Forming a company abroad means reading terms like nominee director, passive NFE or certificate of incumbency in a hurry. Each one here gets the meaning in two sentences, a real example, the law or official body behind it, and the page that takes it further.
You live in your country.
Your bank abroad reports your accounts home, and your home rules decide the tax. Start with these:
Also called annual list, statement of information
The yearly state filing a US LLC or corporation makes to stay active, together with a fee. It is a short form about the company, not a set of accounts.
ExampleIn Wyoming the annual report is due on the first day of the LLC's anniversary month and costs US$60, or more if the company holds over US$300,000 of assets in the state (Wyoming Secretary of State, fee schedule).
Also called confirmation statement
A yearly filing that tells the registry the company still exists and updates its basic details, such as its directors, shares and registered office. Missing it usually brings a late fee first and a strike off later.
ExampleA Hong Kong limited company files its annual return within 42 days after each anniversary of incorporation, for HK$105 if it is on time.
Also called private company, confidential company
A company whose owners are not named on any register the public can search. The owners are still known to the registered agent, the bank and, on request, the authorities.
ExampleA Nevis LLC lists no members in a public record, yet its registered agent must hold their identity documents and hand them to the regulator if asked.
Also called Hague apostille
A certificate added to a public document, such as a certificate of incorporation, so that it is accepted in any other country that has joined the 1961 Hague Apostille Convention. It replaces the slower chain of embassy legalisation.
ExampleA bank in Portugal asks for a Delaware certificate of formation with an apostille. The Delaware Secretary of State issues it, and no consulate stamp is needed (HCCH, Apostille Section).
Also called APT, self-settled spendthrift trust
A trust written to make it hard for the settlor's future creditors to reach the assets, usually under a law with short challenge periods and a high burden of proof. It does not protect against debts that already exist when the assets go in.
ExampleUnder the Nevis trust law a creditor must sue within two years and post a bond before a Nevis court will even hear the claim.
Also called authorized shares, maximum shares
The largest number or value of shares a company is allowed to issue under its constitution. It is a ceiling, not money anyone has to pay in.
ExampleA company may be allowed to issue 50,000 shares but issue only one to its sole owner. Raising the ceiling later takes a resolution and a filing.
A share that belongs to whoever physically holds the certificate, with no owner's name in the register. Most offshore centres abolished them or forced them into the hands of a licensed custodian who records the owner.
ExampleA page that still sells bearer shares in 2026 is out of date: the international standards on beneficial ownership no longer allow an owner to stay unrecorded that way (FATF, black and grey lists).
Also called UBO, ultimate beneficial owner
The living person who ultimately owns or controls a company, even when the shares sit with a nominee or another company. Under EU anti money laundering law, holding more than 25% is a sign of beneficial ownership.
ExampleIf you hold 100% of a Seychelles company through a BVI holding company, you are the beneficial owner of both, and both agents and every bank will record you (Directive (EU) 2015/849, Article 3(6)).
A person who can benefit from a trust or foundation without owning its assets. In a discretionary trust a beneficiary has only a hope of being paid until the trustee decides.
ExampleParents settle a trust for their three children; the trustee pays school fees to one child this year and nothing to the others, as the deed allows.
Also called beneficial ownership information report, CTA filing
A report naming a company's beneficial owners to FinCEN under the US Corporate Transparency Act. Since the March 2025 rule, companies formed in the United States no longer file one; only companies formed abroad and registered to do business in a US state do.
ExampleA Wyoming LLC owned by a resident of Germany files no BOI report. A BVI company that registers to trade in Texas does (FinCEN, beneficial ownership information).
Also called certificate of status, certificate of existence
A short certificate from the registry saying the company exists and is up to date with its fees and filings on the day of issue. Banks and counterparties usually want one less than three to six months old.
ExampleBefore opening an account for a Wyoming LLC, a bank asks for a fresh certificate of good standing printed from the Secretary of State's site.
Also called certificate of formation, articles of organization
The document the registry issues when a company is created, with its name, number and date of incorporation. It proves the company exists; it says nothing about who owns it.
ExampleA Delaware LLC is born when its certificate of formation is filed; a BVI company receives a certificate of incorporation with its company number on it.
Also called incumbency certificate, register of incumbency
A certificate, usually issued by the registered agent rather than the registry, listing a company's directors, shareholders and registered office on a given date. It is how a bank or buyer learns who stands behind an offshore company.
