By using our website you consent to all cookies in accordance with our Privacy Policy.

People have been rambling nonstop about onshore company vs offshore company for a while. These are not new terms in the business world. However, have you got all the ins and outs about these two concepts and what they can offer?


Grasping the insights of onshore and offshore companies is the first fundamental step to go offshore and start saving more money. If you want to differentiate and gain knowledge of these two companies, this is the right blog to read!

1. What is an onshore company?

This can be the most popular type of company in the entire world. To make it simple for you, an onshore company is a legal entity that is incorporated in a country to operate a business within that specific border.

Still, some experts refer to define onshore companies as jurisdictions that have developed economies and strong financial markets. The United States, the United Kingdom, Netherlands are good examples of onshore jurisdictions.


The following are some typical characteristics of onshore companies:

  • Developed and strong financial sector
  • Multiple tax treaties

1.1 Onshore company advantages

It is undeniable that onshore companies come with a set of attractive advantages that most businesspeople will fall for.

Since you incorporate your company within your very own country, timezone differences are not a problem that needs to be solved. You don’t have to worry about midnight meetings as your employees are not on the other side of the globe.

Cultural differences are another thing that you don’t have to deal with. Because most of your business activities are operating inside of your incorporated country, researching and adapting to new customs and cultures are also not on your concern list.

The last advantage, and maybe also the biggest one, is that rules and regulations are easier to understand as well as comply with as you can consult with your local experts anytime.

1.2 Onshore companies disadvantages

Though being the most typical type of company in the world, onshore companies have some disadvantages that business owners should take into account:

Higher bill. It is evident that establishing and running an onshore company can cost you a lot. First of all, the hiring fees. As stated earlier, onshore jurisdictions usually are developed countries. Therefore, the cost of hiring employees will cost you more than that of a developing country.

Secondly, tax is the primary reason why your company bill skyrockets. Onshore company is compulsory by the law to comply with the authority control and the local set of rules.

Less confidential. As your company is being controlled by the authorities, the details of the owners are less private. Almost every information about all the beneficial owners is accessible by the public. So if your goal is to stay low-key and keep your identity secret, an onshore company might not be an ideal option.

2. What is an offshore company?

So, what is an offshore company? While onshore companies are the type of company you encounter on daily basis, offshore companies, on the other hand, are a whole different concept.

An offshore company is a legal entity incorporated in a jurisdiction outside of the investors’ home country. The reason behind this far-off-the-land incorporation is that offshore jurisdictions can offer favorable tax treatments in terms of low tax advantages or even tax-free.


Let’s take an example. You live in the United Kingdom and you want to open a company in Mauritius to gain some tax benefits. The company that you establish in another country is your offshore company.

About to start an offshore business? This manual covers all you need to know when going offshore:

  • Roadmap to offshore company formation
  • How-to guide to offshore bank account registration
  • Introduction to international rules in offshore landscapes

2.1 Offshore companies advantages

Though each offshore jurisdiction has its own specific financial environment that provides different advantages for certain types of businesses, there are some advantages that most of the jurisdictions have in common:

Privacy. As a separate entity, an offshore company separates you from your business or assets and liabilities.

Confidentiality. This could be the biggest difference between onshore vs offshore companies. All the details of the company, as well as the beneficial owners, are kept out of reach from the public. Unless there is a criminal investigation involved, all the identities will remain secret.

Taxes. Most offshore jurisdictions provide special taxation to non-resident companies. Offshore companies have a special status in these jurisdictions that makes them non-reliable to local taxation. There is also no foreign income or capital gains tax.

However, this does not mean you are completely exempt from tax obligations. Your tax duties are much more than that because of your country or other international rules, CFC laws for example. But let’s go into details in the disadvantages part.

Simple Incorporation Process. As an attempt to attract more foreign investments, offshore jurisdictions create simplified laws and lower the amount of bureaucratic red-tape. Some typical policies include no auditing, no financial reports as well as no secretaries needed.

Asset Protection. A separate entity gives you another layer of protection as it is separating you from your assets. Businesspeople worldwide have been shielding their assets with an offshore company.


Legal Protection. Here is another advantage that an offshore company as a separate entity has to offer. The offshore company is located in a jurisdiction overseas with a separate legal system and set of laws. This should help to protect the company from becoming targeted in any asset search or lawsuit.

