In this guide we’ll look at the eight best countries to set up an offshore company.
We’ll have a look at some of the more reasonable options compared to all the exotic countries you might have heard about in the Panama papers and similar publications.
The latter come with a bad reputation and sometimes make it even more difficult to properly run your business these days.
Best Countries to Set Up an Offshore Company
Let’s have a look at the list of best countries to set up an offshore company.
Bulgaria
Bulgaria offers a low corporate tax rate of 10%. Upon paying out a dividend, generally a withholding tax of 5% will apply.
As Bulgaria is part of the European Union and the Schengen Zone, setting up a company in Bulgaria will grant you easy access to the European market.
One attention point about Bulgaria is that correspondence with the authorities will happen in Bulgarian.
Therefore, it’s important to have a reliable local accountant who can assist with your company formation and compliance.
You can check out my dedicated article if you want to learn more about setting up a company in Bulgaria.
Cyprus
In Cyprus, the corporate tax rate is 12,5%. Technically, Cyprus doesn’t levy a withholding tax on dividends. However, there is a social contribution of 2,65% due when you distribute a dividend.
Cyprus is part of the European Union but it isn’t part of the Schengen Zone.
Cyprus is known as an international business hub and English is widely spoken.
I wrote a complete guide on incorporating a business in Cyprus where you can find more details.
Estonia
Estonia isn’t on this list because of its low taxes but because of how the tax system works.
Corporate taxes in Estonia will amount to 22% from 2025 onward. Probably not what you were expecting from a country on the list of best countries to set up an offshore company.
However, the interesting thing here is that the corporate tax is only due when you pay out a dividend from your company.
So, as long as you keep the money in the company, you don’t have to pay corporate tax. This can be interesting in specific cases and therefore we added Estonia to the list.
If you would at some point decide to take out a dividend, you only have to pay the corporate tax. Estonia doesn’t levy withholding taxes on dividends.
Although I do think setting up a company in Estonia is a good option in very particular cases, I thing many people use it also in the wrong circumstances without being fully aware of the tax consequences. You can read the details about in my article about the Estonian e-Business.
Furthermore, Estonia is part of the European Union, the Schengen Area and the main language of communication with authorities is actually English.
Hong Kong
Hong Kong is an interesting option to register an offshore company because it applies a territorial tax regime.
What this exactly means from a tax point of view will depend on the nature of your business. However, in some instances this could mean that you barely have to pay any corporate tax if you’re mainly operating from outside of Hong Kong.
In addition, Hong Kong also doesn’t levy any withholding taxes on dividends.
If you want to learn more about taxes in Hong Kong, you can have a look at the explanation on the website of the Inland Revenue Department of Hong Kong.
Malta
Malta is the country in Europe with both the highest and lowest tax rate in Europe. The statutory tax rate in Malta is 35%. However, you can get the actual tax rate down to as low as 5%.
Furthermore, Malta does not levy any withholding tax if your company distributes a dividend.
Malta is part of the European Union, the Schengen Area and as a business hub it’s common to do business in English.
You can read more about setting up a company in Malta in my dedicated post.
Romania
Romania is an interesting option for businesses who can qualify for the Romanian micro business regime.
You can read all the details in the dedicated article but as a micro business your company can basically pay tax on its revenue instead of on its profit. The tax rate is 1% or 3% depending on how high your revenue is.
Romania is part of the European Union and recently also joined the Schengen Area.
United Arab Emirates
The United Arab Emirates is known by most people for its tax free environment. However, the country introduced a corporate tax of 9% a few years ago. This tax does only apply on profit above AED 375.000 (around EUR 95.000) though.
Furthermore, the UAE doesn’t levy any withholding tax on dividends.
Setting up a company in the UAE – most people opt for Dubai – is very easy and the process will be fully in English. It can be a bit more pricy than in some other countries though. Therefore, some people seek cheaper Emirates in the UAE than Dubai.
You can read all the details in my post about tax residency in Dubai.
United States
We added the United States to the list of best countries to set up an offshore company with a particular reason.
Many digital nomads who have their own business can benefit from setting up a US LLC. However, you must properly assess if this setup suits your situation. In some cases, setting up an LLC can also be the worst thing to do as it could just complicate things unnecessarily.
In any case does the US LLC permit you to pay no taxes at all in the US because of its tax transparency.
Tips to Pick the Right Country when Opening an Offshore Company
The above list of best countries to set up an offshore business just gives an overview of some options. Which option is best for you depends on many elements. I’ll share some you need to take into account.
- Corporate Tax Rate: one of the most important elements is probably the corporate tax rate in the country where you want to set up your offshore company.
- Withholding Tax Rate: if you plan to take out dividends, a dividend withholding tax rate might apply. Furthermore, double tax treaties can influence these rates.
- Reputation: does the country have a good reputation for doing business. If not, this might cause you some trouble down the line to work with certain clients.
- Banking: the same applies for access to proper banking: where can you open bank accounts. Some countries have more and more advanced options available.
- Costs: how much does it cost to incorporate your company. And, even more important, what does it cost to manage all your yearly compliance.
- Political Stability: how stable is the jurisdiction where you want to incorporate? Some countries change taxes and other regulations almost overnight which could heavily impact your bottom line.
Is Setting Up an Offshore Company the Best Strategy for You?
Many people that just setting up an offshore company is the way to save on taxes. However, there are many rules that come into play.
You need to pay attention to the laws of the country where you will incorporate your company.
In addition, you also need to take into account the tax laws in the country where you have your personal tax residence.
Finally, you need to see how these work together and if that provides you with a good setup.
Reach out if you want assistance with crafting the perfect tax setup for your situation. I assisted hundreds of nomads with designing and implementing their tax strategy.