ExampleA Seychelles company's agent issues a certificate of incumbency at its own price, because the public registry shows no owners.
Also called controlled foreign company rules, Subpart F
Rules in the owner's home country that tax a resident on the profits of a foreign company they control, often before any dividend is paid, when that company sits in a low tax place and earns mainly passive income. They are the main reason a 0% company does not mean 0% tax for its owner.
ExampleMany countries treat a company as controlled once their residents own more than half of it. A 0% company that only collects interest may then see its profit added to the owner's taxable income each year (OECD, BEPS Action 3 report on CFC rules).
A court order that lets a creditor of an LLC member collect any distributions paid to that member, without taking the member's share or voting rights. Where it is the only remedy, a creditor cannot force a sale or run the company.
ExampleA creditor of a Nevada LLC member gets a charging order and waits; if the LLC pays no distributions, the creditor receives nothing.
Also called CRS, AEOI
The OECD standard under which banks and other financial institutions report accounts held by non-residents to their own tax office, which passes the data each year to the account holder's country. 112 jurisdictions sent CRS data to at least one partner in 2025.
ExampleA resident of Spain opens an account in Mauritius for their company. The Mauritius bank reports the balance and the controlling person to Mauritius, and Mauritius sends it to Spain (OECD, Common Reporting Standard (consolidated text 2025), OECD exchange table, 20 May 2026).
Also called corporate secretary
The officer who keeps a company's statutory registers and minutes and makes its filings on time. Some places require one, sometimes a local resident or a licensed firm.
ExampleA Hong Kong company must have a company secretary, and if it is a person they must live in Hong Kong; a licensed local firm can fill the role.
A CRS term for the living people who control an entity whose account a bank reports, typically its beneficial owners. For a trust, it means the settlor, trustees, protector and beneficiaries.
ExampleA bank opening an account for a passive holding company records each controlling person's home country and tax number, then reports them there (OECD, Common Reporting Standard (consolidated text 2025)).
A company that serves as the director of another company, in place of a person. Many offshore laws allow it; a growing number require at least one director who is a natural person.
ExampleA licensed trust company acts as corporate director of a client's holding company and signs its resolutions through its own authorised officers.
Also called intermediary bank
A larger bank that moves payments for a smaller bank that has no direct access to a currency's clearing system. A US dollar transfer to an offshore bank often passes through a correspondent in New York.
ExampleA payment from Singapore to a Belize bank goes through a US correspondent, which may hold it and ask questions about the sender before releasing it.
Also called CARF
An OECD standard, approved in 2023, under which crypto exchanges and brokers collect users' tax details and report their transactions to the tax office, which then shares them with the user's home country. It does for crypto what the CRS does for bank accounts.
ExampleAn exchange serving users in a CARF country collects each user's tax residence and number, then reports a year of trades, starting with the first exchanges planned for 2027 (OECD, CARF and amended CRS (2023)).
Also called Directive on Administrative Cooperation 8
The EU directive that brings crypto asset service providers into automatic tax reporting inside the EU, in line with the OECD CARF. Its rules apply from 1 January 2026.
ExampleA crypto platform licensed in the EU records what its users in France and Italy trade during 2026 and reports it to its tax office in 2027 (Directive (EU) 2023/2226 (DAC8)).
Also called single member LLC, pass-through
An LLC with one owner that the IRS ignores for income tax by default, so its income is treated as the owner's own. It is still a separate company for liability and must still file some forms.
ExampleA Wyoming LLC owned by one person in Brazil pays no US federal income tax on its own, but still files Form 5472 with a pro forma Form 1120 each year (IRS, single member LLCs).
Also called inactive company
A company that is kept alive but does no business and has no significant transactions. Dormant does not mean exempt: annual fees, returns and agent costs normally carry on.
ExampleAn owner pauses a BVI company for a year; it still pays the annual government fee and its agent fee, or it is struck off.
Also called DTA, tax treaty
An agreement between two countries that decides which of them may tax a given income and limits taxes such as withholding on dividends, interest and royalties. Most classic 0% places have few or none.
ExampleA UAE company can use the UAE's treaty network, which most offshore centres lack, once it holds a tax residency certificate (IRS, tax treaties).
Also called KYC, CDD, know your customer
The checks a registered agent, bank or payment firm must run on a client before and during the relationship: identity, address, source of funds and whether the client is a politically exposed person. Nobody, including Heirson, can form a company or open an account without it.
