Offshore Corporation Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Offshore Corporation, written in plain English, along with examples of how it is used.
What is Offshore Corporation?
It refers to the corporation or company which has been incorporated in the boundaries and regulations of some other country in order to avoid taxes, take benefit of taxes of that country, lower cost and freedom from government interference.
History and Meaning of Offshore Corporation
Offshore corporations, also known as international or foreign corporations, have been around for many years. The term "offshore" comes from the fact that these companies are incorporated outside of the country where they do business or where their owners reside. They are usually created to take advantage of tax benefits or to protect assets from lawsuits or other legal complications. The use of offshore corporations started to become popular in the 1960s when tax havens were first established in places like Bermuda and the Cayman Islands. In recent years, offshore corporations have come under increased scrutiny as governments around the world attempt to crack down on tax evasion and money laundering.
Examples of Offshore Corporation
- Apple Inc. was able to avoid paying billions of dollars in U.S. taxes by using various offshore corporations located in Ireland and other tax havens.
- A wealthy individual could use an offshore corporation to hold their assets, thus shielding them from lawsuits or other legal claims.
- A company could establish an offshore corporation to take advantage of a more favorable tax environment in another country.
Legal Terms Similar to Offshore Corporation
- Tax Haven: a country or territory that offers favorable tax rates and other incentives to individuals and corporations who are looking to reduce their tax burden.
- Shell Corporation: a company that has no significant assets or operations and is used as a vehicle for various financial transactions, often for the purpose of tax evasion or money laundering.
- Trust: a legal arrangement in which one party (the trustee) holds assets for the benefit of another party (the beneficiary). Trusts are often used to protect assets from creditors or to minimize tax liability.