Offshore Freelancing (Part 2)

This will be a continuation of a previous post, called Offshore Freelancing, and will also explore the topic of running an offshore business in general.

In this post, I will address some points about jurisdictions and banking options for the offshore freelancer, whether it’s as a consultant, IT developer, project manager, marketer, journalist, writer, or what have you.


It might be tempting to go with Seychelles, Belize, Liberia, Vanuatu, et cetera. The problem is the terrible reputation associated with those jurisdictions. The names are synonymous with tax evasion, money laundering, corruption, and – in the case of Liberia – even war crimes. It’s a different debate entirely whether these are deserved reputation and whether other jurisdictions really are much better, but the reality is that they have a poor reputation and are more likely to cause friction with partners and customers than reputable jurisdictions.

As an offshore freelancer, it is important to strike a balance between ease of operation and reputability. (See also Assessing The Reputability of Offshore Jurisdictions. No, really – read it.) If you are going to sell your services to onshore companies but for one reason or another do not want to do so as a local company, it is important that the company type and jurisdiction you choose are not going to cause issues with your business partners.

Popular Jurisdictions

In the last couple of months and years, four offshore jurisdictions have in my experience completely dominated for new incorporations of freelancing and consulting businesses, namely:

  • Anguilla
  • Gibraltar
  • Hong Kong
  • Mauritius

These four, which incidentally are in four different corners of the world, are so far ahead of other jurisdictions that it’s hardly worth mentioning the others. However, if we were to include onshore jurisdictions utilized by international freelancers, UK stands as number one. The US is losing ground, with a drastic decrease in international, non-resident incorporations for SMEs.

Due to their special relationship with the highly reputable United Kingdom, most British Overseas Territories can be viable options. However, while British Virgin Islands and Turks and Caicos Islands are quite lean and affordable, many of the other territories (primarily Cayman Islands and Bermuda) can be prohibitively expensive and cumbersome for a freelancer just looking for an offshore invoicing vehicle.

However, make no mistake that while these are reputable jurisdictions, they are still considered tax havens.

Let’s go through the four jurisdiction in more detail.


Anguilla is often regarded as the lesser known cousin of British Virgin Island. While BVI has had to suffer significant international backlash for its secrecy and lack of compliance, Anguilla has ridden on the coattails of BVI by implementing similar laws but picking up the scraps where the current compliance requirements of BVI are seen as too high for some or by removing (or never enacting) the secrecy for which BVI has been criticized.

The OECD’s 2011 peer review of Anguilla is largely favourable. Anguilla has since been quick to make amendments in line with OECD recommendations and the next peer review is likely to be positive.

CFATF-GAFIC (Caribbean Financial Action Task Force) published its fifth follow-up report on Anguilla and concluded that Anguilla is compliant or partially compliant on all recommendations but two, called R. 20 and SR. VIII, which are more about how the compliance is enforced and run on a day-to-day basis than actual compliance itself.

Anguilla still has some gaps to fill before it is fully compliant but as it stands, it offers quite possibly the best balance of cost vs. reputability. The jurisdiction has signed multiple tax treaties and has demonstrated it can live up to them.

Something that sets Anguilla apart from many other offshore jurisdictions is that it offers both typical IBC incorporation as well as LLC.

Anguilla overview



Corporate Tax;0%

Accounting / Bookkeeping Required;Yes

Filing of financial accounts;No

Audit of financial accounts;No

Company type(s);IBC, LLC

Costs of formation and upkeep;Low

Public records of directors;No

Public records of shareholders;No



It’s no surprise that there are two British Overseas Territories on this list. They tend to be well regulated and well respected jurisdictions.

Gibraltar is precisely that. While it did have an exempt-companies regime similar to Cayman Islands and other Caribbean tax havens, this was removed following massive criticism from – among others – the EU, of which it is a member. Today, Gibraltar applies a sort of territorial taxation whereby companies that are managed by non-residents (and a number of other easily fulfilled requirements) are not subject to any taxation.

While an EU member by an extension of the UK membership, Gibraltar lacks a number of taxes, such as VAT (sales tax). This means a Gibraltar company need not register for VAT in Gibraltar since not VAT is owed there.