Other advantages. Besides the above benefits, the offshore company has tons more. The owners of this type of company don’t have to stay in the incorporated jurisdiction to operate their business. Your bills are also cut down as there are no expenses on hiring, renting, etc.

2.2 Offshore company disadvantages

Despite some of its outstanding features, using an offshore company has some drawbacks.

Ownership Proving. As anonymity is an advantage that comes with offshore companies, it can also cause some problems to all the beneficial owners. Because of the absence of public registers, ownership proving of an offshore company can be quite difficult.

Repatriation. As mentioned earlier, your tax duties depend on where you live. This can be considered as one of the main drawbacks of offshore companies. Remittance and distribution of assets and income are the aspects you should watch out for. Once your assets and income reach the resident country, they are all subject to taxes. This can eliminate all the perks of a favorable tax system of offshore jurisdiction provides.

Offshore fees and regulations. Normally, offshore companies are subject to a fixed amount of fees on an annual basis. Plus, in order to be qualified as a legal offshore company, the particular company must also satisfy certain requirements of which its business activities should not fall into some “restricted” categories for conducting business as per the rules of the offshore jurisdiction.

And before going straight for the offshore company formation part, what you need to do is ask yourself the most important question: “What type of company should I go with?”.

3. Onshore vs Offshore Companies: Which one is better?

So now the biggest question arises: “What is the best-suited type of company for me?”.

The answer to this question mostly depends on your purposes, your financial status, and your business. Each type of company comes with its own set of advantages and disadvantages. Therefore, list out what your aims are, what your business is, and whether you are financially stable or not.

This blog provides you with a simple approach to an onshore vs offshore company. For further and important decisions, it is best to consult with an expert or any trusted incorporation service provider. Should you have any questions or concerns, our experts are always willing to help. Contact us at

Recent Posts

22 Feb 2021

Offshore Company for International Trading: Things to consider

Let’s take a glance at things you should consider in terms of benefits and hindrances before turning your typical trading company into an offshore entity.

Read more
29 Jun 2021

An Overview of Controlled Foreign Corporation Rules (CFC rules)

Many countries have implemented Controlled Foreign Corporations Rules to avoid profit shiftings among jurisdictions. Learn more about CFC rules with BBCIncorp.

Read more
6 Apr 2021

Offshore holding company: How to use & Where to consider

Offshore holding company manages equity participations in subsidiaries. Learn more about popular uses and best offshore jurisdictions for a holding structure.

Read more
19 May 2021

Top 5 countries with no income tax that you should know

Some countries without income tax that you can consider are Bermuda, UAE, Cayman Islands and St. Kitts & Nevis. Check out our article to know about these offshore countries!

Read more
20 May 2021

Offshore company for Indian citizens: What things to consider

If the place of effective management of your offshore company is in India, then your company shall be taxed in India. Check out this article to know how this rule works!

Read more
20 Jul 2021

Top 6 best offshore company jurisdictions for foreigners in 2021

You wonder about the best offshore jurisdiction for your company? Below are top 6 recommended countries and their popular business structure for foreigners!

Read more
29 Jun 2021

How to set up an offshore company for 2021: 4 Steps to go

How to set up an offshore company? BBCIncorp draws you an easy roadmap to move on. Below are 4 must-know steps to incorporate your desired offshore company!

Read more
29 Jun 2021

Offshore Company for Cryptocurrency: Pros & Cons

Are you looking for the best protection for your crypto-based transactions? The use of offshore company for cryptocurrency is an option for you. Let’s find out!

Read more
17 Feb 2021

Offshore Trust: Among The Best Vehicles For Asset Protection

Offshore trust is a commonly-used vehicle for the management and transfer of the assets. Let’s explore how an offshore trust can help in protecting your business assets!

Read more
23 Jun 2021

Offshore Company: An Efficient Path Moving Your Business Overseas

An offshore company is an ideal vehicle for millions of investors wishing to do business overseas. Why and how? The below article will explore an offshore company from A to Z.

Read more
2 Aug 2021

Business Licenses and Permits: What Entrepreneurs Should Know

Obtaining business licenses and permits is the initial step that an entrepreneur must take to ensure legal business operations. So what it is and how to obtain one.

Read more
30 Jul 2021

Top 7 Best Online Marketplaces for eCommerce in 2021

Looking to find the best selling channel out there for ecommerce? Here is our list of top 7 online marketplaces that will set your business up for growth.

Read more