"We consider the formation of a Swiss Corporation in some aspects like an offshore structure."

Overview

Formation and Taxation of Swiss Corporations

The Liechtenstein Trust, Anstalt and Limited Company (AG)

The Luxembourg Holding Co.

British Virgin Islands & Bahamian Int. Business Corporations

Overview

Juridical form	Sole proprie-torship	Ordinary partner-ship	General partner-ship	Limited partnership	Corporation	Limited liability company	Co-operative company
Members	1 natural person	2 or more (natural or juridical persons)	2 or more (only natural persons)	at least 1 general partner (natural person with unlimited responsibility); at least 1 limited partner (natural or juridical person with limited responsibility to the conferred part)	constitution: at least 3 natural or juridical persons; afterwards less then 3 possible (f.ex. 1 person) when any opposition is produced	constitution: at least 2 natural persons or commercial companies; afterwards less then 2 possible	constitution: at least 7 natural persons or commercial companies; afterwards less then 7 possible
Registered capital	in accordance with the contribution of the company’s owners	amount: according to the contract, variable at every time; contributions: if the contract doesn’t dispose otherwise, the members confer equal parts	amount: according to the contract, variable at every time; contributions: if the contract doesn’t dispose otherwise, the members confer equal parts	amount: according to the contract, variable at every time; contributions: if the contract doesn’t dispose otherwise, the members confer equal parts; the amount of the limited capital should be entered in the registrar’s office	minimum Fr. 100’000; the 20% have to be released, in any case at least Fr. 50’000	minimum Fr. 20’000, may not exceed 2 million; the 50% have to be paid	unforeseen by the statute
Establishment	no particular prescription	through social contract without legally obligatory form; the written form is however recommended	through social contract without legally obligatory form; the written form is however recommended	through social contract without legally obligatory form; the written form is however recommended	writing out of the statute; organs’ designation; payment of the registered capital; the public act is required	writing our and approbation of the statute; organs’ designation; payment of the registered capital; the public act is required	writing our and approbation of the statute; organs’ designation; payment of the registered capital; the public act is not required
Trade name	family name, with or without name	it has no trade name	all first names of the members or the first name of one member with the addition "& Co." or "Son's"	like the general partnership but only for the general partner; the limited partner whose name is part of the trade name is unlimited responsible	fantasy, generically or person name; with person name the addition "SA" is obligatory	total designation’s liberty, but always with the addition "Sagl"	total designation’s liberty, like for the "SA"; with names the addition "società cooperativa" is obligatory
inscription to the registrar’s office	obligatory when the annual gross income exceed Fr. 100’000; otherwise optional	it will be not registered	obligatory	obligatory	the corporation acquire the juridical personality (legal status) only with the inscription	the company acquire the juridical personality (legal status) only with the inscription	the company acquire the juridical personality (legal status) only with the inscription
obligation to keep the accounts	when the annual gross income exceed Fr. 100’000	no	yes	yes	yes	yes	yes
management and represen-tation	the company’s owner	every member, if the contract doesn’t dispose otherwise	every member, if the contract or the registrar’s office do not dispose otherwise	every general partner, if the contract or the registrar’s office do not dispose otherwise the limited partner, only with a special power of attorney	the board of directors, if their functions are not be delegated to third persons	all members together, if their functions are not be delegated to third persons	the administration is composites of at least 3 members if this function is not be delegated to third persons
company’s debit’s liability	the company’s owner with the registered capital and unlimited personal patrimony	first of all every member (the company doesn’t have capital) personally, unlimited and jointly	first of all the registered capital subsidiary: every member personally unlimited and jointly	first of all the registered capital subsidiary: the general partners personally, unlimited and jointly; the limited partner only until concourse of the registered capital	only the registered capital	first of all the registered capital if the entire registered capital is not be paid; subsidiary: the members jointly until concourse of the not paid capital	according to the law only the registered capital the statute can also foresee: subsidiary members’ responsibility limited or unlimited and/or limited or unlimited duty to execute supplementary payments
fiscal imposition	the company’s owner on the totality of his income and capital	every member on his income part, capital and his personal income and patrimony	every member on his income part, capital and his personal income and patrimony	every member on his income part, capital and his personal income and patrimony	the corporation on the profit and capital; the shareholders on his shares as capital and on the dividends as income	the company on the profit and capital the members on the respective parts as capital and on the dividends as income	the company on the profit and capital the members on the respective parts as capital and on the dividends as income

