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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 account
  • 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 office
  • 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.


© 2001
Excellent Consultants Ltd.

DISCLAIMERS: This web site is provided for information purposes only and are not and should not be constructed as legal advice. If you wish legal advice about how offshore company may apply to your specific situation, you should contact your attorney.We are not a law firm, and we do not give legal,tax or financial advice.