A company incorporated in Gibraltar is required to file an annual return with the government. However, for a smaller company, an abbreviated financial statement is considered sufficient. Most trustees (registered agents) can help out with this or refer you to someone who can. The backoffice and websites of the Gibraltarian governments don’t necessarily look or feel modern, but they are on nearly on par with UK in terms of ease of use. It is very easy to run a fully compliant Gibraltar company.

The OECD’s 2011 peer review of Gibraltar is generally favourable. There are some gaps before Gibraltar reaches full compliance but it will get there.

All in all, a Gibraltar company is an EU company that enjoys 0% taxation, 0% sales tax, fair and reasonable compliance, and a stellar reputation.

Gibraltar overview



Corporate Tax;0% (if non-resident)

Accounting / Bookkeeping Required;Yes

Filing of financial accounts;Yes, abbreviated

Audit of financial accounts;No, unless turnover exceeds 500,000 GBP

Company type(s);Private Limited

Costs of formation and upkeep;Medium

Public records of directors;Yes

Public records of shareholders;No


Hong Kong

At a first glance, Hong Kong might seem like a lot of work with the requirement to have an audit. Audits are expensive and take a lot of time, right?


Because audits are required for all companies in Hong Kong and Hong Kong being the business-friendly jurisdiction that it is, there are hundreds of audit firms and costs are pushed down very far, without losing quality.

The fact that audits are required is also a huge boost to Hong Kong’s reputability. When you deal with a Hong Kong company, you are dealing with a company that needs to have its finances in check and whose records are verified by a third party.

Hong Kong has a well-deserved, excellent reputation. Everything goes on public records and as of 2014, all companies must have at least one natural person acting as director. Nominees are virtually unheard of.

The corporate tax rate in Hong Kong stands at 16.5% but since Hong Kong applies what’s called territorial taxation, only income derived from business activities within Hong Kong is taxable. This means that for a non-resident freelance consultant or marketer, you can render your services to clients world-wide but only pay tax on income earned from clients based in Hong Kong.

OECD considers Hong Kong to be Largely Compliant. There are a few gaps there but none that are likely to cause friction as an offshore freelancer. The Hong Kong authorities prefer to sign DTAs over TIEAs since DTAs add a business incentive. Hong Kong is likely to adapt to TIEAs very shortly but will continue pushing for DTAs.

See also: Jurisdiction Spotlight: Hong Kong and Macau.

Hong Kong overview



Corporate Tax;0% (for non-Hong Kong-sourced income)

Accounting / Bookkeeping Required;Yes

Filing of financial accounts;Yes

Audit of financial accounts;Yes

Company type(s);Private Limited

Costs of formation and upkeep;Low to Medium

Public records of directors;Yes

Public records of shareholders;Yes



As mentioned before, Mauritius has two types of offshore companies: GBC (Global Business Company) class I and class II.

Class I GBCs are resident companies and very likely falls out of scope for freelancing as there are requirements on resident directors and taxation. GBC class II is largely a carbon-copy of IBC.

What sets Mauritius apart from for example its neighbour to the north, the Seychelles, is the jurisdiction’s strong and tangible commitment to fighting financial crime, tax evasion, and money laundering. At nearly every major conference relating to international finance, the Mauritius FSC and/or central bank is present.

OECD rates Mauritius as Largely Compliant. The only areas where Mauritius is not compliant is relating to identification of ultimate beneficial owner (UBO) in structures involving foundations or nominees. Mauritius has enacted legislation addressing these two issues but OECD were unable to assess them before the peer review was completed.

The ESAAMLG (East and Southern Africa Anti Money Laundering Group) has issued reports on Mauritius, both overall positive. The reports old by now but can be found on

Mauritius has signed several tax treaties and is known to be able to fulfill requests for exchange of information (EOI) in a timely manner. Its regulatory bodies are responsive and helpful.

Mauritius GBC Class II overview



Corporate Tax;0%

Accounting / Bookkeeping Required;Yes

Filing of financial accounts;No

Audit of financial accounts;No

Company type(s);GBC class I

Costs of formation and upkeep;Medium

Public records of directors;No

Public records of shareholders;No



Stop complaining.

I often hear would-be entrepreneurs complaining about bookkeeping and thinking that they don’t need to do accounting for their IBCs. There are a couple of jurisdictions left that do not require accounting but in the end, they all will. Before you ask which ones don’t, they are the kind of jurisdictions you wouldn’t want your name associated with and will not be named.

