Online Business Owners: Will You Consider Setting Up an Offshore Company?

Are you running an online business offering intangible products and services? If so, then you should consider setting up an offshore company. But is it legal? Is it safe? Read on to learn more (including some myths to debunk!)

Offshore company formation
photo credit: Victor1558

But I don’t want to cheat on taxes!

When people talk about offshore company, one thing that often questioned is this: “Does forming an offshore company mean you are doing tax evasion?”

Well, it’s a myth to debunk, but with an asterisk. More on this later, but for now…

Definition, definition…

“An offshore company is a legal entity established in a tax haven or offshore financial center, being protected by specific legislation which guarantees a status of partial or full tax exemption.” – Wikipedia

As mentioned clearly above, an offshore company lets you do smart taxes, as well as protecting your (private) assets. Being “smart” means that you are playing by the legal rule of taxes; It’s one of the legal ways to save on taxes – not cheat on them!

Administratively, You can remain anonymous, and you will be able to operate the business tax free, generally speaking. Some countries do tax you, but typically on the activities you do within the territory (this is called territorial tax system, and it’s applicable for businesses set up in Hong Kong, Singapore and Uruguay, to name a few.)

ICO Services, one of the leading offshore company formation service providers, shares some of the real benefits of setting up an offshore company in their blog:

  1. Financial privacy and confidentiality, while protecting your assets
  2. Reduce tax burdens legally
  3. The ability to set up a virtual office, a great perk for online businesses
  4. You can acquire or be given a trademark, copyright or patent
  5. Set up offshore bank accounts easily.

I am an online business owner: How offshore company formation can benefit me?

There are some great benefits of getting a legal entity for your business. However, not all legal entities are best-suited for online business, especially if what you sell is intangible goods or services – e.g. e-books, online information (such as blogs and online magazines,) web and graphic design services, web apps, and so on.

In that case, offshore company setup may be a better solution for your online business, for several reasons:

  1. Naturally, you have no trading limits, as you don’t ship physical products. You shouldn’t be taxed like other off line businesses as you are not geographically-bound.
  2. If you do need a ‘head office’ for your online business, you can set up a virtual office using your offshore company legal status with minimal legal obligations and paperwork.
  3. You have the perk to choose a safer country for your online business’ head office for operational assurance. You can also setup an offshore bank account to keep – and secure – your operational income.


I mentioned about an asterisk before; in reality, as legal as offshore company formation is, some ‘misuse’ the company for shady or ‘grey area’ purposes. It’s obviously due to the private nature of an offshore company setup. However, bear in mind that setting up doesn’t make your business a shady one.

Using a legal entity as a way to protect your assets should be every business owner’s endeavor. But before you decide on anything, you should consult with experts and lawyers for legitimate advices on how to use an offshore company legally – and stay legal doing so.