Financial company – a legal entity, which in accordance with the law provides one or more financial services, as well as other services (operations) related to the provision of financial services. Financial organizations must be entered in the appropriate register of financial companies, as well as obtain a license for the financial services that the company provides.
Registration of a financial company is a complicated, time-consuming procedure and requires a highly qualified specialist who will perform this work.
It is possible to open a financial company only after meeting a number of regulatory conditions and requirements. These requirements are made to: the size of the Charter capital of the financial company, the personnel, the premises, the availability of equipment, the complex development of standard contracts and the rules of the demonstration of financial services.
Types of financial companies
Under the financial companies, we often mean two different types of organizations.
The first kind is the financial companies, which are meant for granting and servicing the credits. Such a company may be called a credit-financial company.
The second type is investment financial companies or investment brokers. They can also work as investment advisors.
Financial company abroad is one of the popular tools of tax planning. They are often used to organize financial flows in groups of companies, to make investments in the United States, and to make loans to other companies and individuals. Loans, unlike contract proceeds, are not subject to profit or income tax. Taxes can be levied only on the material benefit in case the interest on the loan is too low. At the same time, the cost of servicing the loans, i.e. the interest paid on them, is included in the cost of production or services and reduces the taxable base of the company or individual – the recipient of the loan.
Registration of a foreign financial company with an appropriate license will allow the flexibility to use such a financial planning tool as issuing and servicing loans. Jurisdiction is determined depending on the purpose of the loan and whether or not there is a Double Taxation Agreement with the country where the loan recipient is located. Loans can be used for production purposes, purchase of goods, purchase of real estate, including for personal use, and for any other purpose. Own finance company will allow you to set the interest rate on loans, not only depending on market conditions, but also on the purpose of the loan, including the redistribution of profits within the group of companies.
If the granting of loans or credits is a regular activity for the company, such a company must obtain the appropriate license. In the simplest licenses there are strict limits on the amount of loans issued.
