Delaware is one of the smallest states in the United States of America (USA). The population of Delaware sits at an approximated 853,480. Delaware is an agricultural state but is most popularly known for the formation and incorporation of Limited liability companies (LLCs). The State of Delaware is one of the tax free states in the United States. Delaware also offers Trust formation.
The state of Delaware fits the qualifications of a tax haven. There is no taxation for “offshore” limited liability companies, the states provides privacy for the beneficial owners of Delaware LLCs among other factors. A tax haven is considered to be a country or territory which opens itself up to foreign investors by implementing a zero tax or low tax regime coupled with very strict privacy and confidential laws to protect clients. The client base of most tax havens comes from foreign countries.
A Delaware limited liability company is not a partnership or a corporation but it can be considered to be a cross between the two (2) or a hybrid of the two. This then creates corporation with a tax advantage. In tax haven Delaware Limited Liability Companies which has no business operations in the state of Delaware will pay no taxes. The taxes include federal income tax and state income tax. The fact that there are no taxes for Delaware LLCs gives clients a legal means of tax planning therefore reducing tax liabilities. Delaware offshore LLCs must pay a license fee to the government of the state. Another tax advantage of the state of Delaware is that it has no sales tax, inheritance tax or stock transfer shares.
As far as privacy goes the tax haven of Delaware s able to provide this for the owners of Delaware offshore limited liability companies. When forming a Delaware offshore limited liability companies names of the beneficial owners is not filed at the Companies Register and does not become public information. For further privacy nominee shareholders and directors can also be used when forming limited liability companies in the tax haven of Delaware.
Delaware Limited Liability Companies who do not have business undertakings in the state have no need to file annual income tax reports or the financial statements of the LLC. This ensures that the financial information of a Delaware offshore Limited liability company remains private. The accounting statements of Delaware offshore LLCs can be held anywhere in the world the members find to be convenient.
Delaware as a tax haven has put in conditions which facilitates flexible structure for limited liability companies. The legislation which governs LLCs in tax haven Delaware allows for the same individual to hold all the positions in a Delaware LLC, this includes director, shareholder etc.
LLCs registered in the American states of Wyoming and Delaware can be used for business anywhere in the world. They provide owners with a means of reducing taxation. Incorporation of Limited Liability Companies in the state of Delaware is inexpensive and they business entities are very easy to maintain.