IBC
International Business Company
- What it is
- An international business company in an offshore jurisdiction
- The idea of the form
- Simple registration and minimal local reporting
- What has changed
- Economic presence requirements, beneficial ownership registers, automatic exchange
- The main difficulty
- Opening a bank account for such a company has become noticeably harder
- Conclusion
- The form makes sense for a specific task, not as a way to “hide” assets
In plain words
An IBC (international business company) is a form of company common in offshore jurisdictions. Historically it was valued for its simplicity: quick registration, minimal reporting requirements and low or zero local taxation for activity outside the country of registration.
In recent years the picture has changed. Economic presence (substance) requirements, beneficial ownership registers and the automatic exchange of tax information (CRS) have appeared. Banks have sharply tightened their approach: a company without clear activity and a link with the jurisdiction often simply cannot open an account, and existing accounts are closed as part of de-risking.
The practical conclusion is simple. Such a company may be appropriate for a specific commercial task — international trade, holding an asset, a joint project — if it has clear activity and fits into the owner’s overall tax picture. As a tool for “hiding” assets the form does not work: the information is disclosed, and the risks fall on the owner.
Where this form is found
What is checked today
- Substance requirements
- Genuine activity
- A link with the jurisdiction
- The beneficial ownership register
- KYB at the bank
- CRS exchange
- CFC rules for the owner
- The company’s tax residence
- Permanent establishment
- Willingness to open an account
- The risk of closure
- The cost of maintenance
How to approach such a structure
- 01Define the real task
- 02Check the tax consequences
- 03Assess the banking reality
- 04Ensure presence and reporting
- 05Review it regularly
What has changed in recent years
- Economic presence requirements have been introduced
- Beneficial ownership registers have been created
- The automatic exchange of information is in operation
- Banks are closing accounts as part of de-risking
- CFC rules make the income visible to the owner’s country
Common mistakes
- Treating an offshore company as a way to conceal ownership
- Registering a company without a plan for a bank account
- Ignoring substance requirements
- Leaving an old structure unreviewed after a move
- Not taking CFC rules in the country of residence into account
What this means for a BRIDGES client
Old offshore structures are a common cause of difficulties in due diligence. We examine them in advance: what the company is, why it was set up, which documents explain it. A transparent history removes questions; silence creates them.
Frequently asked questions
01 /What is an IBC?
An international business company in an offshore jurisdiction. Historically — simple registration and minimal local reporting.
02 /Is it legal?
The form itself is lawful. The question is how it is used: whether there is a real task, whether the presence requirements are met and whether the income is declared in your country of residence.
03 /Why has it become harder?
Economic presence requirements, beneficial ownership registers and the automatic exchange of information have appeared, and banks have tightened their approach to such companies.
04 /Can such a company open an account?
It is difficult. The bank will want to see genuine activity, a clear ownership structure and a link with the jurisdiction. This is often the bottleneck of the whole arrangement.
05 /Does such a company conceal ownership?
No. Beneficial ownership registers, KYB at the bank and automatic exchange make ownership visible. Counting on opacity no longer works today.
06 /What to do with the old structure?
Examine it before applying to the programme: its purpose, documents, reporting. Sometimes it is wiser to restructure or close it than to explain it during the check.
See also
Read next
This material has undergone editorial review by BRIDGES.
Have an old offshore structure?
We will examine it before the documents are filed — so that it does not become a source of questions in the check.