What Is An Offshore Holding Company
Worldwide companies, often use a system of ownership that reduces their tax burdens, gives them more freedom, and protects their assets. In many cases, they do this by establishing an offshore holding company. Before you can decide whether this option will work well for you, though, you need to know what an offshore holding company is and whether it matches your needs.
Offshore Holding Companies
An offshore holding company is an entity created in a country with a free trading zone. Panama is one of the most popular countries for establishing holding companies because it has a stable economy and political system that respects privacy. Panama also has one unique legal entity that is perfect for achieving this – a Private Interest Foundation. (For more information visit Click here).
The offshore company in Panama becomes a holding company when it acquires a business within a home country. The home country could be Japan, the United States, Spain, or virtually any other location.
The offshore company only needs to exist on paper to protect the home-based business and its owners. Companies, after all, don't have to be anything other than legal entities. A simple mailing address could establish the offshore holding company as the home business's majority owner.
The Advantages of Using a Holding Company
Establishing a holding company could offer several advantages. Let's say, for instance, that you own a business in Argentina, where you also live. As the business's owner, you need to have a structure which protects your assets for financial and legal problems.
If you create a holding company in Panama, you can transfer the ownership of other companies located anywhere in the world. You then establish yourself as owner of the holding company. Revenues, therefore, stream from your main business to the Panamanian holding company and then back to you.
A holding company can also protect your assets. If you were sued for example you could lose a large portion of your assets. When the holding company owns those assets, though, you don't have to worry about losing them because it creates a buffer between you and your property.
Some of the most successful organizations in the world use holding companies to protect their assets.