ExampleFor a new company the agent asks for a passport copy, a recent proof of address and a short note on what the company will do.
Also called ES, substance requirements
Rules in 0% and low tax centres that make a company doing certain activities, such as finance, headquarters, IP or holding, show real activity there: local direction, staff, spending and premises in proportion to its income. Most were introduced from 2019 after EU pressure.
ExampleA BVI company that only holds shares in other companies meets a lighter test than a finance company, but still files an economic substance report each year (Council of the EU, list of non-cooperative jurisdictions).
Also called ECI
Income a foreign person earns from a trade or business in the United States, which the US taxes at normal rates after deductions. A foreign-owned LLC that serves clients abroad with no US office or staff usually has none.
ExampleA Canadian sells software online through a Wyoming LLC, with no US staff, office or agent; that income is usually not effectively connected with a US business (IRS, effectively connected income).
Also called employer identification number, federal tax ID
The nine-digit number the IRS gives a US company to identify it for tax, needed to open a bank account and file returns. A foreign owner without an SSN or ITIN can still get one by fax or mail, writing "foreign" on Form SS-4.
ExampleA non-resident with a new New Mexico LLC applies on Form SS-4 by fax, because the online assistant only works for people with a US number (IRS, Employer identification number, IRS, Instructions for Form SS-4).
Also called electronic money institution, payment account
A licensed firm that holds client money in payment accounts and moves it, without lending it out like a bank. EMI accounts are often easier to open for a new offshore company, but deposits are not covered by bank deposit insurance.
ExampleA new Estonian OÜ gets a euro IBAN from an EMI while its bank application is still under review.
Also called Estonian digital ID
A digital identity card from Estonia that lets a foreigner sign documents and run an Estonian company online. It is not residency, citizenship or tax residence, and it gives no right to live in Estonia.
ExampleA consultant in South Africa uses e-Residency to found an Estonian OÜ online and signs its annual report with the card, without ever travelling (e-Residency programme).
Also called EU list of non-cooperative jurisdictions, Annex I
The EU's list of places outside the EU that do not meet its standards on tax transparency, fair taxation and BEPS rules, reviewed each February and October. Being listed triggers tougher EU tax and reporting measures against payments to that place.
ExampleSince the October 2026 update, Annex I lists eight places: American Samoa, Anguilla, Guam, Palau, Russia, the Turks and Caicos Islands, the US Virgin Islands and Vanuatu (Council of the EU, list of non-cooperative jurisdictions, Council conclusions, October 2026).
Also called exempt company
A company type, used in Cayman and Bermuda, meant for business carried on mainly outside the islands. In Cayman it can ask for a government undertaking that no future tax will apply to it for a fixed period.
ExampleA Cayman exempted company holding an investment portfolio keeps its shareholders off the public record, while anyone can buy its directors' names from the registry for CI$50.
Also called Foreign Account Tax Compliance Act
A 2010 US law that makes foreign banks report accounts held by US persons to the IRS, directly or through their own tax office. US taxpayers also report their foreign assets above set thresholds on Form 8938.
ExampleA US citizen living in Dubai opens an account in Switzerland; the bank asks for a Form W-9 and reports the account to the US (IRS, FATCA, IRS, FATCA reporting for US taxpayers).
Also called jurisdictions under increased monitoring
The FATF's public list of countries with weaknesses in their anti money laundering systems that they have agreed to fix under closer monitoring. Banks treat payments linked to a listed country with extra care.
ExampleA company formed in a grey-listed country can expect more documents and slower onboarding at banks elsewhere, even if it does nothing wrong (FATF, black and grey lists).
Also called FinCEN Form 114
The yearly report a US person files with FinCEN when their foreign accounts together exceed US$10,000 at any time in the calendar year. It counts accounts a person owns or can sign on, including a company's.
ExampleA US resident who is the signatory on their BVI company's account, holding US$12,000 at one point in the year, files an FBAR (IRS, FBAR).
Also called firewall provisions
Clauses in a trust law that tell local courts to ignore foreign laws and judgments on matters such as forced heirship or divorce when they deal with a local trust. They are why families pick a particular trust law.
ExampleUnder the Jersey trust law, a claim by an heir under foreign forced heirship rules does not change a Jersey trust.
The IRS form a US company that is at least 25% foreign-owned files to report transactions with its owner and other related parties. Foreign-owned single member LLCs file it every year with a pro forma Form 1120, even with no income.