What sets your average offshore jurisdictions apart from many onshore jurisdictions is that there is no need to file the books with or prepare statements for the government. Audits tend to be optional (and almost never used), save for Hong Kong. The bookkeeping itself also tends to be simplified in offshore jurisdictions.

Accounting is easy. You either do it yourself or you hire someone to do it for you. There are thousands of accounting firms out there. To outsource accounting, you submit all invoices, receipts, bank statements, and other financial information of the company and they prepare the books for you. Costs are rarely more than a few hundred USD/EUR per year for a small company. Check with your registered agent if your jurisdiction abides by a specific accounting standard and make sure that your outsourcing partner follows this standard.


This is a problem many B2B-service providing freelancers face: banks not accepting them.

Some place a lot of importance on bank account and require sophisticated services, while others are happy to just have an account, internet bank, and maybe a debit card. This is entirely up to you.

I’m not going to list banks here. Instead, I’m going to tell you what you can reasonably expect and how you can optimize your chances.


If you operate as an Anguilla IBC or LLC, your banking options will be narrow. It is the least reputable of the four jurisdictions here and some banks do not see past it being a Caribbean tax haven, equaling it to the likes of Grenada and Belize. This is unfortunate but it is how it is.

Caribbean and Pacific banks as well as offshore-friendly banks in Europe (Cyprus, Latvia) will probably be your best bet. That’s not to say you can’t find banking elsewhere. It’ll just take a bit more convincing (more on that later).

A Mauritian company is in a position very similar to Anguilla but may find banking options in the Middle East and Africa more available than an Anguillian company. It’s not uncommon for Mauritius companies to bank in anywhere from South Africa to Dubai. Local Mauritian banks are also available and of generally high quality.

Hong Kong companies are accepted almost universally, except for some of the more narrow banks in Europe and South America (Panama, Uruguay). The strength here is that Hong Kong companies are readily welcome at banks in Hong Kong and Singapore, as well as Labuan, Taiwan, and other financial centers in Asia.

Gibraltar companies, being EU entities, usually have a pretty easy time finding banks across Europe, except for in especially tax haven-hostile jurisdictions or banks. Asian banks tend to accommodate Gibraltarian companies as well.

Increase Your Chances

I’d suggest reading Why Banks Say No to You But Yes to Me as well to understand more about how banks assess applications.

In addition to what is mentioned in that post, make sure you introduce yourself in a presentable manner to the bank. If you are going for a non-resident bank account, you need to prove that you are a legitimate business and why you are interested in banking with that specific bank.

There is no excuse for not having a proper business plan. If you just spend a few hours reading about how to form and how to run a company, you can find tonnes of guides out there. If you can’t write a business plan, chances are you have no business starting a business.

Now, because your start-up business will be small, a lot of banks will turn you away not because you are an offshore company or non-resident person, but because you’re not bringing them millions upon millions. That is the reality behind most refused applications.


This is given entirely too much focus. If you can’t afford banking fees, are you really earning enough money with your company to justify starting a business?

Fees are a particularly big concern for people who have previously only held personal bank accounts in their onshore jurisdictions.

If you place too much emphasis on fees, you are going to find yourself with a couple of monkeys because, as they say: if you pay peanuts, you get monkeys. Quality banking comes at a price.


Hopefully you now have a good basis to stand on for doing your own research into the matter.

A feedback I anticipate from this post is questions regarding other jurisdictions. While yes, other jurisdictions certainly are used for offshore freelancing and consulting, the four mentioned here hold tremendously dominant positions. Other popular jurisdictions include British Virgin Islands (BVI), Cyprus, Ras al-Khaimah (RAK), Malta, and The Bahamas – more or less in that order.

BVI has a rather poor reputation and is seen as non-compliant, which can be problematic. Cyprus is a good second to Gibraltar when it comes to ease of operation. The island is an EU member, which helps for intra-European trade. RAK is a part of the problematic but increasingly accepted UAE. Malta is much like Cyprus (without the banking crisis and deposit hair cut of 2013), but tends to be more complicated to set up and manage. Bahamas is starting to seriously recover from the drama of the 80s and 90s, now being classified as Largely Compliant by OECD.

There has been a boost in interest for Turks and Caicos recently. It’s still a fairly small tax haven for these types of endeavours, but worth keeping an eye on.

