Advice about opening company outside The Netherlands

[Something]

Hello,

I've been exploring the complexities of setting up a company abroad for tax optimization purposes and would appreciate some insights from those with experience in this area.

I am a resident of the Netherlands, engaged in providing online services such as coding and GFX projects. Additionally, I do investments on the side. My clients primarily make payments via PayPal and, occasionally, crypto. It's worth mentioning that my business primarily serves international clients.

From what I understand, establishing a company in a foreign country can be challenging, especially when not residing in that country.

The tax rate in the Netherlands is approximately 40%, and I'm exploring ways to legally minimize this tax burden. One strategy I'm considering is to establish a company in another country, handle taxation there, and then transfer profits to myself as dividends since I would be the shareholder of this company.

Is this approach viable? Are there more efficient strategies to lower tax liabilities within the Netherlands or through offshore company formation? I understand that such arrangements must be carefully structured to comply with both Dutch and international tax laws, including Controlled Foreign Corporation rules and Permanent Establishment concerns.

I would also be interested in hearing about any practical experiences or case studies related to setting up and managing an offshore company, particularly from those who have navigated similar paths.

Any advice, especially regarding the legal feasibility and potential complications of setting up an offshore company for a Netherlands-based entrepreneur, would be greatly appreciated.

Also could you let me know if those sites that offer to setup the company and everything is even legit? To me they look like a scam and not legal in the end.

Or even the fact that this is not at all possible would help as well, as that means I'll just have to set up a Netherlands-based company.

Thank you in advance for your insights.

 

[Sols]

It won't work. At least long-term and definitely not legally. What you propose is doable but doesn't hold up if anyone starts asking questions.

You're a resident in NL. That means any company you form outside of NL but still control is usually considered tax resident in NL and has to pay Dutch corporate income tax.

If your foreign company has a genuine substance and economic presence outside of NL (an office, a team), it can work, so long as your involvement is just that of a passive shareholder. If you're still running the business, the company can end up being dually tax resident or taxable in NL through having a permanent establishment there.

Just set up a Dutch company and work with a good accountant to max out on benefits, incentives, and other ways to lower your tax burden.

If you don't want to pay Dutch tax, don't live in NL.

 

[Something]

It won't work. At least long-term and definitely not legally. What you propose is doable but doesn't hold up if anyone starts asking questions.

You're a resident in NL. That means any company you form outside of NL but still control is usually considered tax resident in NL and has to pay Dutch corporate income tax.

If your foreign company has a genuine substance and economic presence outside of NL (an office, a team), it can work, so long as your involvement is just that of a passive shareholder. If you're still running the business, the company can end up being dually tax resident or taxable in NL through having a permanent establishment there.

Just set up a Dutch company and work with a good accountant to max out on benefits, incentives, and other ways to lower your tax burden.

If you don't want to pay Dutch tax, don't live in NL.

Thanks a lot for the detailed reply. I'm afraid it has to be that way yeah.

Sadly I can't move to another country currently, so we'll just have to go with registering a Dutch company.

It won't work. At least long-term and definitely not legally. What you propose is doable but doesn't hold up if anyone starts asking questions.

You're a resident in NL. That means any company you form outside of NL but still control is usually considered tax resident in NL and has to pay Dutch corporate income tax.

If your foreign company has a genuine substance and economic presence outside of NL (an office, a team), it can work, so long as your involvement is just that of a passive shareholder. If you're still running the business, the company can end up being dually tax resident or taxable in NL through having a permanent establishment there.

Just set up a Dutch company and work with a good accountant to max out on benefits, incentives, and other ways to lower your tax burden.

If you don't want to pay Dutch tax, don't live in NL.

I have another question when you have a moment.

I recently came across this website: https://rns.id, which offers a Digital Residency service. It also provides an opportunity to establish a company in that jurisdiction, reportedly with very low tax obligations. However, I'm concerned that this arrangement might present issues under the CFC rules in the Netherlands. This could potentially lead to complications, even if I obtain residency in the new jurisdiction, right? Additionally, I've read that holding a second residency might jeopardize my Dutch residency status.

 

[Marzio]

If you don't want to pay Dutch tax, don't live in NL.

We should make this the tagline of this forum: "If you don't want to pay [hight tax country name] taxes don't live in [country name]"

 

[Alonzo]

Why do people living in western countries still think that they can avoid paying taxes by creating a company in a tax-free jurisdiction?

 

[Something]

Why do people living in western countries still think that they can avoid paying taxes by creating a company in a tax-free jurisdiction?