ExampleMissing the form costs US$25,000 per year per related party, plus more if the IRS writes and it stays unfiled (IRS, Instructions for Form 5472).
Also called private foundation, private interest foundation
A legal person with no shareholders that owns assets in its own name for a purpose or for beneficiaries, run by a council under its charter. Civil law families often prefer it to a trust because their courts recognise it.
ExampleA family in Mexico sets up a Panama private interest foundation to hold the shares of its operating companies for the next generation.
Also called annual tax, privilege tax
A yearly state charge for the right to exist as a company, payable whether or not the company makes money. In Delaware every LLC pays a flat annual tax due 1 June; corporations pay a franchise tax due 1 March.
ExampleA Delaware LLC pays US$400 for the 2026 tax year, due by 1 June 2027; the rate for 2025 was US$300 (Delaware Division of Corporations, LLC and LP tax, Delaware Division of Corporations, franchise tax).
Also called fraudulent disposition, fraudulent conveyance
A transfer of assets that a court can undo because it was made to defeat a creditor or for too little value while insolvent. Trust laws set how long a creditor has and what they must prove.
ExampleA US bankruptcy trustee can claw back a transfer made within two years before filing if it was made to hinder creditors (11 U.S.C. 548).
Also called free trade zone, FZ, FZE, FZCO
An area with its own regulator and rules where companies can be fully foreign-owned. In the UAE a free zone company may pay 0% corporate tax on qualifying income, while other profit above AED 375,000 is taxed at 9%.
ExampleA consultancy in a Dubai free zone that works only for foreign clients may keep 0% on that income if it meets the qualifying free zone rules.
Also called Gesellschaft mit beschränkter Haftung
The German-language name for a private limited company, used in Switzerland, Germany, Austria and Liechtenstein. A Swiss GmbH needs at least one managing director who lives in Switzerland.
ExampleA founder abroad forms a Swiss GmbH in Zug with a local resident director and a minimum share capital of CHF 20,000.
Also called holdco
A company whose main job is to own shares in other companies, collect their dividends and sell them when the time comes. Placed in the right country, it can receive dividends and gains with little or no tax.
ExampleAn entrepreneur puts the shares of three trading companies under one Cyprus holding company, so dividends between them flow under one set of rules.
Also called international bank account number
A standard bank account number of up to 34 characters that starts with a two-letter country code, used for transfers in Europe and many other regions. The country code shows where the account is held.
ExampleAn IBAN starting with LT is a Lithuanian account, even if the company holding it is in Seychelles.
Also called international business company
A company type created for owners who do business outside the country of incorporation, usually with no local tax, private shareholders and light filings. The BVI and Belize have since folded IBCs into their general company laws, while Seychelles keeps the name.
ExampleA Seychelles IBC trading only with clients in Europe pays no Seychelles tax on that income, but its owner's home country may tax it under CFC rules.
Also called individual taxpayer identification number
A tax number the IRS issues to people who need one for US tax but cannot get a Social Security number, usually applied for with Form W-7 and a tax return. A foreign LLC owner does not need one to get an EIN.
ExampleA non-resident who must file a US personal return for rental income applies for an ITIN with Form W-7 attached to that return (IRS, ITIN).
A private, non-binding note from the settlor telling the trustee how they hope it will use its discretion. The trustee must consider it but is not bound by it, which keeps the trust discretionary.
ExampleA settlor writes that the trustee should fund the grandchildren's education first; the trustee follows it unless circumstances change.
Also called LP
A partnership with at least one general partner who runs it and carries unlimited liability, and limited partners who invest and risk only what they put in. It is common for funds and family holdings.
ExampleAn investment fund is set up as a limited partnership whose general partner is itself a company, so no person carries unlimited liability.
Also called limited liability company
A company whose owners, called members, are not personally liable for its debts and which is run under an operating agreement. In the US it is the usual choice for non-residents; Nevis also has one.
ExampleA one-person Wyoming LLC protects its owner's savings if a customer sues the business.
Also called place of effective management, central management and control
The test many countries use to decide where a company is tax resident: where its key decisions are really made, not where it was formed. A 0% company run from a high tax country can become resident there.
ExampleA BVI company whose sole director lives in London and takes every decision there risks being treated as UK tax resident.
Also called M&A, constitution, articles of association
The company's constitution: the memorandum states basics like its name and shares, and the articles set how it is run, how directors are appointed and how shares move. Banks almost always ask for a certified copy.
