Best offshore holding and EU trading structure?

[fourzero]

Hi guys,

Long term lurker and want optimise (or fix) my current structure and would really appreciate your input.
Current situation:
EU tax resident (non EU citizen)
I bill customers through UK Ltd as a trading company and the money is held in an EMI

Goals:
Avoid CFC
Lower taxes
Privacy (only for the sake of CFC)
Investment holding company

Potential Options:
1. Incorporate Belize/Seychelles company and make it 100% shareholder of UK Ltd while remaining a Director of said Ltd (I still pay 19% corporate tax but that's better than local EU jurisdiction). I avoid CFC being non shareholder (at least not in companieshouse ) and use the Belize IBC as my investment holding company to trade stocks/buy shares
2. I use my non EU passport as my ID to register for any account. The bank's CRS policy reports to my citizenship country but I'm not tax liable as I'm not tax resident in that country. My citizenship country also doesn't have any CFC laws
3. Setup a Scotland LP with Belize IBC and a nominee as Partners. Use the LP for my activities in EU

Looking forward to your answers

 

[Tax Cow]

What do you intend to do with the money? I assume you want to include a holding company because your goal is to re-invest and accumulate profits, instead of taking remuneration and dividend to your personal account - is this correct?

If on the other hand your goal is dividend and remuneration distribution from your professional services company, you really do not need a holding structure. I see no point.

 

[fourzero]

What do you intend to do with the money? I assume you want to include a holding company because your goal is to re-invest and accumulate profits, instead of taking remuneration and dividend to your personal account - is this correct?

If on the other hand your goal is dividend and remuneration distribution from your professional services company, you really do not need a holding structure. I see no point.

Yes the former case is correct. I'm already able to take some money out to ensure my livelihood. Goal is to reinvest as much as possible.
The only reason I want privacy is me wanting to avoid Exit Tax when I change my tax residency. My biz is as clean as it as can get.
But at same time I also want to use the investment holding to buy private shares in EU based companies and I'm not sure whether that blows my cover

 

[Tax Cow]

There are a couple "go-to" EU holding options I'd consider in 2019. Since the parent holding company does investments, reputation will come handy.

1. Dutch BV

There's corporate income tax, but this will be waived under Participation Exemption rules, when certain criteria (ever-more stringent) is met. Look up the Participation Exemption rules The Netherlands applies and see if your investments would qualify. Withholding/profit distributions from a Dutch BV are in almost all circumstances 0%, but this may change in the near future due to EU pressure, in particular, if the beneficiary is in a low/zero tax jurisdiction.

Alternatives: Depending on what type of investment income (dividend, interest, royalty) you receive, and how much you invest, Switzerland and Luxembourg can be viable alternatives to Dutch companies.

2. Estonia OU

There's no corporate income tax at all. At least from the side of Estonia, you can accumulate profits without any corporate income tax risk. The problem is the 20% (withholding) tax on dividend distribution, reduced to 13% if the beneficiary is a legal body and if the dividend is paid regularly. As a non-resident you do not pay personal income tax or social security in Estonia, so taking out profits via salary instead of distributing dividend is advantageous. I'm not sure if 1M euro annual salary and 0 euro dividend will be "arm's length", but there's certainly an opportunity to significantly reduce that tax liability upon profit distribution to "as low as you want", with some risk of protest from the authorities if you're overly aggressive with your tax games. On a personal level, you can cherry-pick the jurisdiction which has little or no tax, or use that non-EU passport to completely hide your income.

Alternatives: Slovakia (and now Latvia as well?) have a similar corporate tax system where only profit distributions are taxed, but I have not taken the time to go over their ins and outs.

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For your operational company, you can continue using UK Limited if you're OK with your data being publicly available @ Companies House. Note - for what do you pay 19% tax in UK? As a non-resident, you do not pay UK corporate income tax on non-UK-source income! You can even earn income from UK-resident companies, and not pay any corporate income tax, as long as you do not physically work in the UK, and if you have no Permanent Establishment or a dependent agent (contractor, employee) in the UK.

 

[andres33]

The bank's CRS policy reports to my citizenship country

error....The bank will report to your reidency country. You need to make the diference between residence and citizenship. For this reason to open an account or to be ok with Due Diligence, you must to provide with a utility bill no more that 3 month old. You need to provive a proof of residence. And with the new AML, KYC and DD policies the banks can periodicaly ask you to renew this proofs. If you have a non EU passport and you can provide utility bill and telephone contact in the country that you are saying that you are living, it will be ok.
EU is coming very complicate. Only try to check the futures laws projects that the EU comission want to put on the table. Very complicate. They want to get to tax all the EU citizen for the nationality. It mean that if you have EU passport you will must to pay tax universaly independently where you are living. There are only 2 countries right now with this rules. USA and Eritrea. To implement this law right now EU parlament need the unanimity, but they are working to ger approval that with simple majority. y other hand, take in consideration that Belize is considered in EU as tax haven country. The CFF wiill be be applied in 2020 in all EU. Check also BEPS rules “Base Erosion and Profit Shifting” and the switch-over clauses.
Check also CCCTB. “Common Consolidated Corporate Tax Base” . They sight to aplly a comon tax 285 for all EU companies. Vry sad panorama for EU residents

 

[gymnopedist]

They want to get to tax all the EU citizen for the nationality. It mean that if you have EU passport you will must to pay tax universaly independently where you are living. There are only 2 countries right now with this rules. USA and Eritrea. To implement this law right now EU parlament need the unanimity, but they are working to ger approval that with simple majority.

Do you have any source for that? not doubting it, just unable to find a source. Income taxes abroad
Add China to the list of suck-most countries/citizenships.

 

[andres33]

Do you have any source for that? not doubting it, just unable to find a source. Income taxes abroad
Add China to the list of suck-most countries/citizenships.

I think that for the moment these works are not officially published in the work bulletins carried out, but I know that because I have a client that is part of one of those commissions and that has passed me the information.
I have not really worried about verifying the veracity of such information because this client has shown me over many years that the information he gives is authentic. Nor would I have any interest in lying to me in a matter in which nothing will win.
It is likely that at some point, Germany and other EU states will want to use this tax system according to nationality. The only thing that currently prohibits this tax system is EU legislation. The European Union does not allow this type of tax depending on nationality if it arises as a single country initiative. Of course the thing changes if the majority agrees, in that case all countries would be obliged to adapt this system. And precisely this is what this commission is working on.
The introduction of a nationality tax throughout the EU would probably result in EU citizens on other continents also having to pay taxes to the European Union.