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In most cases, entrepreneurs use non-resident companies to ensure a tax-free regime for their international operations.
However, a non-resident company may be just as useful in the internal market of the owner's country of residence as regards taxed activities (for example, for sales of goods in the home country, providing services to home-country residents etc). For similar operations, resident (i.e. taxpaying) structures have to be created. These include subsidiaries, joint ventures or representative offices of non-resident companies, which operate in the domestic market of the specific country together with ordinary limited-liability or joint-stock companies etc, founded with local capital, but which still have the following advantages when compared to the latter:
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| 1. | Using your non-resident company (instead of yourself as a physical person) as the holder of the local company's shares in your home (or another) country, you will be able to ensure your confidentiality, without drawing too much attention to yourself from third parties or authorities. |
| 2. | If your non-resident company creates a commercial representative office in your country and uses it to operate in the internal market alongside ordinary resident companies, it has the competitive advantage of enjoying tax and other privileges, guaranteed by your country's legislation for foreign investors. |
| 3. | Your "trademark" wins too. Activities on behalf of a representative office of a prestigious company from an economically stable country create a higher profile in comparison with local companies, which is why such status can become the key factor in the competitive struggle for profitable contracts or large clients. |
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In order to become the founder of the company in another country or to open a representative office there, the non-resident company has to comply with the incorporation procedures, stipulated by the specific country. In particular, the company must submit documents of incorporation that are properly certified (by a notary, by Apostille or by the consulate of the country concerned) and translated into its official language, as well as certificates relating to foreign bank accounts and other documents.
It is most important to be prepared for any future situation, namely that dividends from the profits earned by the resident subsidiary will be paid to the parent (non-resident) company. In this instance, if there is no double tax treaty concluded between the two countries, the dividends payable by the non-resident parent company will be subject to the appropriate rate of witholding tax in the country of payment. The rates usually vary between 15 - 25%. Therefore, it is advantageous to use a holding company resident in a country with which the subsidiary's country has a double tax treaty.
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