Meaning of Offshore
What is Offshore:
Offshore It is an Anglicism that means 'at sea', 'far from the coast', 'overseas' or 'out to sea', which is used to refer to any type of activity carried out at sea or in overseas regions, such as islands.
In the financial sphere, it is used to refer to economic or investment activities carried out outside the country, through companies or bank accounts created in low-tax financial centers, also known pejoratively for this reason as “tax havens”.
These centers offshore They are characterized by offering a set of advantages compared to the place of origin, such as tax benefits, facilities for the incorporation of companies, strict privacy or bank secrecy laws, etc. These types of aspects are controversial because they can lead to illegal or sometimes politically immoral movements of assets, as in the case of the Panama Papers.
These financial centers are generally located on islands or overseas regions (Bahamas, Virgin Islands, Cayman Islands, Cyprus, Seychelles), hence they are classified as offshore. However, not necessarily all centers offshore They are found on islands, they can also be on the mainland, as in the case of Andorra, Belize, Switzerland or Panama.
See also Panama Papers.
It is known as partnerships offshore companies or companies that are registered and domiciled in countries in which they do not carry out any economic or commercial activity, but that offer them certain tax advantages, which is why they are usually considered as tax havens. They are companies controlled by companies or foreign citizens who find it more convenient in terms of taxation to do business from a company offshore than from a company registered in your home country. They are easy, quick and cheap to set up, and generally have complete investment freedom.
The purpose of having a partnership offshore is to enjoy the advantages offered by tax havens, such as asset protection, strict confidentiality and privacy, and a considerable set of advantages at the tax level: they are exempt from corporate tax, value added tax (VAT) , the tax on economic activities and the payment of social contributions. For all this, they are sometimes used for tax evasion of natural persons, such as those associated with inheritance, transfers, patrimony or income, etc. Likewise, there are those who use them, they are used for morally questionable or openly illegal purposes, such as the concealment of assets or money laundering.