With two offshore company types available in Seychelles, this is a very important question. Here are some general considerations. By no means they represent the final and absolute recommendation but may prove useful as a general guideline.
Special License Company (CSL)
The CSL would be the preferred choice for clients planning business transactions with counterparties who are located in high-tax countries with an intrusive regulatory environment. In such countries, fiscal countermeasures are possible against the traditional zero-tax companies (IBCs), but are less likely against low-tax companies (CSLs).
On the same note, if the business circumstances require proving that the company is actually a taxpayer in its country of registration, only a Special License Company would satisfy this condition. The CSL is also the right vehicle if clients expect to utilize the benefits of the double-tax avoidance treaties, concluded by Seychelles. In perspective, a CSL is the appropriate choice when it`s important to demonstrate an image of a locally-based, tax-paying business entity, properly operating in the place where it was registered – Seychelles. Clearly, due to its more complex nature, CSL is more costly to create and maintain, but for some of those special circumstances it may be the best option.
International Business Company
The International Business Company is usually preferred by more relaxed clients whose personal or business circumstances allow them to be at relative ease from regulatory and fiscal scrutiny. Such clients would often be individuals who spend most or all of their time outside their home jurisdiction – for instance, management consultants, network engineers, software developers or other professionals who tend to travel between various countries on short-term assignments. Just as well, a clients’ business may be purely international and not particularly tied-up to his home country – like many internet businesses are.
Similarly, if the company will only or mainly engage in business with other similar offshore companies (as is normal in international commodity trade), then an IBC is all You need. An IBC may also be sufficient for use by clients whose home country does not have the sophisticated “management and control” tax-rules – this is still the case in many countries of the world. And, finally, there is no need to use a sophisticated tax-planning instrument when there is no tax planning purpose – for example, when the company is simply used as a personal asset-protection vehicle to passively hold some property or investments.
In all these cases the simpler, cheaper IBC could be the best choice. The International Business Company pays lower government and administration fees, is not subject to the requirement of filing accounts and returns and does not require a complicated management structure, therefore is much cheaper to have and maintain.
Just in case, an IBC can be at any time transformed into a CSL.
Here is a comparison table, listing all the different characteristics of an IBC versus CSL.
Seychelles IBC – CSL Comparison Table (Distinctive Features)
|Full name||International Business Company||Special License Company|
|Applicable corporate laws||International Business Companies Act 1994||Companies Act 1972
Companies (Special Licenses) Act 2003
|Rate of corporate taxation||0%||1.5%|
|Access to double taxation avoidance treaties||NO||YES|
|Qualifies as resident for tax purposes||NO||YES|
|Filing of detailed client application required||NO||YES|
|Corporate directors allowed||YES||NO|
|Minimum paid up capital||USD 1||10% of authorized capital|
|Bearer shares permitted||YES||NO|
|Local company secretary required||NO||YES|
|Filing of accounts and returns required||NO||YES|
|Shelf companies available||YES||NO|