I'm not thinking anything, I'm just asking for advice based on the research I've done. As it seems it's not possible as a smaller business to setup companies offshore, I won't be doing that and just registering here.

 

[Sols]

I recently came across this website: https://rns.id, which offers a Digital Residency service. It also provides an opportunity to establish a company in that jurisdiction, reportedly with very low tax obligations. However, I'm concerned that this arrangement might present issues under the CFC rules in the Netherlands. This could potentially lead to complications, even if I obtain residency in the new jurisdiction, right? Additionally, I've read that holding a second residency might jeopardize my Dutch residency status.

Digital residence changes nothing. The Dutch tax authority isn't going take your JPEG from Palau seriously. It's about actual, physical, genuine, bona fide residence.

Why do people living in western countries still think that they can avoid paying taxes by creating a company in a tax-free jurisdiction?

That sounds like an interesting topic for discussion in another thread, if you drop the uncalled for snark. Furthermore, @Something asked a question rather than presume something.

 

[Something]

Digital residence changes nothing. The Dutch tax authority isn't going take your JPEG from Palau seriously. It's about actual, physical, genuine, bona fide residence.

Yeah, that's what I was thinking as well.

Well means there's only one option left. Thanks for all the help and advice!

 

[kilor]

Relocate to the country with the best tax plans for your needs!

 

[jafo]

Hello,

I've been exploring the complexities of setting up a company abroad for tax optimization purposes and would appreciate some insights from those with experience in this area.

I am a resident of the Netherlands, engaged in providing online services such as coding and GFX projects. Additionally, I do investments on the side. My clients primarily make payments via PayPal and, occasionally, crypto. It's worth mentioning that my business primarily serves international clients.

From what I understand, establishing a company in a foreign country can be challenging, especially when not residing in that country.

The tax rate in the Netherlands is approximately 40%, and I'm exploring ways to legally minimize this tax burden. One strategy I'm considering is to establish a company in another country, handle taxation there, and then transfer profits to myself as dividends since I would be the shareholder of this company.

Is this approach viable? Are there more efficient strategies to lower tax liabilities within the Netherlands or through offshore company formation? I understand that such arrangements must be carefully structured to comply with both Dutch and international tax laws, including Controlled Foreign Corporation rules and Permanent Establishment concerns.

I would also be interested in hearing about any practical experiences or case studies related to setting up and managing an offshore company, particularly from those who have navigated similar paths.

Any advice, especially regarding the legal feasibility and potential complications of setting up an offshore company for a Netherlands-based entrepreneur, would be greatly appreciated.

Also could you let me know if those sites that offer to setup the company and everything is even legit? To me they look like a scam and not legal in the end.

Or even the fact that this is not at all possible would help as well, as that means I'll just have to set up a Netherlands-based company.

Thank you in advance for your insights.

Sorry buddy! It's a one-way street only:
Nederland belastingparadijs? Fiscaal concurreren in een rauw kapitalistische wereldorde. Naam: Marc Seuren Administratienummer: s922424 Studierichting: Fiscale Economie Datum: 21 oktober 2014 Verdediging: 29 oktober 2014, 15:00 uur, CZ 113 Examencommissie: Prof. dr. J.A.G. van der Geld Drs. F.J. Elsweier

Options are:
(A) As @Sols alluded, best to set up in the Netherlands and go about life.
(B) Move to the USA, and cut ties with the Netherlands. Even if you don't cut it too much, belastingdienst will NOT come after you due to Qui Tam & Pro Se. Hard to explain to someone unfamiliar with this. In street talk: You join the stronger, better armed & more lethal gang!
(C) Cut every tie to the Netherlands, don't visit, and move to another country. If there are ties, belastingdienst WILL, once in a while, come after you ...IF and ONLY IF they hallucinate you have some money. If you go to e.g. the Bahamas and you are barely surviving, nobody will care about you and that you moved to a tax paradise. As a matter of fact, they will want you to forget about the Netherlands if you have NOTHING to offer the state.

Case in point:

PS. I have plenty of former Havo/VWO classmates (+100 in the last 40 years) who emigrated from the Netherlands, but this is NOT for everyone. If you like it in Nederland, I recommend staying there. The Dutch "duidelijkheid" can only be found in a few places in the USA (regardless of nationality)...and also in some parts around the world, but only if you are fluent in the local language and are a native. "Gezelligheid" is much harder to come by.