ExampleTo let a second shareholder in on different terms, the owner amends the articles and files the change with the registry.
A person or firm appointed as director who acts on the owner's instructions, so the owner's name is not on the register of directors. They carry real legal duties, and the role is banned or restricted in some places, such as the Bahamas and Bermuda.
ExampleA professional nominee signs board minutes for a company whose owner prefers not to appear as a director, while the owner stays recorded as beneficial owner.
Also called nominee member
A person or firm that holds shares in its name on behalf of the real owner, under a written trust or nominee agreement. It keeps the owner off the share register but never off the beneficial ownership records.
ExampleA nominee holds 100% of a company's shares and signs a declaration of trust in favour of the real owner, who the agent and bank still record.
An account held at a bank or payment firm outside the owner's country of residence. It is legal for most people, but under the CRS or FATCA it is usually reported to their home tax office.
ExampleA company formed in Mauritius holds a multi-currency account at a Mauritius bank, which reports it under the CRS to the owner's country.
Also called offshore corporation, non-resident company
A company formed in a country other than the one where its owners live, usually a place with 0% or low tax on foreign income. Whether it actually saves tax depends on the owner's home country rules, not only on the company's.
ExampleA designer living in Portugal owns a Nevis LLC that invoices clients in the US; Nevis charges no tax, but Portugal may still tax the profit.
Also called foreign trust
A trust set up under a foreign country's trust law and run by a trustee based in that country, which holds legal title for the beneficiaries. The settlor gives up ownership, and every role in it is reported under the CRS.
ExampleA family in Brazil settles a Jersey trust with a Jersey trust company as trustee to keep its holdings together across two generations (IRS, foreign trust reporting).
Also called onshore company
The opposite of offshore: a company formed and taxed in the country where it really operates, or a high tax, high regulation country in general. Many owners combine an onshore company for local trade with an offshore one for holding.
ExampleA Dubai mainland company that trades in the city is onshore; a RAK ICC company that only holds shares is used as an offshore vehicle.
Also called LLC agreement
The private contract among an LLC's members that sets ownership, voting, profit shares and what happens if a member leaves or dies. It is not filed with the state, but banks often ask to see it.
ExampleA two-member Wyoming LLC writes into its operating agreement that profits are split 70/30 even though both put in equal money.
Also called osaühing, Estonian private limited company
Estonia's private limited company, which can be formed and run fully online by e-residents. Estonia taxes its profit only when it is distributed, not while it stays in the company.
ExampleAn OÜ reinvests all its profit for three years and pays no corporate income tax until it pays out a dividend.
Also called passive non-financial entity
A CRS category for a non-financial company where half or more of last year's income was passive, such as dividends, interest or rent, or half or more of its assets produce it. The bank looks through it and reports its controlling persons.
ExampleA holding company whose only income is dividends from subsidiaries is a passive NFE, so its owner is reported to their home country (OECD, Common Reporting Standard (consolidated text 2025)).
Also called PE
A fixed place of business, or a dependent agent who habitually closes contracts, that gives another country the right to tax part of a foreign company's profit. Tax treaties define it, mostly following the OECD model.
ExampleA Seychelles company that rents an office in Germany with staff selling to German clients may have a permanent establishment there and owe German tax.
Also called global minimum tax, GloBE rules
The OECD rules for a 15% minimum effective tax rate in each country where a multinational group operates. They apply only to groups with yearly revenue of EUR 750 million or more, so small owner-run companies are outside them.
ExampleA group with EUR 1 billion of revenue that pays 0% in one country owes a top-up tax to bring that country's profit to 15% (OECD, GloBE Model Rules (Pillar Two)).
Also called PEP
Someone who holds or held a prominent public role, such as a minister, judge or senior official, or a close family member or associate of one. Banks and agents can still serve them, with enhanced checks.
ExampleThe spouse of a sitting member of parliament opens a company account; the bank asks for more detail on source of wealth and reviews the account more often (Directive (EU) 2015/849, Article 3(6)).
Also called POA
A signed document that authorises another person to act for a company or individual, for named tasks or in general. For use abroad it often needs notarising and an apostille.
ExampleA company's director signs a power of attorney so a local lawyer can sign a lease in Dubai on the company's behalf.
Also called trust protector
A person named in a trust deed to watch over the trustee, whose consent is needed for key steps such as replacing the trustee or changing the governing law. The protector is a controlling person under the CRS.
