Offshore

The word „offshore” means concerning the literal translation: far from the coast, coastal. However concerning an offshore company we speak about those companies that are registered in such kind of countries where they do not fulfill activities and do not have to pay taxes on their business abroad. An offshore company is defined by the tax environment of the country of the registration. These are called as tax havens.

The aim of the businesses is to avoid high tax burden of the individual states. The offshore companies do not have revenue in the country where they are registered, but outside of its borders. Its sites are predominantly those countries that are economically independent but politically dependent areas that provide very favorable conditions for the offshore companies. Such as:

  • great security
  • high infrastructure
  • the owners’ and executors’ identity are not public
  • minimum taxation
  • they must comply the minimum administrative and bureaucratic conditions

After that, many of us may wonder whether the offshore company is legal? – to which the answer is the following: this is a completely accepted legal opportunity! They are regulated by laws, they have patterns and they have their own literature. It is exempted totally or partially from taxation secured by the laws. However concerning all these, these companies should meet certain conditions, so their operation has legal, financial and accounting obligations. So these companies are the same as any other, only serves full legal tax optimization purposes. Thus the existence of these companies both in Hungary and abroad is considered as accepted by all the authorities.

An offshore company should be founded in that case when the tax in the country is higher than the maintenance cost of the offshore company. If someone does stock exchange trading activities, even you do not have to set up a company, you just open an offshore bank account as a private individual.

The process of establishing a company:

Two founders are needed. The founders note the first shares of the company, usually one per head. Usually the first directors are the same as the founders. The fact of establishing is documented by the founding document and must include the following:

  • name of the company
  • the founders’ name and address
  • scope of activity
  • maximum capital
  • the registered representative’s name and address
  • number of subscribed shares

For anonymity the most commonly used method is that the beneficiary of the company does not appear on its behalf either as a director or as a shareholder in the company. Instead of it, the names of the nominees and the names and address of the owners are stored in the records.

How it works:

The operation of the company may be continued out of the place of establishment, so you never have to travel. The accounts may be anywhere, so handling does not require travelling. The required tax and other duties may be carried out by the post.

The most important ways of terminating a company:

  1. Does not pay the annual state tax. – In such a case the company will be suspended immediately, a trade bonus and fines will be imposed. If the arrears of the company are not settled for a long time, it will be removed from the company register.
  2. Does not pay the registration fee for the registered representative and for office. – The registered representative makes notes about it at the court of registry and thus renounces his office.
  3. The company will apply to the court of registry to cancel the registration of the company. – So the company ceases rather soon.

Thus the offshore companies are considered as accepted ones by all authorities both in Hungary and abroad in compliance with legal requirements. Concerning the above mentioned things, it is worth to think about the offshore companies - why not to save where we can.