International tax planning: Offshore Company Formation

We are an English tax and law office within the network of international tax consultants and lawyers (LowTax Network International), focussing, in particular, on "international tax planning for natural and legal persons". Other focal points are: the setting up of financial services companies and banks abroad, licences for games of chance within the EU and offshore, the setting up of trusts and foundations and, in addition, the transfer of domestic assets into trusts within the English-speaking legal area (asset protection,bankruptcy protection,inheritance law).
ETC Law&Tax Office

 

Company Formation- Offshore Company Formation- International Tax Planning: EU member countries

Advantages: The recognition of a permanent establishment in the foreign country, from the point of view of EU member states, does not require establishment of a commercial business operation (see also EU Freedom of Establishment); also, applicability of the EU Parent-Subsidiary Directive (tax free receipt of foreign dividends, e.g., in the case of a German capital investment firm) and general existence of DTAs.

Taxes in Europe database:

The "Taxes in Europe" database is the European Commission's on-line information tool covering the main taxes in force in the EU Member States (IP/07/662). Access is free for all users. The system contains information on around 650 taxes, as provided to the European Commission by the national authorities.

 

1. EU member countries

1.1. Cyprus

10% income tax, regardless of profit. Profit distribution is not taxed in the case of foreign shareholders. Holding companies are tax exempt.

 

  • EU Freedom of Establishment Yes
  • DTA: Yes, with most countries
  • EU Parent-Subsidiary Directive applicable: Yes
  • Holding company privileges: Yes
  • Banking secrecy: High
  • Nominee relationships allowed: Y

Advantage: EU Freedom of Establishment as well as DTA, very low taxes compared to the rest of Europe, dividend payouts to non-Cypriots are tax exempt (otherwise subject to 15% defense tax). Holding companies are completely tax exempt.

1.2. Bulgaria

(10% income tax rate, independent of profits, no taxation of distribution of profits, EU company: EU freedom of establishment applicable, therefore EU directive on parent companies and their subsidiaries, DTA concept)

 

Corporate Taxation at Important Locations

UAE: No taxes, exempt on oil companies, petro-chemical industries and banks. Switzerland: By Kanton. Average tax level is 21%. Singapore: No taxation on first $ 100,00.00; 8,5% taxes on $ 100,001.00 to $ 300,000.00; Thereafter a Flat Rate of 17%. Exempt companies and foreign income is tax free. USA: Taxation depends also on state law. Federal Corporate Income Tax is 15% on net earnings up to US$ 50,000.00. Taxation thereafter rises progressively to a maximum level of 35%.

 

Corporate Taxation in the EU

 

Canary Islands Special Zone: Does not belong to EU VAT territory. Special requirements as providing new jobs and investment have to be met. United Kingdom: 21% taxation on mid-sized business up to £ 300,000.00 net earnings. Taxation thereafter rises progressively to a maximum level of 30%. Germany: Total taxation burden is set by Coporate Tax (15%) and local Business Tax. Madeira Free-Trade-Zone: Special requirements as providing new jobs and investment have to be met. Switzerland: Taxation is ruled by the Kanton. Total taxation burden is set by Federal Tax plus Kanton-Tax and local tax. Total taxation burden alternates between 12,5% and 28%.

 

1.3. England

21% for small to medium-sized companies (up to GBP 300,000 in profit), thereafter gradual increase up to 30% VAT registration required only upon reaching GBP 60,000 (approximately EUR 100,000). Very liberal attitude toward offshore companies, maintains a DTA with the Isle of Man.

 

  • EU Freedom of Establishment Yes
  • DTA: Yes, with most countries
  • EU Parent-Subsidiary Directive applicable: Yes
  • Holding company privileges: No
  • Banking secrecy: High
  • Nominee relationships allowed: Yes

Advantage: EU Freedom of Establishment; also DTA, low tax rates for small to medium-sized companies compared to the rest of Europe

1.3.1 Setting up a UK Ltd with an offshore company

UK Ltd as agent only: Up to 90% profit transfer before taxes allowed

A maximum of 90% of UK profits BEFORE taxes in the UK may be transferred to an offshore country as long as the UK Ltd acts only as an "agent" (profit transfer and domination agreement between the offshore and UK Ltd).

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