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Formation and Taxation of Swiss Corporations


1. Incorporation - All categories of Companies

A Company limited by shares requires at least three shareholders. They may be individuals or corporations. If an investor does not wish to disclose his identity, he may, under certain conditions, appoint a third party as his trustee. The board of directors is composed of one or several members, who must be shareholders. If the board of directors consists of only one person, this one must reside in Switzerland and possess Swiss citizenship.
Before incorporation, the nominal capital stipulated in the Articles of Corporation (minimum
SWF 100’000) must be placed with a legally recognised depository, where it is held at the free disposal of the Company. Thereafter a statutory general meeting is held, the minutes of which are issued by a notary in the form of a public document. The company is then entered in the Commercial Register.
A Notice of Registration, including the company's objects, its capitalisation and the names of its directors, the name of the advisor and authorised signatories, is published in the official Swiss Commercial Gazette. The names of the shareholders are not mentioned.


2. Formation Costs - All categories of Corporations

Share capital and any subsequent capital increase are subject to a non-recurring Federal stamp duty at the rate of 3% of the price at which the shares are acquired, i.e. par plus any premium.
Fees are paid for the attestation of document and for entry in the Commercial Register. Attestation in Zurich, for example, amounts to 0.1% of the share capital, with a minimum of SWF 300 and a maximum of SWF 20’000. Entry in the Commercial Register costs SWF 600 for nominal capital up to SWF 200’000 with an additional levy of 0.2% on capital in excess of this amount up to a maximum total fee of SWF 10’000.


Example

Nominal capital:	SWF 100’000
Canton: Zurich
Attestation at 0.1%, at least SWF 300	SWF 300
Publication in the Commercial Register	SWF 600
Miscellaneous, say	SWF 200
Professional Fees, lawyer, trusts company etc., say	SWF 3’000
Fees for incorporation	SWF 4’100
a 1.40 US$/SWF rate say	US$ 3'000

3. Taxation - Different Categories of Companies

Owing to Switzerland’s federal structure, taxes are levied by three different authorities, namely the federal government, the cantons and the municipalities. While the tax laws of the Confederation apply to all of Switzerland, those of the cantons, which are normally valid for the municipalities as well, apply only within their respective areas.

In view of the fact that the Swiss fiscal situation is still in flux, the following comments are based on the federal and cantonal laws applying today, although the differences in the tax harmonisation laws (THL and FDTL) will also be pointed out. From the fiscal standpoint, three types of corporation can be distinguished, namely:

• operating companies,
• participating and holding companies, and
• domiciliary or management companies.

3.1. Operating Companies
An operating company is a corporation that conducts commercial, manufacturing or service operations in Switzerland. The balance of the profit and loss account is ordinarily used as the basis for determining the taxable net earning. As far as the federal direct tax and the cantonal and municipal taxes in most of the cantons are concerned, taxes are treated as deductible expenses.

3.1.1. Federal Taxes:
The federal tax (known as the Federal Defence Tax) is levied on the net earnings and on the equity capital, the open reserves and the disclosed reserves taxed as earnings.

3.1.1.1. Income Tax:
The net profit is subject to a progressive tax, which is applied in a range between 3.63% and 9.8% of the profits of all categories of Companies, depending their profitability.

3.1.1.2. Tax on Capital:
A proportional tax of 0.0825% is levied on capital stock, including open reserves and undisclosed reserves taxed as earnings.

3.1.2. Withholding Tax:
The company must withhold a tax of 35% and remit this amount to the tax authorities an all cash dividends and dividends in kind, including bonus shares and surplus liquidation proceed.

3.1.3. Cantonal and Municipal Taxes:
In most cantons the net income of operating companies was originally taxed according to the so-called principal of earnings intensity (the ratio of net profit to capital stock). In recent years, the majority of the cantons have, however, adopted the system of taxing net income at a rate applied in two or more steps, similar to the method used in the case of the federal direct tax. Like the federal government, the cantons also levy a capital tax on the capital stock of a company at a generally uniform rate. As the space in this publication is too limited to give a complete survey of the different cantonal tax laws, we shall illustrate them using the Canton of Zurich as an example:

3.1.3.1. Income Tax:
On January 1, 1991, the Canton of Zurich changed over from the system of taxation according to earnings intensity to the system of applying a three-step tax rate. At the same time, the system of deducting taxes as expenses was introduced.
A rate of 4% is used as the basis of calculation for this tax. If the yield -ratio of taxable income to taxable capital- is more than 4%, a surcharge of 5% is levied on the additional amount. If the yield is more than 8%, a further 5% is levied on the additional income. However, the combined tax may not exceed 12% of the income.

