goods of an offshore company, company A will be obliged to pay repatriation tax, which is expressed as a percentage of the amount paid (for example, in Poland such tax is 20%).

3) Change in the ratio of payment systems to offshore companies

Payment systems can be confidently called followers of banks. They raise the requirements for the identification of beneficial owners of offshore companies or representatives of such companies.

Also, the interest rate of the payment system commission rises from the operations carried out by the offshore company.

Given global trends, offshore companies are no longer relevant for making payments. However, the way out of this situation is worth looking for, using companies that file accounts and are payers of taxes in the country of registration.

For those who still want to use companies with minimum income tax rates and not submit reports to the regulatory agencies, it is worth paying attention to companies registered in business legal structure – partnership (by the way, some banks also change their policy about them) or choose low-tax jurisdictions not from an established list of offshore countries.