Advice on where to open a company...?

[Guti]

Hello everybody,

Just registered but been looking around for some time.. and researching. The more I read, the more confused I get.
Here's what I'd like to get some advice please.

I currently run an online business and it is legally registered in the UK where I do business, despite the fact that I live in Spain. I am looking to open a NEW company in a completely new industry.

Now, I am considering employing Spanish residents to do some remote (IT) work which is provided by some companies on another european country (kind of like a recruitment agency?). My partners find the work and I provide the talent

Now, I despise and literally hate opening or registering anything in Spain in my name... I simply do not want my name linked to anything in Spain due to its dysfunctional bureaucracy... (long story!)

I was thinking and reading about Ireland, Malta or Cyprus as places to register a company. As I said, the more I read, the more confused I get.

Are there any suggestions as to the best option for me? where can I open a company in a way that I remain as anonymous as possible and away from Spanish inquisition hands...

To be clear (before someone point it out), I am NOT looking to avoid taxes, I am looking to pay them elsewhere... NOT Spain and obviously in the most advantageous way possible, not only for us as a company but also for the employees.

Thanks in advanced, I appreciate everybody's input

 

[John Andrews]

If you live in Spain you almost always have to open a company in Spain. Especially if you want to employ Spanish residents.

 

[Guti]

If you live in Spain you almost always have to open a company in Spain. You could open a company elsewhere but it will still pay taxes in Spain.

The solution in this case is to move out.

Thanks for your reply. I have a UK company already and everything I do is there... not here in Spain. I am looking to create similar scenario, but avoiding the fact that my current company information is available freely online... so people can clearly see everything.

I am no expert but what would be the advantage then to open a company elsewhere than where people live? ie: belize, cyprus, etc...
if according to your post you still have to open a company locally and pay taxes locally?

Btw, my wife won't move out ;-)
Thanks again

 

[John Andrews]

Based on my knowledge as soon as Brexit happens your current setup will be deemed as tax evasion by Spanish tax authorities

Right now UK is in the EU and you're fine because of freedom of establishment however I assume you don't have any substance in the UK i.e. it's just a letterbox company

 

[Guti]

Based on my knowledge as soon as Brexit happens your current setup will be deemed as tax evasion by Spanish tax authorities

Right now UK is in the EU and you're fine because of freedom of establishment however I assume you don't have any substance in the UK i.e. it's just a letterbox company

Interesting point about Brexit, still uncertain. I have some premises in the UK but it is a very small part of my biz, which is mainly online.

 

[John Andrews]

Should be fine then... Lets say you incorporate in Cyprus; are you planning to have an office there?

 

[Guti]

Should be fine then... Lets say you incorporate in Cyprus; are you planning to have an office there?

I really do not need an office there but I understand I may need some type of physical presence... if that's the case, I could certainly rent an office space (I have not looked into that yet) and even employ someone to do admin tasks... I don't want to be naive and I am sure there is more to it... will that give me the sort of anonymity I am seeking?

 

[John Andrews]

Well you can use nominees but the gov will know you are the UBO and in some EU countries this already is or will be public.

An office is a good idea.

 

[Sols]

Just give up.

Form a Spanish company or move to Cyprus or Malta if you want to run a Cypriot or Maltese business.

The days of running a company like you describe are over. Follow the law or expect to be caught, sooner or later.

 

[fshore]

Based on my knowledge as soon as Brexit happens your current setup will be deemed as tax evasion by Spanish tax authorities

Right now UK is in the EU and you're fine because of freedom of establishment however I assume you don't have any substance in the UK i.e. it's just a letterbox company

Brexit will not affect tax residence of a company

 

[Guti]

Just give up.

Form a Spanish company or move to Cyprus or Malta if you want to run a Cypriot or Maltese business.

The days of running a company like you describe are over. Follow the law or expect to be caught, sooner or later.

Are the days over because of any recent changes? I have seen many online businesses with an address in Cyprus... yet they operate wordlwide (and they are not based in Cyprus btw).

 

[dgs]

I´m in similar situation. In Spain too and looking to open a company out of Spain and close my spanish company.

 

[Guti]

I´m in similar situation. In Spain too and looking to open a company out of Spain and close my spanish company.

I feel the pain ;-)

 

[John Andrews]

Yeah move out if you don't want to risk being caught

You can still be in Spain for almost 6 months per year

 

[Guti]

Yeah move out if you don't want to risk being caught

You can still be in Spain for almost 6 months per year

Not easy when you have kids...

 

[Sols]

Are the days over because of any recent changes? I have seen many online businesses with an address in Cyprus... yet they operate wordlwide (and they are not based in Cyprus btw).

CRS/AEOI, EU ATAD (from OECD BEPS), and economic substance requirements to mention some.

Once Spain becomes aware of your dealings (and they will), the company will be considered either fully resident in Spain or considered to have a permanent establishment in Spain and all income derived from the Spanish operations are taxable in Spain. They will probably start by assuming the entire business is resident in Spain and issue you a nice little invoice for that whole sum and leave it up to you to prove them wrong.

I can't tell you what to do, nor do I care since it's not my family that risks financial hardship because daddy thought he could get away with living in Spain without paying his lawfully owed taxes.