3.1.3.2. Tax on Capital:
In the Canton of Zurich, a tax on capital of 0.15% is levied on the capital stock and on open as well as on undisclosed reserves taxed as income.

3.1.3.3. Multiple:
The aforementioned basic rates are multiplied by the multiple for the canton and the municipality combined. The cantonal multiple, which is always set for three years amounts to 108%. The municipalities in the Canton of Zurich establish their multiples on an annual basis to take into account their financial requirements. The range of the municipal multiples for legal entities extended from 87% (in Wallisellen) to 135% (in the City of Zurich).

3.1.3.4. Example of Tax Computation in the City of Zurich:
A corporation that has a capital stock and reserves of SWF 1 million and shows a net income after the taxes paid in the business year of SWF 100'000 will pay around SWF 23'000 as combined Cantonal and Municipal Taxes and SWF 7'600 as federal direct tax.

3.1.4. Foreign Withholding Taxes:
The operating company may make unrestricted use of any tax relief provided by double taxation agreements concluded by Switzerland. This applies in particular to foreign taxes levied at source on dividends but also to taxes withheld on interest and license fees (royalties).
3.1.5. Special Features of Taxation in connection with Investment and Real Estate Companies:
As far as their tax treatment is concerned, the investment companies and the real estate companies have a different approach:

3.1.5.1. Investment Companies:
As mentioned above, interest on funds deposited with banks in Switzerland is subject to the 35% withholding tax. Similarly, a withholding tax is applied to enterprises which are not actually banks but which publicly solicit interest-bearing funds or which continuously accept funds against the payment of interest.

3.1.5.2. Real Estate Companies:
For purposes of taxation, corporations are considered real estate companies if their main activity is the development, acquisitions, management and use or sale - although the latter is currently restricted - of real estate.
Such companies must make certain that the ratio of their capital stock and reserves to their assets is not too low, otherwise excessive borrowed funds might be considered as disguised capital. The consequence of this would be that the capital tax would be levied on that percentage of the borrowed funds considered as capital and reserves, while the excessive amount of debit interest charged would be added to the net income of the company and (as disguised profit distribution) become subject to the withholding tax.
Up to now it has been assumed that borrowed funds may not, as a rule, amount to more than 80% of the market value of the real estate in certain cantons the regulations differ. According to the new federal law regarding direct federal tax and the tax harmonisation law, the capital stock and reserves of real estate company will, generally, have to amount to at least one third of its total assets.

3.2. Holding Companies
In contrast to other countries (such as France, Germany and Great Britain), profits earned and later distributed by a company are taxed twice in Switzerland: the first time the tax is imposed on the company and the second time it is imposed on the shareholder. If the latter is also a corporation that later distributes the profit, the original earnings would become subject to taxation a third time. To avoid such an eventuality, Swiss legislators provided two possibilities: the less comprehensive participation privilege and the more radical form of the holding company.

3.2.1. The participation Privilege:
If a Swiss corporation has among its assets' one or several participations (or share packages) in other Swiss or foreign companies, the dividends received constitute in principal taxable income. An exception exists, however, if the participation reaches a certain size in that the dividends at the receiving company are treated on a privileged basis as far as the tax on income is concerned and - depending on the canton - the tax on capital is also reduced.

A Company is regarded as having "substantial interests" if in addition to its trading, manufacturing or service activities it has an interest of not less than 20% in the nominal capital of another Swiss or non Swiss Company or if its shareholding exceeds a value of SWF 1’000’000 (in a Swiss Company) or SWF 2’000’000 (in a non Swiss Company). Such companies are named Holding Companies. Holding Companies are generally accorded tax privileges by the Confederation and by the Cantons.
The only taxable income for the purpose of the Federal tax is the profit distributed on the Holding Company's assets. Royalties, interests paid on loans to subsidiaries and capital gains from the sale of shareholdings are exempt. Except in a few Cantons, Holding Companies are exempt from tax on profits, while tax on net worth is payable at a reduced rate.

