Can I setup a Hong Kong Holding company to own the shares in a Swiss GmBH or AG ?

[Noiq]

But then you will have the trouble with the HK company and lots of extra expenses for accounting etc.

What kind of trouble are you referring to?
Open a Holding in HK to own the shares of the AG looks like a good solution for a noob as me.

I would never setup something in HK any longer.

Please let us know why?

 

[JohnLocke]

You want to have a look at the different threads around here about HK company formation services like NEAT and similar.

Either it is ultra expensive and useless or you setup something that won't be accepted anyway. I wonder what any Swiss lawyer or accountant will say if you come with a HK holding company without substance and tell them, this is my holding company, now go and register a Swiss AG for me.

I doubt they will clap their hands.

 

[Noiq]

You want to have a look at the different threads around here about HK company formation services like NEAT and similar.

Either it is ultra expensive and useless or you setup something that won't be accepted anyway.

As I saw in other threads and at NEAT the creation process and accountant for HK is around $1000/$2000 year.

I wonder what any Swiss lawyer or accountant will say if you come with a HK holding company without substance and tell them, this is my holding company, now go and register a Swiss AG for me.

I doubt they will clap their hands.

I run a 100% lawful business and my plan was:
1 - Incorporate an AG in Switzerland with me as a shareholder.
2 - Open bank accounts in CH
2 - Several months later transfer my shares of the CH AG to my Holding in HK.
(My business is 100% legal)

Do you guys see any issue in doing this this way?

 

[Sols]

What are you hoping to achieve by doing it that way? Why insert the HK holding?

 

[Noiq]

What are you hoping to achieve by doing it that way? Why insert the HK holding?

We are 3 partners, all Spanish Citizens.
Our goal is:
- each partner own his Holding company in HK.
- avoid paying taxes in our country when we withdraw dividends from the AG company.
- each partner will be able to use his holding company to be able to buy his goods and properties, etc.

 

[Sols]

Sit down with a local tax adviser. They will talk some sense into you. Your structure is weak, to say the least.

Unless you are living in a tax haven, there are zero tax savings to the proposed structure. The Swiss company pays full tax in Switzerland and the Hong Kong holding companies pay full tax (which is probably 0%) in Hong Kong. But then both companies are also tax resident where each of you live and have to pay tax there as well. So you have to invoke double taxation treaties, which would probably only be applicable in giving the Swiss taxes paid as tax credit for taxes owed at home.

 

[Noiq]

But then both companies are also tax resident where each of you live and have to pay tax there as well.

Sorry, didn't understand this part.
If I send the profits of my Swiss AG to my HK holding, keep the money there and then use it to buy properties etc on behalf of the Holding, for what reason I have to pay taxes in my country?

 

[Sols]

Because, unless you live in a tax haven, corporate tax residence is determined by where effective management and control are performed. The HK holding company is, for tax purposes, no different than any other company in your home jurisdiction.

Your structure is Tax Evasion 101. Those setups fall all the time as soon as the tax man comes and asks questions.

 

[dirtyharry]

I wonder if OP is still around to let us know what he did, to achieve his goals?

 

[Noiq]

Because, unless you live in a tax haven, corporate tax residence is determined by where effective management and control are performed. The HK holding company is, for tax purposes, no different than any other company in your home jurisdiction.

Your structure is Tax Evasion 101. Those setups fall all the time as soon as the tax man comes and asks questions.

As I know I'll only has to pay taxes in my country when I get profits from the Holding to my pockets.
My intention is always to keep the money in the Holding and buy stuff on behalf of of the Holding.

 

[John Andrews]

As I know I'll only has to pay taxes in my country when I get profits from the Holding to my pockets.

This was correct up until like 2004., talk to a tax advisor

 

[Noiq]

So, If ppl always has to pay taxes in his country of residence what's the advantage of create an offshore Holding structure?

If I'm wrong, please let me know how the things works nowadays. I'll really appreciate it.

 

[Sols]

As I know I'll only has to pay taxes in my country when I get profits from the Holding to my pockets.
My intention is always to keep the money in the Holding and buy stuff on behalf of of the Holding.

That is not correct. Please speak with a local tax adviser before you find yourself 1-2 years from now with huge fines or worse.

So, If ppl always has to pay taxes in his country of residence what's the advantage of create an offshore Holding structure?

It's a waste of time for tax purposes. There can be other regulatory advantages of a company being offshore: neutral grounds for investors from multiple jurisdictions, asset/trademark/IP protection, safer territory, specific legal requirements, and so on.

If you have a lot of capital to play with, you can do things like set up an office offshore to create proper tax residence there. Then you could maybe get away with not having to pay corporate income tax locally for your offshore company and instead only pay capital gains tax on dividends for example.

There is a middle-way solution using professional directors. This is a popular arrangement in for example Isle of Man, Gibraltar, and Cyprus. Under this arrangement, you appoint a director to control and manage the company from there. This means you do not control the bank accounts of the company, sign agreements, or anything like that. The professional director will act on your instructions, though, so you have to manage your tax risks. For a holding company, this is easier to get away with than for a trading company.

Your other problem is the Swiss company. As mentioned, it's likely resident both in Switzerland and wherever the company is actually managed and controlled. This is such an expensive and complicated headache I don't even want to get into it. Swiss companies are almost always useless unless owned and operated from within Switzerland (or as a part of large-scale, legal tax planning).

 

[lavel]

If you have a lot of capital to play with, you can do things like set up an office offshore to create proper tax residence there. Then you could maybe get away with not having to pay corporate income tax locally for your offshore company and instead only pay capital gains tax on dividends for example.

this sounds like the best way if you have such money available.