Offshore Company Formation in Delaware
Updated on Monday 23rd December 2024
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The American state of Delaware is considered a tax heaven by most of the investors, mostly for the lack of taxation of the non-residents. There is no special legislation applicable to LLCs;investors must respect the regulation of the Common Law.
No tax is applicable for the offshore company if all the employees are non-residents and if the company is not permanently hiring US citizens or performing any business in connection to the US market. No sales on tax and no VAT are applicable for the limited liability companies opened in Delaware.
Non-residents are not subject to personal income taxes. There is no minimal share capital requested for the incorporation. Our consultants remain at your disposal for more details on the registration of a local business.
Steps for company formation in Delaware
The basic form of organization of an offshore company opened in Delaware is the limited liability company. In order to incorporate an offshore company in Delaware, the next steps have to be considered. For the limited liability company to be incorporated in Delaware, a registered agent must be appointed.
After choosing the proper agent, entrepreneurs are advised to check the availability of the desired name at the Delaware Division of Corporations. The name of the offshore company must be followed by one of the following terminations: "Limited Liability Company", "L.L.C.", or "LLC". If the name is available, it may be reserved for a period of 120 days in exchange of for a fee.
Thirdly, it is necessary to fill the certificate of incorporation with the Secretary of State. This certificate must state: the name of the company, the address and other specific details included by the company’s members. The certificate filling may be sent through post or fax to the Delaware Division of Corporation.
The next step after registering with the Secretary of State Division of Corporation, based on the Certificate of Incorporation, is applying for the Federal Identification Number from the IRS.
If the company is planning to have employees, it has to be registered at Delaware Department of Labor. Even if the company will not have employees is necessary to be registered at the Department of Finance, Division of Revenue. The registration is available nonstop thanks to the on-line one stop.
Finally, the company has to contact the relevant state agencies for the type of performed business. The formation of an offshore company in Delaware doesn’t take longer than 2 days.
Please know that, depending on the type of activity you want to carry out in Delaware, it might be necessary to obtain business permits and licenses, which allow investors to lawfully develop their activities.
These documents can be required for both onshore and offshore companies, therefore if you plan to start the process of offshore company setup in Delaware, we advise you to address our team of consultants, who can offer the necessary support.
You are also invited to address our team for business immigration. In most cases, foreigners have to apply for adequate visas when arriving here and this can be the case of investors. However, those who plan to incorporate a business without being constantly in the country, do not need to apply for specific immigration documents, such as visas and residence permits.
What is an offshore company in Delaware?
When we refer to offshore incorporation, we define a company that is set up by foreign investors in an overseas country, somewhere else than the country of residence. However, in order to be considered an offshore company, the legal entity that is incorporated in a state (in this case, Delaware), must not engage in commercial activities in the country where it is registered.
In other words, if the company is incorporated din Delaware for the purpose of the carrying its operations on foreign markets, the main consequences are financial in nature, as the taxation of the company will not be carried out following the same tax rules applicable to an offshore company (a legal entity incorporated in Delaware, engaging in economic activities in Delaware, thus taxable in Delaware).
Requirements for offshore company formation in Delaware
A limited liability company in Delaware is formed by at least one member. No minimum share capital is requested at incorporation and the existing capital is divided into shares, received by each member. It’s advisable for all the non-residents members to be natural persons, or the company could be considered a branch (and pay corresponding taxes).
The 100% foreign presence is allowed in an offshore company opened in Delaware. A secretary is not mandatory to be appointed, but advisable. The general meeting of the members can take place anywhere in the world and there are no regulations regarding the frequency of this these meetings.
As a particularity, limited liability companies don’t need to file annual accounts but is mandatory for it to pay an annual tax at the Secretary of State.
Services provided for Delaware company incorporation
Our team can assist in drafting the Articles of Association (necessary for company incorporation in Delaware) .The Articles of Association of the Delaware company can be signed through Power of Attorney.
We can also draft all other documents required for the incorporation of the Delaware company; these documents include: specimen signatures, special forms provided by the Company Registration Office in Delaware, passport copies etc.
Our team can assist in offering a registered office in Delaware for your company, which is mandatory to have for starting a business in this offshore jurisdiction. The registered office may be any address where the Delaware company declares to have its headquarters.
Our services also include setting up a bank account for your Delaware company. We can also help you set up an offshore bank account.
Delaware key facts
The organization and the activities of limited liability companies in Delaware are regulated by the Limited Liability Company Act.
The most common form of business in Delaware is the company limited by shares. A company may choose to open an account in a US bank, but may also operate through branches of foreign companies.
Every organization incorporated in Delaware and conducting business here is obligated to file Corporate Income Tax Return every year. Companies incorporated here but not conducting business are not obligated to submit the above document.
In Delaware, the sales tax is 0% and the Value Added Tax are inexistent. The basic Corporate Income Tax Rate is 8.7%. Some other matters concerning the tax system in Delaware are presented below:
- the personal income tax is charged at rates varying from 2.2% to 6.6%;
- the personal income tax rates vary because they are applied following a progressive tax system (the more income a person has, the higher the rates charged – the higher tax rate is imposed for an yearly income above USD 60,000);
- as mentioned here, the state does not apply a sales tax, but it charges a gasoline tax (23 cents per gallon) and a cigarette tax rate (USD 2.1 per pack).
Taxes in Delaware are paid online, through the services of the Delaware Taxpayer Portal (the online services are available for individuals and companies alike).
The members of an offshore company, whob don’t have US residency, are not income taxable. Also if the incomes are achieved outside the US, foreign citizens don’t need to file tax returns.
Offshore companies are more than welcome in Delaware. The corporate law benefits have attracted more than half of the American companies to incorporate business here. Bridgewest provides company formation services in Delaware. Please contact us for more information and prices.