 

[Something]

Sorry buddy! It's a one-way street only:
Nederland belastingparadijs? Fiscaal concurreren in een rauw kapitalistische wereldorde. Naam: Marc Seuren Administratienummer: s922424 Studierichting: Fiscale Economie Datum: 21 oktober 2014 Verdediging: 29 oktober 2014, 15:00 uur, CZ 113 Examencommissie: Prof. dr. J.A.G. van der Geld Drs. F.J. Elsweier

Options are:
(A) As @Sols alluded, best to set up in the Netherlands and go about life.
(B) Move to the USA, and cut ties with the Netherlands. Even if you don't cut it too much, belastingdienst will NOT come after you due to Qui Tam & Pro Se. Hard to explain to someone unfamiliar with this. In street talk: You join the stronger, better armed & more lethal gang!
(C) Cut every tie to the Netherlands, don't visit, and move to another country. If there are ties, belastingdienst WILL, once in a while, come after you ...IF and ONLY IF they hallucinate you have some money. If you go to e.g. the Bahamas and you are barely surviving, nobody will care about you and that you moved to a tax paradise. As a matter of fact, they will want you to forget about the Netherlands if you have NOTHING to offer the state.

Case in point:

PS. I have plenty of former Havo/VWO classmates (+100 in the last 40 years) who emigrated from the Netherlands, but this is NOT for everyone. If you like it in Nederland, I recommend staying there. The Dutch "duidelijkheid" can only be found in a few places in the USA (regardless of nationality)...and also in some parts around the world, but only if you are fluent in the local language and are a native.

Thanks for the detailed reply again.

I see. I've now actually already got an appointment with the KvK lined up, sadly seems like there's no other way around it.

A lot of places, including the Netherlands, are having a tough time right now. But it feels a bit better here. Despite that, I really do like it here. It's just the Belastingdienst that's a bit of a pain. As the video and the comments say, I don't mind paying my fair share, but 40%? That's crazy, and it really doesn't incentivize me to work harder and earn more money, knowing an even bigger chunk of what I earn will just vanish in taxes. I was hoping there might be a way to get around that, but looks like that's not happening.

Really appreciate all the honest advice! Thanks a lot.

 

[GPT]

Having worked a lot with Dutch entrepreneurs I’ve picked up a handful of things;

“The belasting is diefstal” concept is a concept from the past. It does NOT work like that anymore. Many legal loopholes have been closed since 2010.

Another thing is that you have in NL plenty of opportunities to lower your tax burden if you work with the concept of 2 bv’s. Mother daughter concept. Your fiscal advisor, if s/he really understands what s/he is doing can explain to you how this works.

Last; below 100-125k turnover there is not a lot to optimize. It starts to become interesting from 150 and upwards.

Good luck.

 

[jafo]

“The belasting is diefstal” concept is a concept from the past. It does NOT work like that anymore. Many legal loopholes have been closed since 2010.

This has NOT been my experience when confabulating with defense attorneys in the Netherlands and reading the plethora of court cases they share with me.

@Something do NOT try anything that can be considered suspicious while living in the Netherlands. Belastingdienst is paying rewards to bank employees and others to turn over data on Dutch passport holders. The state/prosecutor also refuses to identify who the "whistleblower" is and what they were paid, and despite violating court orders the state and its members are NOT held in contempt of court.

Confirm this for yourself:

https://uitspraken.rechtspraak.nl/#!/details?id=ECLI:NL:PHR:2019:295
PS. What is lost on almost EVERYONE (+99.99%) is what I call the "opportunity cost, psychological & legal frictional cost" of defending against crimes committed by "members" of the State. The defendant spent +€1M on his defense, so the state is "rewarded" with about 50% of that money even when they blatantly flout the law . The legal and accounting professionals MUST pay taxes on their income.

you have in NL plenty of opportunities to lower your tax burden

100%! I agree with this wholeheartedly! This is the ONLY way if you live in the Netherlands. The fight is NOT worth it and there is NOTHING to gain even if you "win" in court against the State!

 

[JimBeam]

You either move out OR buy a Dodge RAM on your company with "V" plates like everyone else does LOL

 

[Marketint]

This has NOT been my experience when confabulating with defense attorneys in the Netherlands and reading the plethora of court cases they share with me.

@Something do NOT try anything that can be considered suspicious while living in the Netherlands. Belastingdienst is paying rewards to bank employees and others to turn over data on Dutch passport holders. The state/prosecutor also refuses to identify who the "whistleblower" is and what they were paid, and despite violating court orders the state and its members are NOT held in contempt of court.

