Offshore & International Structures

The term "offshore company" typically describes a business registered in a jurisdiction where the founder has no residence and where the company usually does not conduct operational activity locally. The term itself is neutral and describes a legal structuring option — what matters is the specific structure and its tax treatment in the founder's home country.

Why international structures are used

Legitimate reasons for structuring abroad are varied: access to international markets, diversification of legal risk, use of stable legal systems for international business, or asset planning as part of succession arrangements. What matters most is that tax and regulatory obligations in the founder's home country are properly fulfilled.

Transparency requirements have changed fundamentally

The era of largely anonymous offshore structures is largely over. Through the Common Reporting Standard (CRS), now adopted by over 100 countries, account information and beneficial ownership data are routinely exchanged between tax authorities. Most traditional offshore jurisdictions now also maintain their own beneficial ownership registers.

Key legal principles

• Residence-based taxation: Most countries, including Germany, tax residents on worldwide income — a foreign company generally does not change the underlying personal tax liability on attributed income.
• Controlled Foreign Corporation (CFC) rules: Many countries, including Germany (Sections 7–14 of the Foreign Tax Act), directly attribute income from certain low-taxed foreign companies to domestic shareholders when specific control and passive-income criteria are met.
• Substance requirements: Numerous jurisdictions now require proof of genuine economic substance (staff, office space, actual local business activity) to access certain tax benefits.

Conclusion

International corporate structures remain a legitimate tool for business and asset planning, but given increased transparency requirements they demand careful and correct legal and tax structuring. Anyone considering a foreign structure should factor in home-country reporting obligations from the outset.