23 Comments on "Offshore Freelancing (Part 2)"

  1. Hello and Thanks for all helpful contributions here!
    I’m IT consultant providing onsite services to blue-chips mainly in EU, being resident in central EU. As in this business there is always an (recruitment-)agency between me and the end customer, my invoice receivers (agencies) are often located in UK.
    I would like to know if this kind of business is possible using a Gibraltar Ltd (IBC) and still having the residency in central EU. My question is (in a first step) only related to the business relationship between me and the invoice receiver (recruitment agency) in UK. Can I expect that this set-up is accepted by a UK company? Does my residency (not in Gibraltar but in EU) has any impact? Would I be required to have a company address for my correspondence/contract (i.e with the name of the Ltd) or could I also use my personal home address in central EU (I would be the single director of the IBC)?
    Thanks for your input and any other practical consideration for this set up.

    • Where you live doesn’t matter as far as your customers are concerned, they’ll receive an invoice from your Gibraltar company, which is based in Gibraltar (Gibraltar companies must have a registered office in Gibraltar). Whether you’ll avoid paying taxes in your home country depends. Usually, if it’s controlled where you live, you’ll have to pay taxes there as well.

    • Hi Carlos,

      If I understand your first question right, you are asking if a UK company will mind receiving an invoice from Gibraltar? That’s usually not a problem provided it’s a B2B transaction and VAT was anyway not a concern and provided you are not a huge client of theirs (companies can find large invoices from tax havens problematic and can at worst trigger CFC or transfer pricing rules/checks).

      Your residency won’t matter in most cases as far as your business partner is concerned, provided you’re not resident in a sanction jurisdiction like North Korea. Since you say central EU, you’re very unlikely to run into any issues.

      You can use your home address as correspondence address. That is, in fact, quite common. You might need to put a little sticker on your mailbox saying “Carlos Worldwide Limited”, if you live in a country where the mailman actually checks to make sure addressee matches.

  2. Just saw that FBME is allowing 10,000 Euros a day via cheques. This a good thing or these guys fishing to see where the cheques go?

    • I doubt they’ll be wasting any significant resources on tracking down each individual cheque. They might file an SAR if you cash it in southern Beirut which is Hezbollah territory. But that would be treated the same as a suspicious bank transfer – not unique to a cheque.

  3. Hi Streber,

    As a one man operation I have been hard pressed to keep a log of wires that come in or out. That that end, the only record I have are the bank records online per se. This all said, last month received an email with a declaration form asking for a physical address of where we keep our records and that we are to submit on notice via our OSP — while I realize this is important, does it mean the jurisdiction will start asking for records. In this case it is Seychelles. I read some where that Seychelles companies are wrapped in litigation from day one and therefore by law not able to relinquish by law. Just thought I might ask your views on this.

    Thank you!

    • Hi Evan,

      It’s strange that your OSP didn’t notify you until now. This has been a legal requirement for one or two years now in the Seychelles.

      All that the Seychelles government is doing here is appeasing OECD by enacting a law which states that companies’ registered agents must know the physical location of each company’s records. There is a legal provision whereby the government can request copies of such records but this is in reality very unlikely to happen. They know full well that if they start requiring annual filings of records and such that their offshore sector will disappear quickly in favour of other jurisdictions without such a requirement.

  4. Hello Streber,

    Your blog is just magnificent and very useful 🙂

    I read almost of your articles, and came to a specific question, which better country to register a company offshore with a bank offshore for business type of online services, Gibraltar or Malta? and why?

    I am asking this because I just found that Gibraltar started to tax: , where Malta requires more invests for establishing the two companies (one service company 35% + one holding company 0-5%) to reach the 0-5% taxes, which may have some lack of procedures.

    My question is related non US nor EU residents 🙂

    Thank you in anticipation 🙂

    All the best.

    • Hi GWTW,

      Thanks for your feedback!

      It’s always difficult to say which is better when comparing two jurisdictions.

      For example, Malta has a much better network of tax treaties which can be used for legal tax avoidance if you are a large enough business to be able to benefit from it, but it is more complex to set up and maintain than Gibraltar. To make the most of Malta’s tax code you will need a structure involving at least two companies as you have found out, and this drives up costs and complexity.