ExampleA family's long-time lawyer is named protector and refuses consent when the trustee proposes moving the trust to a new country.
Also called Ras Al Khaimah International Corporate Centre
The UAE registry for international companies in Ras Al Khaimah, used to hold assets such as shares, investments and intellectual property, and to trade with clients abroad. It cannot do business inside the UAE without a separate UAE licence.
ExampleAn investor uses a RAK ICC company to hold the shares of companies in three countries; selling to customers in Dubai would need a UAE trade licence first.
Also called resident agent, statutory agent
The licensed person or firm a company must keep in its country of formation to receive legal papers, keep its records and deal with the registry. Offshore, the agent also runs the identity checks and holds the owners' details.
ExampleEvery Wyoming LLC must have a registered agent with a street address in Wyoming who accepts court papers during business hours.
Also called registered address, legal address
The official address of the company in its country of formation, where legal notices are served and records are kept, usually at the agent's office. It is not where the business must actually work.
ExampleAn Estonian OÜ uses a Tallinn legal address from a licensed contact person while its founder works from South Africa.
Also called share register, register of shareholders
The company's own list of shareholders, with their shares and dates. In many offshore centres it is kept by the agent and not open to the public.
ExampleA Cayman exempted company's shareholders are not public, and only the company or someone it authorises can get a certificate listing them.
The IRS term for the person who ultimately owns or controls a company applying for an EIN. It must be a person, not a nominee or the formation firm.
ExampleOn Form SS-4 for a new LLC, the owner in India is the responsible party, even though a formation firm sends the application (IRS, Instructions for Form SS-4).
Also called reinstatement, revival
Bringing a struck off company back onto the register, usually by paying the unpaid fees, penalties and a restoration fee. The longer a company stays off the register, the more it costs.
ExampleA BVI company restored within 12 months of dissolution pays a US$200 application and a US$500 restoration fee, plus every unpaid fee and penalty.
Also called CRS form, tax residency self-certification
The form a bank asks a new account holder to sign stating their tax residence and tax number, and, for a company, its CRS type and controlling persons. A false self-certification is an offence in many countries.
ExampleWhen opening a company account, the owner signs an entity self-certification marking the company as a passive NFE and listing themself as controlling person (OECD, Common Reporting Standard (consolidated text 2025)).
Also called grantor, founder
The person who creates a trust and transfers the assets into it. After the transfer the assets belong to the trustee, though some laws let the settlor keep certain powers.
ExampleA business owner settles a trust with the shares of their holding company and names their children as beneficiaries.
Also called issued capital, paid-up capital
The value of shares a company has actually issued to its shareholders. Many offshore companies need no minimum, while some onshore types do, such as a Swiss GmbH.
ExampleA Seychelles company issues 1 share of US$1 to its owner, and that US$1 is its whole share capital.
Also called SOF, source of wealth
Source of funds is where the money for a particular payment or deposit came from; source of wealth is how the person built their total assets. Banks and agents ask for both and usually want documents.
ExampleFor a first deposit from the sale of a flat, the bank asks for the sale contract and the statement showing the proceeds arriving.
Also called struck off, deregistration
The registry removing a company from the register, usually for unpaid fees or missing filings, or at the owner's request. A struck off company cannot trade or use its bank account, and its assets may pass to the state.
ExampleWhen a BVI company misses its annual fee, the Registrar sends a notice that it is liable to be struck off, with 90 days to put it right.
Also called BIC, bank identifier code
An 8 or 11 character code that identifies a bank in international transfers. Together with the account number or IBAN, it tells the sending bank where to send the money.
ExampleThe fifth and sixth letters of a SWIFT code are the country: a code with CH there belongs to a Swiss bank.
Also called tax planning, compared with tax evasion
Tax avoidance is arranging your affairs within the law to pay less tax; tax evasion is hiding income or lying about it, which is a crime. An offshore company can be part of the first and never makes the second legal.
ExampleMoving your tax residence to the UAE and then running a company there is avoidance; keeping an undeclared account abroad while living in France is evasion.
Also called offshore financial centre, no or nominal tax jurisdiction
A tax haven is a country or territory that charges foreigners little or no tax on income earned elsewhere, often with easy company formation and private registers. The OECD's 1998 test added a lack of transparency, a lack of exchange of information and no substantial activity; the EU uses its own list.
