The news reporting of the ‘Panama papers’ frequently mentions ‘letterbox companies’ (eg, see a simple Google news search). In recent academic research, the same term has also been used in a number of publications (see Google scholar search, starting 2010). But there is the potential of misunderstandings as there are at least two different types of letterbox companies, let’s call them:
- Type A: companies that do business in one country, but are incorporated with only a ‘letterbox’ in another jurisdictions.
- Type B: companies that are mere ‘special purpose entities’, ie those too merely have a ‘letterbox’ in the country of incorporation, but they only hold financial assets and are not involved in any business activity in any country.