Investors looking to set up companies in order to protect their assets have various types of structures they can use, however, they can also choose between onshore and offshore jurisdictions when it comes to ensuring a favorable taxation system. Once more popular than onshore states, offshore jurisdictions are now starting to offer similar business registration conditions to the former because onshore countries are trying to attract larger numbers of foreign investors.
One of the most appealing offshore jurisdictions in the world is the Cayman Islands. While it offers many advantages in terms of taxation, one can also set up a Cayman Islands limited liability company just like in any onshore jurisdiction. So, what are the differences between onshore and offshore jurisdictions then? Let’s see below.
Increased availability of business structures to use in onshore jurisdictions
For those who have a hard time deciding on the business structure they can use in order to set up a company, an onshore jurisdiction will be a better choice because it is more flexible in terms of structures available for investors. Both individual investors and companies have various choices when it comes to establishing their presence abroad. Foreign companies, for example, could perform quite good by operating branches in Spain, one of the most appealing onshore jurisdictions in Europe. In comparison, offshore jurisdictions do not allow the same flexibility.
Onshore jurisdictions have a better reputation
Indeed, one of the most important advantages of onshore jurisdictions over offshores is their reputation. Benefitting from strong and diversified economies, onshore jurisdictions can often mix relatively low corporate taxes with other tax incentives which make them quite appealing even for those who thought about an offshore jurisdiction in the beginning.
Onshore jurisdictions are more business-friendly
Even if at the beginning they might not seem like that, onshore jurisdictions usually have a more business-oriented approach which implies various industry-related incentives. This is why most of the time an onshore jurisdiction can be a better solution for those interested in investing in particular business sectors.
While the difference between onshore and offshore jurisdictions are not that discrepant as they used to be years ago, onshore states have certain advantages that offshores will never have, especially when it comes to reputation. Also, in an onshore jurisdiction, foreign investments are protected through special mechanisms which are usually not available in offshore countries.
, one of the most appealing onshore jurisdictions in Europe. In comparison, offshore jurisdictions do not allow the same flexibility.