3.3. Domiciliary Companies

A Domiciliary Company has its legal domicile in Switzerland but does not own real estate or business premises. It conducts no business activity there. An example of a domiciliary company is a company whose income derives from commissions earned as an intermediary on transactions that are contracted and carried out abroad and therefore have no bearing on Switzerland.
The federal tax is charged as for an Operating Company. Most Cantons levy no tax on the profits of Domiciliary Companies and a reduced rate on net worth.
A Company may have a mixed tax treatment under which its profits are treated in part under Operating and in part under Domiciliary rules. Service Companies which, although having premises, do not trade but only perform support functions (book-keeping, invoicing) for foreign concerns receive similar treatment.

4. Operating Cost - Annually Fees for all Categories of Companies


The supreme authority in a Company limited by shares is the general meeting of shareholders, which must normally be held annually within six months of the close of the business year. The general meeting has non-transferable powers to:

• elect the board of directors and the external auditors
• approve the annual report and the financial statements
• decide upon the allocation of the net profit and declare the dividend
• ratify the acts of the board of directors
• amend the by-laws

The annually fees for running a company are:

	minimum	maximum
Board of directors (one or more)	SWF 3’000	SWF 10’000
External auditors (including tax declaration)	SWF 2’500	SWF 3’000
Bookkeeping	SWF 2’000	SWF 8’000
Fiduciary agreement	SWF 300	SWF 1’000
Domiciliary fees	SWF 300	SWF 800
Company secretary and/or assistant	SWF 300	SWF 1’000
Telephone, Fax, stamps, ect.	SWF 400	SWF 1’000
Total annual fees	SWF 8’800	SWF 24’800
a 1.40 US$/SWF rate say		US$ 18'000

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The Liechtenstein Trust, Anstalt and Limited Company (AG)

1. Background & History

On January 22nd, 1719 Vaduz and Schellenberg - situated on the northern border of Switzerland - were united into the single principality of Liechtenstein within the Austro-Hungarian Empire. In 1806, as a consequence of the Napoleonic Wars, Liechtenstein acquired complete independence, which has been retained to this day. Under its present constitution of 1921, Liechtenstein is defined as a hereditary, constitutional monarchy, based on a parliamentary democracy.

Since 1924, Liechtenstein has been extremely closely linked to Switzerland by numerous treaties. For example, they have a common communication system and the currency is the Swiss Franc.

However, Liechtenstein retains its own legal system (with its company law embodied in the Personen und Gesellschaftsrecht (PGR) enactment of January 20, 1926, and various subsequent amendments), deriving from the Austro-Hungarian law. This is in contrast to the Swiss law which - based on the Napoleonic Code - does not recognise concepts which are perfectly acceptable in Liechtenstein.

The law in Liechtenstein provides for three unique structures, each of which entails complete confidentiality; a zero tax base; and a great deal of flexibility in form and administration, namely:

• The Liechtenstein Trust,
• The Anstalt, and
• The Aktiengesellschaft (AG).

All enjoy the added advantage of being "protected" by the stability and conservatism of Liechtenstein's association with Switzerland, from which important administrative functions can be conveniently managed.

Formation procedures and specimen documentation are available on request. Example costing of formation and subsequent administration are shown under Off Shore Structures, Formation and Running Costs.

2. The Liechtenstein Trust

Liechtenstein is the only country in Europe to have legislated in matters of trusts in a similar way to the one adopted in the UK. In concept a Liechtenstein Trust differs from its United Kingdom counterpart only in that:

• Income can accumulate within the Trust, and, in some cases indefinitely, and
• The Trust can be established for an indefinite period

In practice it differs fundamentally because in Liechtenstein taxation is nominal and confidentiality is complete. However this is said of other off-shore locations - such as the Channel Islands or the Caribbean - so why Liechtenstein? Because:

• The rules governing the operation of Trusts are wide and flexible,
• Professional services in Liechtenstein and in Switzerland are sophisticated, efficient, immediately available and multi-lingual,
• The Settlor can appoint a Protector who is equally professional, empowered to "stand in the Settlor's shoes" and able to take whatever measures may be necessary quickly and within the same time zone,
• There is absolute confidentiality, not only in theory but in practice,
• Liechtenstein provides a politically stable environment which lies out of the potential impact of such initiatives as the Multi-National Convention on Mutual Administrative Assistance in Tax Matters, launched by the Council of Europe and the OECD,
• The Settlor may recur to independent, accessible and reliable courts for breach of trust and malpractice.

