Seychelles Offshore Business Entities

Seychelles offer a variety of offshore entities. Among the offshore entities that can be formed in Seychelles are offshore banks, offshore insurance companies, offshore trusts, company special licenses, protected cell companies, limited partnerships and international business companies.

The offshore insurance act in Seychelles was passed to promote industry confidence, fair, stable and efficient insurance markets and to ensure that policy holders are treated fairly. By ensuring that the rules and guidelines for the offshore insurance are followed by the respective stakeholders, growth in the sector is assured through healthy practices.

The offshore insurance act regulates both domestic and offshore insurance which are divided into two main categories. Both forms of insurance are divided into long term and general insurance business. The main difference between Seychelles offshore and domestic insurance is that the risks insured offshore must exist only outside of Seychelles. Seychelles offshore insurance also enjoys the same tax benefits as other offshore entities on the basis of earning income outside Seychelles. Offshore insurance managers, brokers and agents are required to open and maintain a bank account in which premiums are placed and this account must be separate and distinct from the account for premiums. An offshore insurance company is not allowed to appoint anyone in Seychelles as an agent if that person is not registered with the relevant authority.

The Special License Companies (CSL) is a special type of offshore company that can be formed under the Companies Act 1972. Special License Companies are able to operate both as Seychelles offshore and onshore companies and are subject to relatively low taxes. One of the features of the Special License Company is that it is required to meet the relevant disclosure requirements of regular business in Seychelles and is able to access and benefit from the Double Tax treaties signed by Seychelles.

Taxable income of a CSL is considered to have originated from within Seychelles whether or not obtained indirectly or directly in or outside of Seychelles. Special License Companies pay a 1.5% tax rate on their taxable income. However, there are exemptions that CSLs receive such as exemption from withholding tax on dividends and interest paid to residents and nonresidents, including any royalty paid to a person residing outside of Seychelles for copyright, trademark, patent or for right of use, and royalty paid to anyone residing outside of Seychelles for the use of commercial, industrial or scientific tools and equipment.

A Special License Company that wishes to continue out of Seychelles may do so in accordance with the provisions of the Act.

Despite the disclosure requirements of a Special License Company, strict confidentiality regulations must be observed in matters which concern shareholding and the shareholders of a CSL. In this sense, CSLs enjoy the same confidentiality protection as a regular Seychelles offshore entity.

The continuation of a CSL to another jurisdiction, however, does not free the company from any criminal or civil proceedings that may be pending against a director, agent, officer or the company.

Seychelles offshore trusts serve the fundamental purpose of protecting assets. Establishing an offshore trust in Seychelles provides a flexible means of pursuing specific personal and business interests. For instance, an international trust that is established for a trading company or other trade related matters can be created as an offshore trading trust, whilst an offshore life insurance trust can be established for setting up a company, group or personal life insurance, and a cash deposit trust can be created for depositing cash. These trusts form allow for better and easier financial planning and organisation as they are not just created as regular trusts from which a beneficiary benefits but as trusts setup with the intention of fulfilling a special business or personal objective. This also demonstrates the point that Seychelles offshore trusts are not only used for protecting assets but managing funds which can be done for employees, groups, organisations and pension plans.

As an offshore entity, a Seychelles offshore trust is protected by strict confidentiality provisions. A trustee or any employee of a Seychelles trust company is prohibited from disclosing any information pertaining to a trust which was setup and managed by the trustee. Seychelles offshore trusts rely on the privacy that they receive from Seychelles

The Protected Cell Act was passed in 2003 so that companies regulated by the Companies Act could be able to divide into identifiable cells for the purpose of protecting every cell from acquiring the liabilities of any other cell. This setup is ideal for organising and managing different types of funds.

In a Seychelles each cellular unit of a PCC has its individual cellular assets and as a result can be clearly identified as a distinct unit without being a separate legal entity. Any Seychelles company can either be incorporated as a protected cell company or converted into one if already existent.

Protected Cell Companies have a single legal personality and their assets must be either non-cellular or cellular. Shares may be created and issued in respect of any cell. The cell share capital is accumulated through the proceeds earned from the issue of cell shares and comprises the cellular assets belonging to the cell whose shares were issued. The proceeds of issued shares not belonging to a cell must be placed in the company’s non-cellular assets. Dividends can be paid out for the shares of a cell with regard to its profits, liabilities and assets.

Seychelles offshore limited partnerships are not allowed to conduct business in Seychelles except if that business or transaction is fully necessary for business conducted outside Seychelles.

A Seychelles offshore limited partnership is required to have at least one general partner who is to assume responsibility for the financial responsibilities and debts of the partnership in the event of insufficient assets’ except if otherwise provided for in the partnership agreement. At least one of the general partners of a Seychelles limited partnership can be a natural person, a partnership or a body that has limited or unlimited liability that is resident in Seychelles. As long as one general partner meets these criteria, the other partners can be a body corporate, partnership or individual that is resident, incorporated or domiciles in another jurisdiction.

Tax exemptions given to limited partnerships are for 20 years. Seychelles offshore limited partnerships are exempt from tax on profits, duty and income generated from business conducted. Tax is also exempt on property transfers and transactions involving debts, contributions, securities and other general business, as well as imported furniture and equipment intended to be used for office use by the partnership. All expatriate employees of a Seychelles offshore partnership receive an exemption from the fee payable for a gainful occupation permit.

Seychelles offshore banking is governed by the Financial Institutions Act 2000. Offshore banking laws in Seychelles ensure that banking transactions are done in a confidential, environment. Offshore banking services can be offered by a domestic bank that has been duly licensed to conduct offshore banking operations in addition to its local services. Any Seychelles offshore bank must have a paid-up capital of at least USD 2 million or its equivalent in another currency that can be easily converted. To register as an offshore bank in Seychelles the applicant must be either an overseas company that has been registered in accordance with the domestic Companies Act or a limited liability company.