offshore corporation
An offshore corporation, also called an offshore company, is a legal entity formed under the laws of a jurisdiction outside of the United States. Common offshore jurisdictions include the British Virgin Islands and the Cayman Islands, as these jurisdictions maintain predictable corporate statutes designed to attract foreign-owned entities. They may offer streamlined formation and flexible corporate governance rules.
In the British Virgin Islands, the standard offshore entity is known as a “business company” formed under the BVI Business Companies Act. A BVI business company may conduct business inside or outside the jurisdiction, subject to applicable licensing requirements. In the Cayman Islands, the typical offshore entity is known as an “exempted company” and is formed under the Companies Act. An exempted company is generally prohibited from carrying on business within the Cayman Islands, except as necessary for activities that are incidental to its offshore operations, such as maintaining registered offices, holding meetings, or engaging local professional services.
Offshore companies are commonly used for international structuring, including cross-border investment holding, financing arrangements, asset ownership, and better conditions for conducting cross-border/multinational mergers and acquisitions. They are often selected for the absence of foreign exchange controls, relatively lower administrative and reporting burdens compared to onshore jurisdictions, as well as access to tax-neutral regimes. The use of an offshore company does not eliminate the legal or tax obligations in other countries where the company operates, or where its owners are residents.
[Last reviewed in January of 2026 by the Wex Definitions Team]
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