The first question I would ask is: what is the purpose of the company?
There is no single jurisdiction that is the best choice for every situation. The right jurisdiction depends on the characteristics of the structure, the assets involved, and the investor’s objectives.
The choice of jurisdiction depends much more on the company’s purpose than on the lowest tax rate. For an international investor, factors such as legal stability, access to banks and brokerage firms, costs, and compliance requirements are often more important than a highly favorable tax regime.
Key Criteria for Choosing a Jurisdiction
Some of the main factors to consider include:
- Legal certainty: a stable and predictable legal system.
- International reputation: jurisdictions that are well accepted by banks, brokerage firms, and investors tend to facilitate the opening of accounts and the conduct of business.
- Local taxation: tax rates, rules applicable to foreign-source income, and any withholding taxes.
- International treaties: tax treaties to avoid double taxation may be relevant depending on the countries where you invest.
- Economic substance requirements: some jurisdictions require certain types of companies to demonstrate genuine economic activity, including local directors, employees, among other requirements.
- Ongoing compliance obligations: some jurisdictions may require audits, income tax returns, and other periodic filings.
- Banking system: ease of opening and maintaining corporate bank accounts.
- Compatibility with your country of tax residence: for example, a Brazilian tax resident should consider the Brazilian rules applicable to controlled foreign companies.
When Is an Offshore Company Typically Considered?
An offshore company is generally considered when there are additional needs, such as:
- significant wealth;
- international estate planning;
- multiple shareholders or family members;
- investments in several countries; and
- participation in private companies or investment funds.
Is There a “Best” Jurisdiction?
The British Virgin Islands (BVI) remain a popular choice because they offer a simple and widely recognized corporate structure. However, there are many alternative jurisdictions that currently impose fewer annual compliance obligations, resulting in lower maintenance costs.
For Brazilian Residents
The decision should take Brazilian legislation into account, including the rules governing the taxation of controlled foreign companies introduced by Law No. 14,754/2023. In many cases, the choice of jurisdiction today has a greater impact on operational, legal, and estate planning matters than on tax savings.
If you intend to use the offshore company as an investment holding company, a foreign trade company, or for another purpose, the most appropriate jurisdiction may vary depending on the specific case. Each structure has its own requirements and advantages.
How Dartmouth International Can Help
Dartmouth International assists clients and their advisors with the incorporation and administration of companies in multiple jurisdictions, providing support throughout the entire life cycle of the corporate structure. Our team assists in selecting the most appropriate jurisdiction, incorporating the company, complying with corporate, regulatory, and accounting obligations, and providing ongoing annual maintenance, ensuring that each structure is robust, efficient, and aligned with the client’s wealth planning, estate planning, or business objectives.
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