Confirm this for yourself:
View attachment 5837

https://uitspraken.rechtspraak.nl/#!/details?id=ECLI:NL:pHR:2019:295
PS. What is lost on almost EVERYONE (+99.99%) is what I call the "opportunity cost, psychological & legal frictional cost" of defending against crimes committed by "members" of the State. The defendant spent +€1M on his defense, so the state is "rewarded" with about 50% of that money even when they blatantly flout the law . The legal and accounting professionals MUST pay taxes on their income.



100%! I agree with this wholeheartedly! This is the ONLY way if you live in the Netherlands. The fight is NOT worth it and there is NOTHING to gain even if you "win" in court against the State!

You say exactly how it is. The tax authorities in the Netherlands buy material obtained through theft, hacking and other dubious channels. And when you start litigation you are in fact funding the case for both sides . The Dutch tax authorities have a very bad reputation because of many scandals. As a punishment, the tax authorities recently had to pay a fine (to the state). Really unbelievable that they can get away with this.

Best advice is to leave the country if possible.

 

[jafo]

the tax authorities recently had to pay a fine (to the state)

Damn! I didn't know this! Thank you for sharing.

Now, imagine if my company gets caught doing something "wrong" and as punishment, my company has to pay me a fine!

How did they get away with that trick?

 

[GPT]

This has NOT been my experience when confabulating with defense attorneys in the Netherlands and reading the plethora of court cases they share with me.

Perhaps you did not get what I was hinting at (and I could have explained better as well - which is my bad). The phrase "belasting is diefstal" is something from Toine Manders (not the European politician) from the Libertarian Party who popularised the phrase in the Netherlands with among others radio commercials. Directly linked to that was a method to avoid the dividend tax by setting up a dividend structure which was NL bv (or UK ltd registered in NL - which was possible because of the inspire art arrest) above that a CY holding (or again a UK ltd registered in Cyprus) and above that a Seychelles offshore and above that a Panamanian foundation. Effectively until approx 2010 this meant that profits could be distributed via Cyprus to the Seychelles and Panama back to the UBO without paying dividend tax. That route and many spinoffs got closed around 2010-2011.

For the average one man entrepreneur (the ones with <150k profit) there is not really an option anymore to save on taxes via a (any) foreign country unless you have real presence, substance etc with a real service or product. You might save some taxes in NL, at the same time you will spend lots of fees to keep companies, bankaccounts abroad active etc. On a profit of 100k I calculate for argument sake with 20% corporate tax (about the rate in NL) which is 20k. I dare say that at the end of a year, when you properly would set everything up including you not being in any register you would spend at the very least 10-15k on administration, accounting, management and other fees etc. Of course, you would still save some money. That however is not worth the headache in NL. Hence me saying from 150k you might have an option albeit very difficult. You then clearly would spend more than 20k on proper advice to navigate the Dutch tax authorities.

That difficult option (still possible) is using the IP route. Registering IP offshore and via licensing fees you build up a foreign nest egg. The challenge however is that its extremely difficult to bring that money back to NL especially given how the Dutch tax authorities operate (which you addressed correctly). In that sense its not really of any use to use this route. Especially not when you are the small time entrepreneur.


The Dutch tax authorities have a cross departmental and functional team called "team hidden assets" (rough translation). They hunt everyone down nowadays. Even when its for pocket change i.e. less than 25k not reported.

The Netherlands -is- a tax haven, just not when you have a Dutch passport.

PS. What is lost on almost EVERYONE (+99.99%) is what I call the "opportunity cost, psychological & legal frictional cost" of defending against crimes committed by "members" of the State. The defendant spent +€1M on his defense, so the state is "rewarded" with about 50% of that money even when they blatantly flout the law . The legal and accounting professionals MUST pay taxes on their income.

Most case dont make it to court. On the very last moment the tax authorities back down for two reasons.
1. they definitely bled you dry by then and earn based on what your legal team in NL has to contribute in taxes.
2. they try to avoid precedence. By walking away you dont win and dont lose. Result is that you also cannot claim any costs for when you would win.

 

[jafo]

The Netherlands -is- a tax haven, just not when you have a Dutch passport.

I agree 100% with everything you said and especially this last statement.

 

[Sols]

Moved off-topic posts to a new thread. Let's stay on topic here, please.

 

[Sols]

It's easy to stay on topic. Please open new thread to begin unrelated discussion.