is a legal entity formed in certain countries, which, according to the rules of
those countries, are either tax- free, or it pays minimal dividends. A non-residential
company performs its business outside the country of registration and, according
to the rules of that country; it does not have to submit financial reports.
It is formed for simple reasons, as the following:
- competitiveness in the field of intervention
- simpler and more liberal international business through a non-residential
- cheap and easily attainable investment with a number of advantages.
The offshore status is usually based on the following facts:
- that the registered director of the company is a non-resident (foreigner)
in the country where the company is founded
- that the company has a non-residential account (foreigner's account) in whichever
bank in the world (that is, outside the country of registration)
- the company has minimal basic capital, which is registered as the issued
shares of the company
- the company is responsible for paying the due annual capital tax to the state
- the state office in that case, generally speaking, does not require the financial
balance of the company for the majority of non-residential jurisdictions.
The work of non-residential firms
All legal entities, and so the non-residential firms, operate according
to how the entrepreneurs envision their business and cooperation with their business
partners, with respect to the rules and regulations of the countries in question.
So, for example, if a non-residential company wants to charge another company
for the delivered goods or services, it has to issue an invoice on its memorandum,
including all the necessary information, and send it to the company that is to
be charged, so that the bill can be paid. Since the non-residential company is
a foreign legal entity, the invoice is to be stated in foreign currency, with
the note of its non-residential bank account. The charged company makes its payment
through a bank transfer to the non-residential account of the receiver. The money
that a non-residential company has earned by charging others for the delivered
goods and services is deposited in the non-residential account of the company,
and can be used by an authorized person (the director of the company) according
to the needs of the company:
- if a remittance is to be sent to anther company
- if the company needs cash, it will be withdrawn from the account
- if cheques are to be issued, etc.
Running a business through a non-residential account, the company charges its
services. The state office does not require any balance or annual report on the
company's earnings, but the regular payment of the due capital tax.
In other words, the principle of operation of a non-residential company does
not differ from the principle of operation of any other company. However, if your
business has so far been mainly national, going non-residential broadens the cooperation
with foreign countries and the work with bank accounts. The mode of operation
of a non-residential company, as you could read from the above, is not bureaucratic,
which largely simplifies the business, so that the management of the company can
totally devote to the business itself and to making profit.