best company structure to reduce Tax for Trading companies .

[ms42]

A company buying goods from Asian countries and selling to European countries .

which is the best jurisdiction to form a company , to pay minimal tax for above business .
- The jurisdiction should have access to good banks , who are fast in sending and receiving money.

 

[CyprusLawyer101]

Check out Cyprus, with a 12.5% corporate tax and 0% tax on dividend distributions. Easy access to VAT within Europran markets which allows for 0% vat when selling to EU companies.

 

[Forester]

Check out Cyprus, with a 12.5% corporate tax and 0% tax on dividend distributions. Easy access to VAT within Europran markets which allows for 0% vat when selling to EU companies.

Yes; but banking I see as a problem. The access to non-Cypriot banks is problematic and banks at Cyprus are IMO all but good and fast (With all due respect, @CyprusLawyer101 ) If you can be satisfied with some good EMI, then it is a possible way to go, IMO; otherwise think about another jurisdiction (I do not dare to advise... maybe @Don?).

 

[Don]

Yes; but banking I see as a problem. The access to non-Cypriot banks is problematic and banks at Cyprus are IMO all but good and fast (With all due respect, @CyprusLawyer101 ) If you can be satisfied with some good EMI, then it is a possible way to go, IMO; otherwise think about another jurisdiction (I do not dare to advise... maybe @Don?).

Possibly some freezones could be best that are logistically in great locations near highways, railways and ports.
Goods brought to the free zone for later re-export are not subject to VAT, excise nor customs duties.

Otherwise, there is quite little information from OP to provide a meaningful recommendation.

Cyprus is indeed quite low tax, especially if you decide to move there too(non-dom), which will certainly change your local banking experience.
Amazon runs from Luxembourg instead of Cyprus for some reason though. Even my Cypriot friend asked me to order something for him because couldn't order to Cyprus. Apparently many suppliers don't like to deliver there.

 

[CyprusLawyer101]

Yes; but banking I see as a problem. The access to non-Cypriot banks is problematic and banks at Cyprus are IMO all but good and fast (With all due respect, @CyprusLawyer101 ) If you can be satisfied with some good EMI, then it is a possible way to go, IMO; otherwise think about another jurisdiction (I do not dare to advise... maybe @Don?).

It is possible to open an account with a Cyprus bank. The banks here are extra careful and maintain a high compliance standard for known reason emanating from past experiences. This is not necessarily a bad thing; one could claim that this is indicative of the bank's seriousness in continuing doing business with all the good things that this may entail. Obviously parachuters wont be happy or even be on-boarded with Cyprus banks, but if you have a good and well run business there is nothing that stops you from opening an account with a bank in Cyprus and maintaining a good lifelong relationship.

 

[Forester]

It is possible to open an account with a Cyprus bank.

I do not object. If someone has a real running business and a proper substance then definitely yes.

The banks here are extra careful and maintain a high compliance standard for known reason emanating from past experiences.

Fully understandable.

This is not necessarily a bad thing; one could claim that this is indicative of the bank's seriousness in continuing doing business with all the good things that this may entail.

Yes, I agree. The dark side of this is, FMPOV, that these high compliance demands may result in asking for a bunch of papers, or at least for one paper, for all and every transaction, including the routine payments between a long-time foreign business partners, and making e.g. such a task as getting a letter of credit a two weeks procedure. As an example, one of my friends, running a foreign trade business for >25 years, left Cyprus ~3 years ago exactly because of this; and this is not the one and only such case that I heard of.
Or, from your perspective as an insider, is it, under some circumstances, possible to avoid all of this?

To avoid misunderstanding: I do not object the apparent advantages of Cyprus as of the tax regime (especially but not only non-dom), friendly environment, skilled business people etc. But I really doubt whether is an optimal haven for a foreign trade business that needs fast operations and understanding that e.g. some transactions simply represent some business risk, even when absolutely legal...

 

[CyprusLawyer101]

I do not object. If someone has a real running business and a proper substance then definitely yes.

Fully understandable.

Yes, I agree. The dark side of this is, FMPOV, that these high compliance demands may result in asking for a bunch of papers, or at least for one paper, for all and every transaction, including the routine payments between a long-time foreign business partners, and making e.g. such a task as getting a letter of credit a two weeks procedure. As an example, one of my friends, running a foreign trade business for >25 years, left Cyprus ~3 years ago exactly because of this; and this is not the one and only such case that I heard of.
Or, from your perspective as an insider, is it, under some circumstances, possible to avoid all of this?

To avoid misunderstanding: I do not object the apparent advantages of Cyprus as of the tax regime (especially but not only non-dom), friendly environment, skilled business people etc. But I really doubt whether is an optimal haven for a foreign trade business that needs fast operations and understanding that e.g. some transactions simply represent some business risk, even when absolutely legal...

There is a basis to what you are saying. Unecessary compliance does at times get in the way of fluid business.

 

[Don]

There is a basis to what you are saying. Unecessary compliance does at times get in the way of fluid business.

People tend to hope there exists some kind of place where people don't face such issues, but Im afraid thats just the way international banking works in 2024 - there is no getting around of what I like to call "compliance BS"

 

[CyprusLawyer101]

People tend to hope there exists some kind of place where people don't face such issues, but Im afraid thats just the way international banking works in 2024 - there is no getting around of what I like to call "compliance BS"

Word.