      Gibraltar is very simple compared to Malta. The tax you are seeing is only for resident companies. Non-resident companies pay no tax. To be a non-resident company, you need to keep management and control of the company outside of Gibraltar. You should also avoid having a bank account for the company in Gibraltar.

      See for example Deloitte’s Gibraltar Tax Highlights 2014 for more information. I also have a post about Gibraltar coming in about four weeks.

      • Hello Streber,

        Great, I will be exciting to read it 🙂

        Yes, its all about starting up business, and/or freelancers, Malta can be a good solution for medium/big types of companies/business.

        Seems I haven’t read it all, about non-residents co.’s taxes , when I sent the message 🙂

        1-From documentary point, does an offshore company supposed to have own Bylaw? Or just one/some paper stating the presence of the company? I mean, is offshore company is an actual official registration, when it comes to ownerships and rights of shareholders/owners?

        2-What recommended banks please (opened remotely) in case of Gibraltar company? And in this case, does the company pays taxes in the country where the bank account is opened, for Gibraltar Non-resident company?

        Thank you again 🙂

        • Hi again,

          1. Most offshore companies are formed under a memorandum and articles of association which outline the purpose of the company, share structure, and other fundamentals of the company. Most service providers have standard memorandum and articles of association that are generic, stating that the company can do whatever its directors desire, but you can usually request a customized one if you want.

          Once the company is formed, you receive some type of certification of incorporation from the government of the jurisdiction in which you are incorporated.

          In some jurisdictions, names of directors and shareholders end up in a public registry. In some jurisdictions, names of directors are on public record but shareholders are only known to the government or only known to the company secretary or registered agent. Then you have the highly secretive jurisdictions where neither directors nor shareholders are on public records. Examples of the latter would be jurisdictions that offer incorporation based on the old BVI IBC model, such as Anguilla, Mauritius, Belize, Seychelles, Samoa, and so on.

          Gibraltar and Malta list directors and share holders in public records. Some choose to get around this by appointing nominees or using other companies as directors/shareholders where permissible.

          2. Gibraltar companies are considered quite reputable and you can find banks almost anywhere. It’s not a perfect list but I’ve put together a list of offshore banks here. If you are especially interested in Malta, I know of a handful of recent cases where Gibraltar companies were able to open bank accounts with BOV and HSBC remotely.

          The company wouldn’t pay corporate tax in a jurisdiction simply for banking there (unless, of course, the banking jurisdiction is Gibraltar). It might pay tax on interest and other forms of income/capital gains but non-residents are usually exempt from that.

          • Hello Streber,

            Thank you, much appreciated.

            How about Switzerland? Is it a good alternative to Gibraltar?

            I know Switzerland was famous maybe 20+ years ago, but not sure how these days ..

            Any thoughts?

            Thank you again 🙂

            • Hi,

              Yes and no.

              Yes, if you have enough money to be attractive to the banks.

              No, because except for UBS and Credit Suisse, there really aren’t any Swiss banks that are suitable for transactional business banking. The Swiss banks with the lowest deposit requirements are either trading/broker banks or wealth management banks. Such banks will not like it if you use the bank for everyday business transactions.

              I recently placed a Gibraltar company with Credit Suisse, so it’s definitely possible but it took a bit of convincing to get the bank on board with it.

            • Gone With The Wind | September 4, 2014 at 09:35 |

              Yes, you are right .. I have made some international calls to the list of banks, almost of them are trading/broker banks or wealth management banks 🙂

  5. As many others, I’d like to first and foremost thank you very much for having created this website and being so helpful to people. I can only imagine that it must require quite a bit of effort. I’ve just recently discovered your site and I can’t tell you how much I appreciate the wealth of information you’re giving out.

    Also, I’d like to apologise that my comment / question is a bit lengthy, but I’m hoping that the details might be able to provide an answer that is as helpful as possible for me as well as future visitors.

    I’m currently running a few online businesses in the EU as well as doing high-level consulting for various blue chip companies in Europe. As I will be travelling for the foreseeable future, I’ve been looking into the ideal company and banking structure to optimize ease of operation, privacy and tax rates.

