Structure4 min read
Offshore jurisdictions, compared on what they're actually good for now
Every one of these jurisdictions still exists and most of the reasons to use them do not. Here is what each is genuinely good at, and the honest default for a founder with one company.
The offshore comparison article is a genre, and almost all of it is a decade out of date. Three changes between 2017 and 2020 removed the substance of what these jurisdictions offered: economic substance requirements, beneficial ownership registers with automatic exchange, and the collapse in banks' willingness to onboard entities with no operations.
That does not make them useless. It makes them specialist tools with narrow uses, and the uses are mostly not tax.
What each one is genuinely for
| Jurisdiction | Actually good at | Not good for |
|---|---|---|
| Cayman Islands | Investment funds. The overwhelming majority of the world's offshore funds sit here because the regulatory framework, the service providers and the investor familiarity are unmatched | A one-person operating business. Cost and compliance are sized for institutions |
| BVI | Joint ventures and holding vehicles where several parties want neutral, well-understood corporate law and no party's home jurisdiction. Fast, cheap to form, and the case law is settled | Anything needing a bank account of its own, which is now the binding constraint |
| Nevis | Asset protection, specifically. The LLC statute's charging-order protection and short limitation periods are unusually strong | Trading, banking, or credibility with a counterparty who will look it up. See what asset protection actually buys |
| Seychelles, Belize | Very little now. Both restructured their regimes under EU pressure and both carry reputational cost with banks and payment providers | Almost everything. If your entity's jurisdiction causes a processor to decline you, no tax rate compensates |
| Bermuda | Insurance and reinsurance, where it is genuinely the world centre | Small companies. Costs are institutional |
| Jersey, Guernsey, Isle of Man | Fund administration, listing vehicles and structures needing European proximity with strong regulation | Cost-sensitive founders |
| Delaware | Anything raising outside capital. Predictable corporate law, a specialist court, and every investor's documents already assume it | Being cheap. The franchise tax and agent are a real annual cost |
| Wyoming, New Mexico | A cheap, credible US LLC that banks and processors recognise. The honest default for most readers | Investor rounds, which will want a Delaware C-corporation |
The three constraints that decide it
1. Can it get a bank account?
This is the first question and it eliminates most options. A company incorporated in a classic offshore centre, with no operations there and a beneficial owner resident somewhere else, matches the profile correspondent banking risk teams are trained to decline. You can form the entity in a day and spend six months failing to bank it.
Test this before forming, not after. Ask a prospective bank or payment provider whether they onboard entities from that jurisdiction, and take the answer seriously.
2. Will your payment provider accept it?
Processors maintain their own lists of supported jurisdictions, and several of the names above are simply not on them. For a business that takes card payments this is decisive and it is checkable in five minutes. It is also the reason so many founders end up with a US entity: not tax, but access to rails.
3. Does it survive your own country's rules?
The jurisdiction's own tax rate is close to irrelevant if you personally are resident somewhere with controlled-foreign-company rules, or if the company is managed from your kitchen and therefore resident where you are. The offshore rate applies to a company the offshore jurisdiction taxes. Your country may simply disagree that it is theirs to tax.
What the register changed
Confidentiality was the second selling point after tax, and it has narrowed sharply. Every jurisdiction above maintains a beneficial ownership register accessible to its own authorities, shares information under the reporting standard, and exchanges substance-failure and residence information with the jurisdictions of the owners.
Public access is a separate and contested question — the EU's public-register requirement was struck down by its own court on privacy grounds, and jurisdictions have moved in different directions since. But privacy from the public was never the thing that mattered. Privacy from tax authorities is what these structures were bought for, and that is gone.
When an offshore entity is still the right answer
- A fund with investors from several countries. Nobody's home jurisdiction is neutral; Cayman or a Channel Island is. This is a real, live, unreplaced use case.
- A joint venture between parties in different countries, for the same reason plus the settled case law.
- Asset protection with genuine liquid assets and no current claims, where Nevis or a Cook Islands structure does something a domestic entity cannot — subject to every caveat in that article.
- A business genuinely operating there, with people and premises, where the substance test simply describes what you do.
- Shipping, aviation and insurance, which have specialist regimes for structural reasons unrelated to secrecy.
The honest default
For a founder with one company, customers in several countries, and a need to take card payments: a US LLC in Wyoming or New Mexico, or a company in the country you actually live in. The first buys access to rails and is recognised everywhere; the second is simplest to run and creates no second country's filings.
Neither is exciting, and neither is what an offshore incorporation service will sell you. But the decision that moves your tax bill is where you are resident, not where the company is registered — and that decision costs nothing to make correctly and a great deal to make late. Where to move is the comparison that actually matters.
Pick the jurisdiction your bank, your processor and your own tax authority all accept. That is usually one of about four, and none of them is on a beach.
One entity, formed in the right place, run properly
Formation, EIN, banking and the compliance calendar as one job — with the jurisdiction chosen against what your rails and your residence actually allow.
See what's includedFounders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.