ExampleCayman charges 0% on company profit and is a classic tax haven, yet it exchanges account data under the CRS and is not on the EU blacklist (OECD, Harmful Tax Competition (1998), Council of the EU, list of non-cooperative jurisdictions).
Also called TRC, certificate of residence
An official letter from a tax authority confirming that a person or company is tax resident there for a period. It is what you show to claim a tax treaty benefit or to prove residence to a bank.
ExampleThe UAE Federal Tax Authority issues a tax residency certificate to a UAE company that meets its tests, which a foreign payer can rely on to cut withholding tax (UAE Federal Tax Authority, tax certificates).
Also called territorial system, source-based tax
A tax system that taxes only income from sources inside the country and leaves foreign income untaxed. It is different from 0% tax: local income is still taxed in full.
ExamplePanama taxes only Panama-source profit, so a Panama company serving clients abroad from abroad owes no Panama income tax on that work.
Also called tax identification number
The number your tax authority uses to identify you or your company. Banks ask for it on the CRS self-certification and send it with the account data to your home country.
ExampleA resident of Italy gives their codice fiscale as their TIN when opening an offshore company's account (OECD, Common Reporting Standard (consolidated text 2025)).
Also called arm's length principle
The rules that make related companies price deals between them as if they were strangers, so profit is not moved to a 0% company on paper. Most tax authorities follow the OECD arm's length principle.
ExampleA German company paying a large licence fee to its own offshore company for a logo must be able to show an unrelated party would pay the same.
An arrangement where a settlor transfers assets to a trustee, who holds them for beneficiaries under the rules in a trust deed. A trust is not a company: it has no legal personality, so the trustee owns everything.
ExampleA grandmother settles a trust; the trustee owns the investment account and pays income to her grandchildren as the deed says.
The person or licensed company that legally owns a trust's assets and must manage them for the beneficiaries, under duties the law enforces. Offshore, the trustee is usually a licensed trust company in the trust's country.
ExampleA Cayman trust company acts as trustee, keeps the trust's accounts and decides, within the deed, when to pay the beneficiaries.
Also called virtual asset service provider, CASP
A business that exchanges, transfers, holds or manages crypto assets for others, which must be licensed or registered and run anti money laundering checks in most countries. In the EU the term is CASP under MiCA.
ExampleA company running a crypto exchange for clients needs a VASP licence where it operates; a company that only invoices clients and is paid in crypto does not (Regulation (EU) 2023/1114 (MiCA), FATF, black and grey lists).
Also called WHT
Tax a payer must deduct from a payment, such as a dividend, interest or royalty, before sending it abroad. A tax treaty can cut the rate.
ExampleThe US withholds 30% from US dividends paid to a foreign company unless a treaty sets a lower rate (IRS, FDAP income, IRS, tax treaties).
No term matches that yet.
Updated 13 November 2026. Laws and lists change: the EU list is reviewed every February and October, and the dated figures above are taken from the official source linked beside them.
Most mistakes in offshore planning start with two words treated as one. The difference, side by side:
| Tax avoidance | Legal: you change the facts, such as where you live or where the company is run. | Tax evasion | A crime: the facts stay the same and you hide them from the tax office. |
|---|---|---|---|
| Registered agent | A licensed firm with duties: it checks you, keeps records and answers the registry. | Registered office | Only an address, usually the agent's, where official letters are served. |
| Nominee shareholder | The name on the share register. | Beneficial owner | The person who really owns it, recorded by the agent and every bank. |
| CRS | Banks report non-residents to their own tax office, which shares the data with about 112 countries. | FATCA | Banks report US persons, and only to the United States. |
| Trust | Not a legal person. The trustee owns the assets. | Foundation | A legal person that owns the assets itself. |
| EIN | A number for the company, which any foreign owner can get. | ITIN | A number for a person, needed only to file some personal US returns. |
| Territorial tax | Local income taxed, foreign income not. | Tax haven | Little or no tax on most income, local or foreign. |
| EU blacklist | The EU's list on tax cooperation, eight places since October 2026. | FATF grey list | The anti money laundering list, about weak controls, not tax. |
Writing about offshore companies and need to explain a term without a detour? Every entry has its own address, so a link opens the page right on that definition, and the wording stays the same for your readers.
Use the copy link button beside any term, or pick one here for a ready-made HTML link.
Each country page shows the full yearly price with every government fee, what the agent covers and how the bank account gets set up. Paid in crypto.