These issues are of prime importance if, for example, a complex off-shore structure is set up handling large commercial transactions; or if the situation is complicated by inheritance issues arising in several jurisdictions.
A Liechtenstein Trust is created when a Settlor of any nationality entrusts property of any kind to one or more Trustees, one of whom must be resident in Liechtenstein. A Protector is not mandatory but usually highly desirable.

The Trust is expressed in a written contract between the Settlor and the Trustee (The Trust Deed). This is not available for inspection by third parties. The Trust Deed may be very specific or extremely general. It will be far more comprehensible to the layman than the format used in UK type law jurisdictions.

The Trustee is bound by law to administer the Trust for the benefit of the Beneficiaries who are named in the Trust Deed. The Settlor may be a Beneficiary.

Specifically the Trustee must:

• act with the care of a prudent business man,
• insure the Trust property against risk,
• make no decisions which frustrate the object of the Trust, and
• keep the Trust property strictly separate from other assets.

He has to keep annual accounts. In the event of misdemeanour, he is liable to the full extent of his assets. He may not draw commercial advantage from the Trust other than his agreed fees. The Settlor or Beneficiaries may go to Court if the Trustee is delinquent. As a party to the Trust the Settlor cannot be examined as a witness.

Normally, the Liechtenstein law applies although provision can be made for foreign law. A Trust terminates as specified in the Trust Deed. Unless otherwise stated, it is irrevocable.

Costs vary on a case by case basis but all-in (unless there are unusual legal problems, a multiplicity of Trustees, complex accounting or other special features) one should count on:

Formation US$ 4’500
Annual Administration US$ 4’000

The Protector should be a professional, linked to the Settlor by a Fiduciary Agreement. He gives the Settlor the comfort of knowing that an independent body with corporate existence of sound judgement high repute and wide experience is familiar with his intentions, and stands ready to act in every day’s matters or in the event of an emergency.

Specifically, the Fiduciary Agreement empowers the Protector, acting always in what he believes to be the best interests of the Settlor and/or the Beneficiaries:

• to change the governing Law,
• to remove and appoint Trustees,
• to appoint his own successor,
• to delegate powers as appropriate, and
• to carry out any other act which is within the scope of the relevant law.

Formation can take place within a matter of days, including a visit to Switzerland to meet those involved in formation. Precise procedures and specimen documentation are available on request.


3. The Liechtenstein Anstalt (Establishment)

The Liechtenstein Anstalt and AG are both corporate structures used for purposes similar to the various types of Swiss Limited Company. However, they have two notable advantages - there can be a majority foreign board, and they are not taxed.

The Anstalt has a uniquely flexible construction. Provided its Articles of Association define the minimum information required by law, it can be tailored to suit any particular aim or need.

An Anstalt has no shares, shareholders, members or partners. Its assets can take any form and be of any value in any currency, provided that their value on formation is not less than SWF 30’000.00.

The Anstalt can trade exactly as if it were a limited liability company, with its liabilities to third parties limited to the value of its assets (unless more far reaching liabilities are provided for in its Articles).
The parties to an Anstalt are:


3.1. The Founder or Settlor, who provides the initial capital or assets; creates its structure via the Articles of Association and appoints the original Beneficiaries. He can then retain fundamental rights or assign them. The Founder’s rights normally allow him to:

• appoint and remove the Board, the Auditors and the Beneficiaries,
• modify the Articles and the By-Laws,
• to liquidate the Anstalt.

3.2. The Management, vested in the Board of Directors or their appointees. The Board can be limited to one member (who must be a qualified resident of Liechtenstein) or can be more numerous and with a foreign majority. The Board may transfer its functions to one Director or to others with rights of signature.

3.3. The Beneficiaries who are appointed via a By-Law to the Articles referred to as a Zessionserklärung or Certificate of Assignment. They are entitled to the full benefits of the Anstalt's operations. The Founder can be a Beneficiary.