What I can tell you, though, is that everyone (everyone) I know in Spain in similar situations, have ensured their structures are 100% compliant with Spanish law. Or have left Spain.

 

[Guti]

CRS/AEOI, EU ATAD (from OECD BEPS), and economic substance requirements to mention some.

Once Spain becomes aware of your dealings (and they will), the company will be considered either fully resident in Spain or considered to have a permanent establishment in Spain and all income derived from the Spanish operations are taxable in Spain. They will probably start by assuming the entire business is resident in Spain and issue you a nice little invoice for that whole sum and leave it up to you to prove them wrong.

I can't tell you what to do, nor do I care since it's not my family that risks financial hardship because daddy thought he could get away with living in Spain without paying his lawfully owed taxes.

What I can tell you, though, is that everyone (everyone) I know in Spain in similar situations, have ensured their structures are 100% compliant with Spanish law. Or have left Spain.

Funny how you assume daddy does not pay his "lawfully owed taxes". My company is complying with the "law" AND paying taxes. You missed the whole point of this thread by being judgemental about my situation. I am asking about the possibility to open another company and obviously - and unashamed of it - I do not want to pay a cent more of what I need and want to minimise my liabilities. The name of this forum is "offshorecorptalk", yet you say "Just give up. Form a Spanish company"... (a contradiction of what this is all about...) If you choose to be a good citizen and follow the "law" well... I guess your a better man.

 

[Sols]

Funny how you assume daddy does not pay his "lawfully owed taxes". My company is complying with the "law" AND paying taxes. You missed the whole point of this thread by being judgemental about my situation. I am asking about the possibility to open another company and obviously - and unashamed of it - I do not want to pay a cent more of what I need and want to minimise my liabilities. If you choose to be a good citizen and follow the "law" well... I guess your a better man.

First of all, I didn't mean to imply you weren't paying your lawfully owed taxes. I was, however, implying that you were hoping to form a foreign company and somehow use that to lower your tax burden.

To be clear (before someone point it out), I am NOT looking to avoid taxes, I am looking to pay them elsewhere... NOT Spain and obviously in the most advantageous way possible, not only for us as a company but also for the employees.

That sounds an awful lot like daddy wanting to evade Spanish taxes by forming a new company outside of Spain and paying taxes there. Maybe paying net 5% in Malta or even 12.5% in Cyprus? But not interested in paying the Spanish tax, right?

It's not about being a better person. It's about being a person who can sleep at night knowing their structures are compliant and sustainable, or saving a few percent in tax by having a non-compliant structure in a tax aggressive jurisdiction.

If all you want is to hide your identity from public record, you need to look outside of EU if you want anything lasting since EU has mandated UBO disclosure even in case simple nominees. You will need to explore non-EU options and/or solutions like trusts and foundations to remove yourself from the UBO position. Speak with a lawyer to discuss suitable options fitting your business and situation.

Or you can do what most of your peers are doing: incorporate in Spain and pay your dues, pack up and move, or incorporate overseas and set up a permanent establishment there (employees, directors, office). The latter has a lot of caveats to consider, though.

 

[Guti]

First of all, I didn't mean to imply you weren't paying your lawfully owed taxes. I was, however, implying that you were hoping to form a foreign company and somehow use that to lower your tax burden.



That sounds an awful lot like daddy wanting to evade Spanish taxes by forming a new company outside of Spain and paying taxes there. Maybe paying net 5% in Malta or even 12.5% in Cyprus? But not interested in paying the Spanish tax, right?

It's not about being a better person. It's about being a person who can sleep at night knowing their structures are compliant and sustainable, or saving a few percent in tax by having a non-compliant structure in a tax aggressive jurisdiction.

If all you want is to hide your identity from public record, you need to look outside of EU if you want anything lasting since EU has mandated UBO disclosure even in case simple nominees. You will need to explore non-EU options and/or solutions like trusts and foundations to remove yourself from the UBO position. Speak with a lawyer to discuss suitable options fitting your business and situation.

Or you can do what most of your peers are doing: incorporate in Spain and pay your dues, pack up and move, or incorporate overseas and set up a permanent establishment there (employees, directors, office). The latter has a lot of caveats to consider, though.

Thanks for your reply and advice about getting advice from a lawyer and looking outside the EU. I will check that possibility.

And yes, you are right, I am not interested in paying in Spain, I definitely want to evade Spanish taxes by forming a new company outside of Spain and I still sleep very well. Why would anybody want to pay 24% instead of 5%? I live my life with integrity, which has nothing to do with complying with some rules and laws that some bureau-rats decide to impose. As long as I can do things "legally" and with the correct structure in place as you said, I am ok. I can assure you I have paid my "duties" for over 30 years...

I do not really want to get down the rabbit hole here... but thanks for your constructive criticism.

 

[Gediminas]

You employ these persons in a Spanish company, also you can work in this company, however, Spanish company could be engaged in low added value operations and work as a “service center” on a cost-plus basis (all salaries plus other costs and plus 5% mark-up). Spanish company might issue an invoice to other companies in more tax-favorable jurisdiction (Cyprus, Malta or any other depending on your situation). It is important that this other company would be properly structured and would have economic substance. If it did not have substance previous comments as regards “permanent establishment” would be applicable. So I think it is possible to structure your business in a more tax-effective way and still stay on the legal side, but it also might be costly.