Basic questions about Offshore company spending

[euphoric13]

Hello everyone
i have few questions about having an offshore company with a bank account
as far as i know you can legally spend from the account on things like your flights tickets , hotels stays if you are registered as CEO or something like that with the company, but i want to know more:

1- for exmaple if you pay someone from your company's bank account (let's say he lives in UAE which has 0% tax income) and you live in a country in the EU , do you have to report that money transfer to the country that you live in or is it none of their business?
2- since you declare the offshore company and its bank account as assets to the governement, do you have to report every single action or transaction also or only the income that you receive from the company?
3-can you take loans from the company?
4- in case of reporting the company, what of your informations you have to give to tax admins? (holdings? shares?assets under the company?)

 

[Martin Everson]

1- for exmaple if you pay someone from your company's bank account (let's say he lives in UAE which has 0% tax income) and you live in a country in the EU , do you have to report that money transfer to the country that you live in or is it none of their business?

None of their business

2- since you declare the offshore company and its bank account as assets to the governement, do you have to report every single action or transaction also or only the income that you receive from the company?

Income and capital gains is what most governments want to know, however it is country dependent. Speak to a local accountant.

3-can you take loans from the company?

Yes off course. Tax treatment of the loan can be deemed a benefit and can be taxed. Again speak to a local accountant.

4- in case of reporting the company, what of your informations you have to give to tax admins? (holdings? shares?assets under the company?)

Speak to a local accountant. Tax admins want to know if you derive benefit and then tax that.

A good accountant will help you understand benefits you could get under double tax agreements (DTA) with the offshore country. For example having an offshore company in Mauritius which has many DTA's has very good advantages for doing business while based in some EU countries. If you don't plan on taking anything out of the business than tax is not really an issue. Even if you do there are loopholes to derive benefit from the company and not be taxed at all.

 

[euphoric13]

Martin Everson : Thank for the infos
one more question for people who knows about France, i heard that if you own an offshore company and you are tax resident in france, that company is also taxed as french company, is that true?

 

[W4rhol]

Martin Everson : Thank for the infos
one more question for people who knows about France, i heard that if you own an offshore company and you are tax resident in france, that company is also taxed as french company, is that true?

Yes it is. In France the Tax on the company depends from where your company is managed.

For example, you have a Hong-Kong company in import-export from France to Asia (Wine trade or whatever), you as director you live in HK but all your company activity is in France (Supply Chain, Sourcing, Accounting, and most of your employee are there). Then, the French Tax Administration will consider that the core of your company is in France, so your HK company will have to pay taxes in France. No matter what the HK law will say.

 

[W4rhol]

I cannot edit my previous post, but here is the law about what I was speaking about :

Code général des impôts - Article 123 bis | Legifrance

 

[JohnLocke]

Yes off course. Tax treatment of the loan can be deemed a benefit and can be taxed. Again speak to a local accountant.

great advice, you may consult a tax lawyer if you use any tool like a loan to gain tax reduction / tax avoidance. This method is known by the tax man and most often they will dive deep into it.

 

[euphoric13]

Yes it is. In France the Tax on the company depends from where your company is managed.

For example, you have a Hong-Kong company in import-export from France to Asia (Wine trade or whatever), you as director you live in HK but all your company activity is in France (Supply Chain, Sourcing, Accounting, and most of your employee are there). Then, the French Tax Administration will consider that the core of your company is in France, so your HK company will have to pay taxes in France. No matter what the HK law will say.

Ok
but let's say for example that you have a company that its based in HK and is investing in real estate completly outside France, do you still have to pay french corporate tax? and lets for example say that the company pay dividends to non-french people, do these people have to pay french income tax?

 

[diablo]

I spend the Money as I go, never thought about accounting or anything when I withdraw from my offshore account.

 

[void]

company that its based in HK and is investing in real estate completly outside France, do you still have to pay french corporate tax?

don't know about France specifically but in general your typical problem will be that the real estate must be paid from a bank account, such a bank account has its UBO verified and known by the bank (typically you), this bank (in most jurisdictions in the world) will report your ownership of that account/company to your tax man, the tax man (depends on the local law) may be interested in your company and income and paying your taxes

 

[Martin Everson]

Ok
but let's say for example that you have a company that its based in HK and is investing in real estate completly outside France, do you still have to pay french corporate tax? and lets for example say that the company pay dividends to non-french people, do these people have to pay french income tax?

If the effective place of control of the company (directors residency, meetings taking place etc etc) is in France than the tax man will see through that and tax it as a French company.

I don't speak French and the French tax man is particularly aggressive. You need an expert in French tax law as it needs to be structured correctly. However with the 1000's and I mean 1000's of millionaires that left France in the last 2 years I don't think there is any loopholes left over there other than to reduce your taxation via operating in a low tax country with a good double taxation agreement (DTA) with France.

 

[buenosdias]

I spend the Money as I go, never thought about accounting or anything when I withdraw from my offshore account.

Whaa...? Really? I mean, no one's gonna ask for books and s**t like that? What about your tax residence's tax man?

 

[uplana]

I have a debit card for my offshore company's bank account and spend the money as I go. At the end of the year I report my spendings to my local tax office, at least the most of it, and never hear anything from the bad man

 

[symon]

I cannot edit my previous post, but here is the law about what I was speaking about :

Code général des impôts - Article 123 bis | Legifrance

Hello

to be more precise it is stated that you must own >10% of the shares of your offshore company AND the jurisdiction is a tax heaven:

definition of a tax heaven:
offshore corporate tax =0% or <= French corporate tax /2 where French corporate tax = 15% if under 38K of benefits or 33% above (going to be 15% / 25% by 2020)
so if your offshore corporate tax is below 7.5% or 15% you are in trouble

e.g : UK LTD 20% is not considered as a tax heaven, HK most probably...