It is not unusual for the identity of the Beneficiaries to be left unspecified on formation with a blank Certificate of Assignment deposited with the lawyer who has been instrumental in its creation under suitable authority.

The Anstalt is registered with the Public Registrar in Vaduz. The identity of the Founder; the terms of the Articles of Association and By-Laws; the names of the Beneficiaries; and the Anstalt's accounts are entirely confidential and not available to outside enquiry under any circumstances.

An Anstalt is only obliged to keep accounts if it trades. The investment and administration of assets or the holding of intellectual or property rights is not considered as trading. If an Anstalt does trade, its accounts must be audited by a firm holding a suitable certificate from the Liechtenstein authorities and submitted to the tax authorities. The auditor need not be a resident in Liechtenstein.

Costs vary on a case by case basis but all-in, unless there are unusual complexities, one should count on:

Formation US$ 4’500
Annual Administration US$ 3’500


4. The Liechtenstein AG (Limited Company)

Most of the facilities provided by the AG can be acquired via an Anstalt. The latter is normally preferred as it has a less complex and "lighter" administrative structure. The AG may be more suitable if it is to take a very obvious public profile.

There are two forms of Liechtenstein AG which are of interest to non-residents. Both have their registered offices in Liechtenstein; they may have offices and employees there; but do not trade in Liechtenstein. They are:

• 4.1. a Holding Company, which acquires, possesses and administers investments in companies elsewhere, or,
• 4.2. a Domicile Company, a commercial enterprise which can trade anywhere in the world except in Liechtenstein.

The minimum share capital is SWF 50’000.00 fully paid. This can be subscribed in properly valued assets.
5% of annual net profits are placed in general reserve until this reserve equals 10% of the share capital.

Shares can be bearer or registered. Both types can exist in the same AG. Bearer shares protect the identity of the shareholder, they are easily transferable but must be fully paid. Registered shares can be partly paid and usually carry pre-emption rights.

Different classes of shares (either bearer or registered) can be established with varying preferential rights as to voting, the exclusive election of officers, dividends, subscriptions, etc.
The parties to an AG are:

4.3. The Founder or Settlor, who provides the initial capital or assets, creates its structure via the Articles of Association and appoints the original Beneficiaries. He can then retain fundamental rights or assign them. The principal functions of the General Meeting are:

• To elect the Board and the Auditors and to discharge them from liability,
• To approve the accounts and dividends,
• To amend the Articles of Association.

Normally, resolutions are carried by simple majority but the Articles can provide for other arrangements.

4.4. The Board of Directors. There can be any number of Directors of whatever nationality, provided one is a qualified person resident in Liechtenstein. He can be the sole Board member.

The Board's functions are:

• To prepare the business of General Meetings and to carry out its decisions.
• To organise the administration of the AG's activities in an orderly manner
  and to appoint and supervise its management.

The Board can entrust the execution of its duties to individual Directors or to other authorised signatures. The Board acts by simple majority. Written decisions by correspondence are permissible.

4.5. The Auditors need not be resident in Liechtenstein but must hold a suitable certificate from the Liechtenstein authorities.

An AG is bound to keep a full set of books which must be audited and presented to the Liechtenstein tax authorities within six months of the end of each fiscal year. Its accounts are completely confidential and are not available for public inspection under any circumstances.

Costs vary on a case by case basis but all-in, one should count on:


Formation US$ 4’500
Annual Administration US$ 4’000
(before accounting and audit costs)



Specimen Documents available on request:

Practical Procedures for forming a Liechtenstein Trust, Anstalt or AG.

Liechtenstein Trust: Questionnaire
Fiduciary Contract with the Protector
Trust Deed

Liechtenstein Anstalt: Articles of Association

Liechtenstein AG: Articles of Association

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The Luxembourg Holding Co.

Although Luxembourg is the smallest member of the European Economic Community, its stability and "neutrality" have led many European institutions to place their headquarters there, notably the Secretariat of the European Parliament, the European Investment Bank and the European Monetary Fund. Luxembourg is a member of the European Monetary System (the EMS). Its currency is the Luxembourg Franc (the LUF), valued at par with the Belgian Franc (say 1 US$/31BF).

