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Having a company registered anywhere actually requires a Local Registered Address of some sorts and sometimes a secretary is also required by law. If you don't have these, you don't get your registration. So substance is already there once you register your company in a specific country.
So since all companies have these when they register - it means they pay taxes where they are registered, not where the owner / stakeholder is located. And yes, there's a yearly or monthly fee for the office or secretary - but it's quite cheap (central London office is $25 per month - secretary is $100 per year). I would not consider that expensive at all...

So no registered company will pay taxes outside of it's registration country - i hope we can agree to that...


you are wrong. Substance is not only a domiciliation and someone who answer the phone.
Substance is SUBSTANCE meaning workers, decisions made, direction, and so much more.
Until you don't have that, the company is assimilated to you and you are taxed (and much more) on EVERYTHING that belongs to that company.
 
So it seems i'm wrong - and there's no substance - if that's the case, and my company is registered in France and i live in Belgium - does that mean i don't have to pay any tax in France? Coz there's no substance in France, all the substance is in Belgium...
 
It depends on the tax treaty (which I linked to above). If there is a tax treaty, yes, that’s usually how it works. You would only pay tax in Belgium, not in France.
Unless work is carried out in France as well, in that case usually you pay tax in France for that work, and in Belgium for everything else. But all of that is regulated in the tax treaty.
There can still be advantages with such a setup. For example if you have many French clients, they may prefer dealing with a French company. But it usually won’t let you save any taxes.

If there is no tax treaty, then you may find yourself in a situation where you will have to pay double tax - to both countries.
 
wait...
Imagine you got a company in France and there is no susbstance.
You WOULD pay taxes in france, but you COULD also pay taxes in Belgium because if they claim there is no substance, they will tax you as if the company was of belgium, and you would be asked to pay FULL taxes.
MAYBE you could withdrawn something paid in France but that is not sure and during that time (because that would take one year or more), you got a sword of damocles over your head....

Having a company abroad is only possible IF you got full privacy OR if you live in a country that doesn't matter OR if the company has a REAl substance.
All other things are just useless and will lead you to huge problems, much more than the taxes itself because such a things comes with fines and interests
 
let's say there's no privacy and everything is legit (as it is) - does that mean i would have to pay taxes twice? in france as well as in belgium? that's just nonsense. and what kind of tax would i have to pay? company tax? personal tax? this is rather confusing, seems you know more than i do, so please let me know what should i expect...
 
wait...
Imagine you got a company in France and there is no susbstance.
You WOULD pay taxes in france, but you COULD also pay taxes in Belgium because if they claim there is no substance, they will tax you as if the company was of belgium, and you would be asked to pay FULL taxes.
MAYBE you could withdrawn something paid in France but that is not sure and during that time (because that would take one year or more), you got a sword of damocles over your head....

Having a company abroad is only possible IF you got full privacy OR if you live in a country that doesn't matter OR if the company has a REAl substance.
All other things are just useless and will lead you to huge problems, much more than the taxes itself because such a things comes with fines and interests

i was under the impression that having a company abroad is possible no matter what (except some countries where non-residents can't have companies). i think that's a 100% correct statement (it does not matter where you live or what privacy is there or if there's real substance). please correct me if i'm wrong, but i could set up a company almost anywhere, without privacy, without living in that country and without substance - i could do that tomorrow... there are no IFs here...

let's say there's no privacy and everything is legit (as it is) - does that mean i would have to pay taxes twice? in france as well as in belgium? that's just nonsense. and what kind of tax would i have to pay? company tax? personal tax? this is rather confusing, seems you know more than i do, so please let me know what should i expect...
 
let's say there's no privacy and everything is legit (as it is) - does that mean i would have to pay taxes twice? in france as well as in belgium?
Depends on if you are able to make use of double tax treaties which may be worth to look into before you proceed anyway.
 
Imagine you got a company in France and there is no susbstance.
You WOULD pay taxes in france, but you COULD also pay taxes in Belgium because if they claim there is no substance, they will tax you as if the company was of belgium, and you would be asked to pay FULL taxes.

That is not necessarily true. You would explain to French authorities that no work is carried out in France and that the effective place of management is in Belgium. French authorities will then look at the tax treaty and agree that taxes shall only be paid in Belgium (unless the treaty says otherwise, which is unlikely), probably after talking to their colleagues from the Belgian tax office.

