Company incorporation in foreign jurisdictions

Undoubtedly, the basis of any business is an idea that, if properly and thoughtfully implemented, brings both profit and pleasure to the owners, and benefit to society.

At the stage when the business concept is clear and the directions of development are determined, it is necessary to choose the form of doing business and the jurisdiction of its domicile

Regarding the form of doing business, firstly, you need to decide whether a legal entity is created or an individual entrepreneur is registered. Secondly, if the choice is on a legal entity, what type of enterprise to choose.

The most popular and optimal enterprise for running small and medium-sized businesses, regardless of jurisdiction, is a limited liability company (LLC, which is also called in other countries: LTD, GmbH, SARL, etc.). The legal requirements of different countries for the number of founders, the size of the authorized capital, the residence of the director, accounting may differ, but the essence of LLC is universal.

The founders (participants) are responsible for the obligations of the company exclusively within the limits of their contribution. That is, unlike doing business as an individual entrepreneur, when almost any property may be encumbered by debts, a member of such a company only risks what he contributed to the authorized capital.

Obviously, a limited liability company is not suitable for all types of activities, and legislation may require the creation of a joint stock company.

The VigoLex team has launched more than one business and knows exactly how to choose the right organizational and legal form and prevent risks.

Equally important, and sometimes decisive, is the choice of the jurisdiction of incorporation. There are several aspects to consider:

  • type of activity (IT products development, gambling business, provision of information services, investment business);
  • where the activity will take place and where the main clients/consumers are located;
  • with which state the founders have actual economic and business ties to comply with the requirement for substance.
  • political, economic and legal stability of the country;
  • respectability of jurisdiction;
  • taxation system, rates of corporate tax, VAT, withholding tax, the possibility of avoiding double taxation with other countries;
  • forms of doing business in the country of registration, the size of the authorized capital, the composition of the company’s participants (individuals, legal entities), the specifics of accounting and financial reporting, the cost of servicing operating activities.

It should be noted that the fashion for creating companies in classic offshore zones has long since sunk into oblivion. The reputation and trust of customers are now important for business, and with competent tax structuring, you can significantly reduce the tax burden on business.

It should also be borne in mind that all over the world legislation regarding CFCs (controlled foreign companies) is being strengthened, as well as significant requirements have been added in connection with the implementation of the BEPS plan. And this means targeted control of the tax authorities on the activities of the company. Without knowing all the nuances of legal regulation, the wrong choice of jurisdiction can endanger both the business itself and the well-being of the owners.

VigoLex lawyers, taking into account all aspects and peculiarities, help clients choose the right jurisdiction for registering a business, which allows them to avoid unjustified risks and conduct business legally and profitably.

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