Owing to their favourable tax treatment, several thousand Luxembourg Holding Companies (LHC's) are in operation. Governed by two laws (of 1915 and 1929) and exempt from EEC directives concerning corporate accounting, the sole statutory object of the LHC is the acquisition, management and sale of investments in subsidiaries in Luxembourg and elsewhere. An LHC can undertake no commercial or industrial activity.

The following explanations apply to both LHC's incorporated and joint stock companies (SA's) a format normally chosen because of its flexible share transfer rules.

1. Incorporation

The statutes and any subsequent modifications, are executed by a Luxembourg public notary; registered with the Registre de Commerce; and published in the Luxembourg Official Gazette. This will show:

• the LHC's name and registered address,
• its objectives, and share capital,
• the names of directors, managers and auditors.

The identity of the shareholders is not published. An LHC must have a minimum of 2 shareholders, 3 directors and 1 auditor. All can be non-resident. Shares can be registered or bearer. Minimum share capital is LUF 1.25 million (US$ 28’500) with at least LUF 1 million paid. Capital can be subscribed in any currency.

2. Taxation

An LHC is exempt from taxation on:

• income and capital gains arising from its investments, and
• the proceeds of the liquidation of the LHC.

Dividends and interest paid to shareholders, who often subscribe by means of bonds, are not subject to a withholding tax in Luxembourg. The benefits of double taxation treaties do not apply.
Hence the only tax paid by an LHC is:

• 1.0% on capital subscribed, and
• 0.2% annual subscription tax.

3. Administration

A Balance Sheet and Profit and Loss Account must be lodged annually with the District Court of Luxembourg. Details of investments and shareholders are not shown.

A variety of rules apply in respect to investments in corporations, limited partnerships and bonds; loans and guarantees; trademarks and patents; utilisation of cash balances, and property investments. These require study in relation to individual cases.

4. Forms of LHC

LHC's are classified under the following headings:

Venture Capital LHC	Investing in companies unable to generate funding from other sources.
Family LHC	Investing in a diversified portfolio, without control.
Patent LHC	Owning patents, without any industrial or commercial role.
Finance LHC	Providing "holding company" services to companies without any direct interest.
Billionaire LHC	LHC's with a capital in excess of US$ 25.00m, to which special rules apply.

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British Virgin Islands & Bahamian Int. Business Corporations (IBC’s); Panama Corporations (PC’s)

1. Introduction

The offshore islands of the coast of Europe and North America were the classic offshore areas. They were characterised by lows or no taxes, compliance requirements which were rather less then in the more populated countries and they might also have had flourishing finance sectors – dealing indeed with the moneys which they receive from neighbouring high tax countries. Offshore areas with their low taxes, tax exemptions and in some cases no tax status, occupy a vital and growing role in the international economy. Use of offshore companies and trusts is increasing too with the liberalisation and in many cases abolition of exchange control systems by the developed nations.

P.d.P.Portatrice di Prosperità SA always encourage the clients to take appropriate independent professional advice before setting up an offshore company of other entity.

International Business Corporations in the BVI, the Bahamas, and other similar Caribbean jurisdictions and Panamanian Corporations can be easily and quickly formed. All are exempt from taxation on business carried out outside their place of incorporation. Articles of Association are extremely flexible. If local Boards are used, special care should be taken to ensure proper control and effective secrecy.

Formation procedures and specimen documentation are available on request. Example costing of formation and subsequent administration are shown under off Shore Structures, Formation and Running Costs. The following is a listing of conditions available in the various centres under initials (BVI; B - Bahamas; P- Panama). We normally select BVI as being the most adaptable. Standard Articles and formation procedures are available on request.

1.1. Confidentiality

Complete business secrecy, privacy, and confidentiality and anonymity BVI, B, P

No requirement to disclose beneficial owners BVI, B, P

No requirement to file annual returns or financial statements BVI, B, P

No requirement to hold annual general meetings of Shareholders or Directors BVI, B, P

Shareholders, Directors, and Officers may be of any nationality or residence BVI, B, P

Shareholders and Directors meetings may held anywhere and by proxy BVI, B, P

Directors and Officers need not to be Shareholders BVI, B, P

Directors and/or officers can be either corporations (except Panama) or individuals BVI, B

No registration of initial or on-going changes in Directors and/or officers (except Panama) BVI, B