    So far my considerations, heavily based on the content read on your website and elsewhere has been the following:

    1. As I’m not interested in getting into any sort of illegal offshore setup, I will need to move my residency.
    2. The jurisdiction that I incorporate in, will need to have low – zero taxation on foreign income.
    3. The jurisdiction that I take residence in, will need to have a low – zero taxation on personal income.
    4. As my clients are blue chip companies, with whom I have a personal relation, it would be problematic to invoice them from a jurisdiction outside of the EU

    Initially I’ve thought about taking residency, incorporating and setting up banking in HK or alternatively taking residency in Singapore. From my understanding, that setup would result in zero taxation on foreign income for the company as well as zero personal income tax – while at the same time being completely legal. Even though this setup, as I have understood it, would be legal, I reckon that it could still seem dodgy to an EU company, when receiving invoices or entering contracts.

    Therefore, I’ve been contemplating if it would be possible to add an EU company as an extension to this setup. For instance, by having the HK company establish a UK company with a UK bank to handle all sales, contracts and invoicing of clients. Naturally, the majority of the income generated by the UK company would then need to be paid to the HK company, to pay for the consulting services delivered by the HK company.

    From your experience, would these 2 structures be considered legal? And would they result in low – zero tax (corporate and personal income)? Also, have you experienced or heard of alternative structures that would solve my concerns?

    Finally, as I completely understand that you might not be able to provide concrete or actual “advice”, who do you think I could benefit from consulting on this? I’m basically considering between dedicated OSP’s such as OCRA and Mossack Fonseca or the the bigger companies like Deloitte, KMPG etc

    • Hi BlueViking,

      Thanks for your kind words and comment!

      You don’t really have a lot of tax free options in Europe. There are ways you can utilize places like Malta, Gibraltar, and Cyprus to pay very low tax or only pay tax on whatever money you pay yourself but tax free is essentially limited to the tiny tax havens that are usually quite unattractive to live in, save maybe for Monaco. You will need millions to live comfortably there, though.

      As for picking residence, I prefer Malta and Gibraltar in western Europe. It’s pretty straight-forward and there are tonnes of advisors available to help you out. Visit the places before you set up camp there, though. They’re not for everyone.

      Eastern Europe is full of countries with low effective tax but living there if you come from western Europe can be quite frustrating due to language, archaic bureaucracy, and lower standard of living. The tax savings of living in Bulgaria or Romania aren’t always worth it.

      It is indeed quite common to use UK companies for trading and shifting all profits to offshore companies, such as Hong Kong in your example. What you can actually do depends a bit on how your business is structured. If you sell something (a product) you can look into something like a franchise agreement but if it’s consulting services it might not hold up. You’ll also need to consider transfer pricing rules and any applicable CFC regulations.

      Another idea would be to form a UK LLP together with a partner or have the two partners of the LLP be yourself and your offshore company, i.e. your Hong Kong company. Similar to the US LLC concept, LLPs are tax neutral, meaning the legal entity itself is not taxed and instead the partners are taxed on income tax. If the partners are not residents in the UK, no UK income tax would apply to them. You’ll of course want to verify this with an accountant since there might be fringe cases where this might be different.

      If you run the business from within Hong Kong (while living in Hong Kong), income the company earns will be considered Hong Kong-sourced. You would have to prove to the Hong Kong revenue department that the dividends/payments from the UK company are for services rendered outside of Hong Kong. So it again depends on how your company operates. That said, the corporate tax rate is quite low in Hong Kong and there a number of deducions you can do to reduce it.

      If your clients are primarily European, I would think twice before operating directly with them as a Hong Kong company. It’s nowhere near as bad as a Belize or Seychelles IBC, but it might raise a few concerned eyebrows. In all likelihood, though, it won’t be a problem unless your clients are of a particularly skeptical nature. Hong Kong is a tax haven but it is perhaps the most transparent and reputable of them all.

      As for where to seek advice, I think the Big Four might be overkill in your situation. When it comes to tax planning, they are great for large international businesses but the costs can quickly become insurmountable to a small business. It wouldn’t hurt to get a quote from a big name but chances are you’ll get equally good service with someone like Mossack & Fonseca, Appleby, Baker Tilly International, or Trident Trust.

  6. First of all, thanks for this blog Streber. It is the best source for offshore information (this and your posts on some well known forums).

    Right now I am considering between Cayman Islands, BVI and Anguilla offshore companies (not having public records is a must for me).

    I`m leaning towards BVI as I imagine it would be easier to open bank accounts than Anguilla. I`m assuming banks and brokerages have more experience dealing with BVI, as it`s a more popular jurisdiction than Anguilla.
    Is that right?

