Meaning of offshore (what is it, concept and definition)

What is Offshore:

Offshore is an anglicism that means 'at sea', 'away from the coast', 'overseas' or 'offshore', which is used to refer to any type of activity carried out at sea or in overseas regions, such as islands.

In the financial field, it is used to refer to economic or investment activities carried out outside the country, through companies or bank accounts created in low-tax financial centers, also known pejoratively for that reason as "tax havens".

These offshore centers are characterized by offering a set of advantages compared to the place of origin, such as tax benefits, facilities for the constitution of companies, strict privacy or bank secrecy laws, etc. These types of aspects are controversial because they can give rise to illegal or, at times, politically immoral movements of heritage, as in the case of the Panama papers.

These financial centers are generally located in overseas islands or regions (Bahamas, Virgin Islands, Cayman Islands, Cyprus, Seychelles), hence they are classified as offshore . However, not all offshore centers are necessarily located on islands, they may also be on land, as in the case of Andorra, Belize, Switzerland or Panama.

companies offshore

It is known as companies offshore the companies or companies that are registered and domiciled in countries which do not develop any economic or commercial activity, but offer them certain tax advantages, so often regarded as tax havens. They are companies controlled by foreign companies or citizens who find it more convenient in terms of taxation to do business from an offshore company than from a company registered in their country of origin. They are easy, fast and cheap to set up, and generally have absolute freedom of investment.

The purpose of having an offshore company is to enjoy the advantages offered by tax havens, such as the protection of assets, strict confidentiality and privacy, and a considerable set of advantages at a tax level: they are exempt from corporation tax, from the tax on value added (VAT), the tax on economic activities and the payment of social contributions. For all this, sometimes they are used for the evasion of payment of taxes of physical persons, such as those associated with successions, transfers, assets or income, etc. Likewise, some who use them are used for morally questionable or openly illegal purposes, such as the concealment of assets or money laundering.