1.2. Administration

Speedy incorporation procedures and simple on-going administration BVI, B, P

No minimum or maximum capital requirements BVI, B, P

Lawful business can be carried on in any country or currency BVI, B, P

Nominative or Bearer Shares at the owner's option BVI, B, P

Use of "Apostille", should documentation need to be legalised BVI, B, P

The accounting books of the company may be kept at the registered office or abroad BVI, B, P

There need not be more than 1 Director BVI, B
(In Panama 3 Directors and 3 officers - President, Secretary/Treasurer and V-P - are required)

Familiarity of incorporation documents (Memorandum & Articles of Association, Certificate BVI, B
of Incorporation) as both are British Commonwealth jurisdictions (Panama is not).
Incorporation documents are in English but can be translated into any language BVI, B
(In Panama original documents are in Spanish and can be translated into English)

The word "Limited" may be used in the company name as "Corporation", "Incorporated", BVI, B
"Sociedad Anonima", "Societe Anonyme" or the abbreviations "Ltd.", "Inc." or "S.A."
(In Panama the company name cannot end with "Limited", or "Ltd.")

2. Schedule of company fees

JURISDICTION	Annual Tax/Exemption Fee	Annual Filing Fee	Formation Fee
Antigua (IBC)	Nil	US$ 500	US$ 1500
Bahamas (IBC)	Nil	US$ 200	US$ 1200
Belize	Nil	US$ 200	US$ 1000
British Virgin Islands (IBC)	Nil	US$ 600	US$ 1500
Cayman-Exempt	Nil	US$ 1000	US$ 1500
Delaware	US$ 30	US$ 40	US$ 1000
Gibraltar-Exempt Resident Company	UK£ 225	UK£ 62	UK£ 500
Gibraltar-Non-Resident	Nil	UK£ 62	UK£ 500
Guernsey-Exempt	UK£ 500	UK£ 200	UK£ 1000
Hong Kong	US$ 292	US$ 18.00	US$ 750
Ireland-Non-Resident	Nil	UK£ 20	UK£ 390
Ireland-Resident	Varies	IR£ 20	IR£ 596
Isle of Man-Exempt	UK£ 300	UK£ 84	UK£ 500
Isle of Man-Non-Resident	UK£ 600	UK£ 84	UK£ 500
Jersey-Exempt	UK£ 500	UK£ 220	UK£ 900
Liberia	Nil	US$ 200	US$ 1000
Mauritius (IBC)	Nil	US$ 240	US$ 1200
Nevis	Nil	US$ 400	US$ 1500
Panama	Nil	US$ 300	US$ 1500
Singapore	Nil	US$ 40	US$ 4500
Turks & Caicos Islands-Exempted	Nil	US$ 600	US$ 500
United Kingdom	Varies	UK£ 64	UK£ 300

Formation fees include applicable registration and legal fees, payment of duty in respect of the maximum authorised share capital for which minimum fees apply, subscriber services where required, supply of 5 copies of the Memorandum and Articles of Association or equivalent, Company Register and Seal.


2.1. Annual Domiciliary and Directors Fees

2.1.1. Domiciliary Fees

• Provision of registered office facility in the jurisdiction of incorporation
• Provision of the company secretary and/or assistant company secretary
• Provision of resident agent/local resident representative as required by local law
• Arranging the filing of the company’s annual return or annual licence

INCLUSIVE FEE UK£ 990 US$ 1500

2.1.2. Directors Fees

• Provision of professional third party directors and officers to comply with local laws
• Provision of nominee shareholders acting under nominee declaration
• Provision of bank account signatories as required

INCLUSIVE FEE UK£ 1050 US$ 1590

2.2. Fiscal Agency

Clients incorporating in jurisdictions such as the Irish Republic, Hong Kong and Singapore are advised that the tax authorities do not grant tax free status automatically and detailed information on the company’s affairs may have to be given to include audited accounts. In jurisdictions such as the Isle of Man it may be a requirement for a company to register for Value Added Tax purposes. Again non European Union companies may wish to register for VAT in the Isle of Man or the United Kingdom to assist in their trading with companies located in the EU. P.d.P.Portatrice di Prosperità SA provides the service of Fiscal Agent and charges an annual fee of UK£ 500/US$ 800 and as part of this service we can also arrange local audits as required by law at competitive cost.

3. Application Form for a Company

Click here to download an application form in PDF format.


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