    One thing that worries me is hearing from multiple sources that BVI has a bad rep but I only heard vague explanations for that. The one thing that I could confirm had happened was a leak on one of the agents but that could have happened anywhere I guess (and they are passing a law to make leaks like that a crime).

    With Cayman I imagine it would be even easier to open bank and brokerage accounts as it has more prestige but then the fees are more than double of what BVI charges. I can afford that as my business is doing well.
    But is that worth it?
    (in terms of secrecy and easy of doing business with banks as my clients do not care and will just wire money as requested)

    • Hi Marcos,

      Thanks for your comment! Glad to hear you like my little blog.

      You would be right that banks typically have more experience with BVI, but most compliance teams at banks will treat all British Overseas Territories the same.

      BVI’s poor reputation comes from its unwillingness to help foreign tax authorities and for consistently dodging questions, turning down requests for information, and generally being difficult to deal with. It has taken steps to combat money laundering, though, which places it ahead of the likes of Belize and Seychelles but it is still being far too lenient when it comes to tax crimes.

      The Cayman Islands indeed carry a higher prestige than Anguilla and BVI. It’s still undoubtedly a tax haven but a fairly reputable one. The Cayman authorities are much more responsive and cooperative than BVI.

      What I find holds the Caymans back compared to Anguilla but also Turks and Caicos is, as you’ve found, the high costs and the extra documentation and records required to maintain the company. The cost is part of the prestige but is also a consequence of the more cumbersome paperwork required to form and maintain a Cayman Islands company compared to most other offshore jurisdictions.

      I can’t really tell you if it’s worth it; that decision is up to you. Anguilla is easier to operate and costs less to form and maintain, but the Cayman Islands offer a stronger reputation and is much more well-known which can make things like bank account opening easier. Secrecy-wise, Anguilla might be stricter but if you are just concerned about keeping your name away from public records, the two are essentially equal.

  7. Whoops, that comment doesn’t really appear right! Just delete it 🙂 Again: Thanks for the great information! But I am also interested in how you can legally benefit from these jurisdictions. Or is it only possible when you are living offshore (like in the article ‘Living Offshore’ in a previous post)? Because you said JohnSmooth’s structure sounds like tax evasion 101 on your about page.

    • In the grand scheme of things, measured in number of companies or company-like entities formed, the offshore sector is very small compared to onshore company formations.

      As a one-man operation (which is the assumed target audience for this post and the previous), you are extremely unlikely to be able to reap any tax benefits from incorporating offshore, since to do so you need to establish the company tax resident somewhere else and then set up a structure to pay yourself money from the company in a way which generates less tax than otherwise. This is expensive.

      The benefits rather come down to things like for example privacy (secrecy), ease of operation, regionality, and reputability.

      Privacy – many onshore jurisdiction publish a lot of detailed information about companies in public records. This can be undesirable in many cases, whether it’s to protect the identity of investors or just keep the company’s owners, financials, et cetera away from the public eye. Maybe you live in a country where a company’s financials (or summaries thereof) are published publicly but you don’t want your neighbour to know how much money your company actually makes.

      Ease of operation – some parts of the world are far behind the likes of Hong Kong, Singapore, (much of) Europe, and other highly advanced jurisdictions. A lot of people live in extremely bureaucratic jurisdiction where everything must be stamped not once, not twice, but three or more times… By different people, at different government and notary office, at different addresses, with short opening hours, and they always seem to be on vacation… You don’t fully appreciate how efficiently things run at home until you’ve been to these types of countries and had to go through everything from entering the country to forming a company to filing returns. But you don’t necessarily have to go to that extreme. You could be living in the most modern part of Europe and still find that a Hong Kong company much easier to form, operate, and maintain.

      Regionality – if you have skills that are beneficial to clients in Asia, having a company in Asia (i.e., Hong Kong) may make it easier for your clients to pay you or it may make you seem more tangible and reliable.

      Reputability – if you live in a jurisdiction with a poor international reputation, freelancing under an offshore company in a better-reputed jurisdiction can be an advantage to you.

      It’s all very much down to personal preference and personal assessment of the pros and cons. If you got the money to establish foreign tax residences, it’s a different discussion.

Leave a comment

Skip to toolbar