 

[Forester]

People tend to hope there exists some kind of place where people don't face such issues, but Im afraid thats just the way international banking works in 2024 - there is no getting around of what I like to call "compliance BS"

Well, yes – but don't you think that the compliance BS really varies across the countries and across the financial institutions? (In my perception, yes. My experiences from CY differs from the experiences from HK or SK and similarly, SoGe /FR/ and FIO /CZ/ represent the different worlds, in my perception...)
Naturally
– everything has its pros and cons;
– and a company running foreign trade in the automotive with just-in-time deliveries has different needs than a family heritage trust...

 

[Don]

Well, yes – but don't you think that the compliance BS really varies across the countries and across the financial institutions? (In my perception, yes. My experiences from CY differs from the experiences from HK or SK and similarly, SoGe /FR/ and FIO /CZ/ represent the different worlds, in my perception...)
Naturally
– everything has its pros and cons;
– and a company running foreign trade in the automotive with just-in-time deliveries has different needs than a family heritage trust...

Certainly, it can make a difference.

Say you are transacting in USD. There is a big difference if you transact using US bank, or some small European bank which is scared of losing correspondence relationships.
I recall some firsthand experience from years ago when I discussed this matter internally in one bank. Management admitted that its a big risk for the bank to have just one USD correspondence relationship, yet its so difficult to get more, so the result is to approach this matter with "de-risking" portfolio.

Lets face it - banking in small jurisdictions sucks more (in certain cases, to a certain extent)

Another dimension is geography, politics and the currency. I guess in certain countries the banking experience differs depending on whether your clients/suppliers/operations are from Germany, North Korea, Iran, Russia, Panama, or Marshall Islands.

 

[ilke]

My experiences from CY differs from the experiences from HK or SK and similarly, SoGe /FR/ and FIO /CZ/ represent the different worlds, in my perception...)

Is there some similarity between HK and SK that they are used as a comparison together against CY?

What experiences do you refer to with Societe Generale and Fio banka?

I'm just curious as to what you've seen with them as I also have some long-term experiences with those.

Certainly, it can make a difference.

Say you are transacting in USD. There is a big difference if you transact using US bank, or some small European bank which is scared of losing correspondence relationships.
I recall some firsthand experience from years ago when I discussed this matter internally in one bank. Management admitted that its a big risk for the bank to have just one USD correspondence relationship, yet its so difficult to get more, so the result is to approach this matter with "de-risking" portfolio.

If we use Fio from above as an example, you avoid those risks because they have multiple correspondents for each currency (and some of the largest - Citi, Raiffeisen, Erste, etc.). The USD is really worry-less when working with them.

Lets face it - banking in small jurisdictions sucks more (in certain cases, to a certain extent)

Depends on what you consider a small jurisdiction, I guess (and even that will always have exceptions).

 

[Houdini]

A company buying goods from Asian countries and selling to European countries .

which is the best jurisdiction to form a company , to pay minimal tax for above business .
- The jurisdiction should have access to good banks , who are fast in sending and receiving money.

Switzerland, Dubai, Cyprus and Ireland

 

[Forester]

Is there some similarity between HK and SK that they are used as a comparison together against CY?

Well, I admit that there definitely are better examples; but I see such a similarity that in both regions bankers are able to accept the perspective that someone simply wants to run his business smoothly and hence it is necessary to get something done. (I missed this at CY, regrettably; maybe I just had a bad luck.) Otherwise, the business culture and environment of HK and SK seem really different to me.

What experiences do you refer to with Societe Generale and Fio banka?

I'm just curious as to what you've seen with them as I also have some long-term experiences with those.

SoGe was/is a bureaucratic hell. FIO – although reportedly it is going worse there, too – burdened clients with forms only when they really were forced to; and generally they were flexible and using the common sense.
(OT: I would't park a remarkable money neither there nor there, though.)

Say you are transacting in USD. There is a big difference if you transact using US bank, or some small European bank which is scared of losing correspondence relationships.
I recall some firsthand experience from years ago when I discussed this matter internally in one bank. Management admitted that its a big risk for the bank to have just one USD correspondence relationship, yet its so difficult to get more, so the result is to approach this matter with "de-risking" portfolio.

A really good point.

Another dimension is geography, politics and the currency. I guess in certain countries the banking experience differs depending on whether your clients/suppliers/operations are from Germany, North Korea, Iran, Russia, Panama, or Marshall Islands.

For sure.

Lets face it - banking in small jurisdictions sucks more (in certain cases, to a certain extent)

Depends on what you consider a small jurisdiction, I guess (and even that will always have exceptions).

Well, I think both of you are correct


Getting back to the original question:

After going through the discussion here, I think that really more info from @ms42 would be needed to give a well-founded advice, despite his description of the situation is not just general...

 

[bubbledouble]

A company buying goods from Asian countries and selling to European countries .

which is the best jurisdiction to form a company , to pay minimal tax for above business .
- The jurisdiction should have access to good banks , who are fast in sending and receiving money.

You could bring this topic inside mentor group and get some new input which won't come here. I feel you're not the compliance guy!