There are two ways this can go: They can either say that the company is effectively managed from Belgium, so it shall be regarded as a Belgian company for tax purposes entirely. Then they would basically say "France doesn't have anything to do with the taxes for this company, Belgium is responsible."
Or they could say "This is still a French company in our eyes, but there definitely is a permanent establishment in Belgium, so any work carried out in Belgium is taxable in Belgium."
If all work is only carried out in Belgium, then the result is the same: Corporate income tax will be paid in Belgium.
No French taxes will be paid at all - at least that is how double taxation usually is avoided.

Yes, there are some cases where you essentially pay the full taxes in country A. And in country B, you also pay the full taxes, but you can deduct what you have already paid in taxes in country A. But I believe that is more the exception than the norm.
The usual case is that they look at which part of the income was earned in country A and which part was earned in country B and then each country gets to tax that part (possibly at a higher tax rate because they can take into account the income from the other state).
 
i was under the impression that having a company abroad is possible no matter what (except some countries where non-residents can't have companies). i think that's a 100% correct statement (it does not matter where you live or what privacy is there or if there's real substance). please correct me if i'm wrong, but i could set up a company almost anywhere, without privacy, without living in that country and without substance - i could do that tomorrow... there are no IFs here...

Yes, it's absolutely possible and fully legal. But that doesn't mean you can avoid taxes where the work is carried out.

The Belgian tax code has rules for permanent establishment and the effective place of management.
Essentially what this means is: "If your company has an office in Belgium, you pay Belgian taxes for profit from that Belgian office."
So you can register your company on the moon: If they find out that the reality is that all the profit your moon company makes is effectively created from your sofa in Brussels, where you sit with your laptop managing an online store, then that is taxable in Belgium, for which Belgian corporate income has to be paid. For the Belgian tax office, it is completely irrelevant what the laws on the moon say. They want to see that corporate income tax. (And if you live in Belgium and you pay out anything to yourself from that company, then personal income tax applies as well.)

If the laws on the moon say: "Any profits from a moon-registered company are taxed 5%" - then of course you will have to comply with those laws as well.
So you would be paying the Belgian corporate income tax of ~30% PLUS the 5% moon corporate income tax.

But IF there is a tax treaty, then there could be a rule like: "It doesn't matter where the company is registered. If all work is only done either in Belgium or on the moon, then corporate income tax shall only be paid in that country."
Which would go both ways - so someone working from the moon could register a Belgian company and only pay 5% moon corporate income tax, instead of ~30%.

All of this changes, as soon as there is economic substance:
Say you've saved some money and you have heard that Belgian food is very hip on the moon. You find a chef who wants to open a Belgian restaurant on the moon, but has no money. You buy real estate on the moon, register a restaurant company and hire him as the manager. You give him some money to hire waiters and buy ingredients and furniture, but that's it. The rest is up to him. Every year, 50% of the profits from the restaurant on the moon are paid out to you in Belgium, the rest is reinvested into the restaurant.
The moon restaurant clearly would only pay 5% of corporate income tax as you are not involved in the daily business. Maybe you fly there twice per year to discuss how things are going, but basically, you just cash in on your investment. For the dividends, you pay personal income tax in Belgium (again, both moon rules and Belgium rules for dividend payments apply - there could be withholding tax on the moon).
But there definitely won't be any Belgian corporate income tax to be paid because no work for that restaurant is carried out in Belgium.

So if you want to use the moon tax rate for your business, you MUST make sure that your business is like a restaurant on the moon, not like an eBay store.
And you must have other reasons for that, except just wanting to save taxes.
For an online store, you could say you want to register the company in Hong Kong to be closer to suppliers in China. But you would need a local director in Hong Kong who needs to be working from a proper office. And you will have to pay a regular salary, probably a couple thousand dollars per month or whatever would be the average salary for such work in Hong Kong.

That's why some people prefer setting up their companies in places like Romania/Bulgaria/Georgia, where wages are low, so it's not so expensive to hire a local manager and an office. But it's still not cheap and you would still have to be able to prove to Belgian authorities that you are not managing the company from Belgium and that all work is done outside of Belgium.
That's the only legal way.

The alternative is to just break the law, set up the company and hope you won't get caught. But that's obviously illegal and can land you in jail.
You're welcome.
 
That is not necessarily true. You would explain to French authorities that no work is carried out in France and that the effective place of management is in Belgium. French authorities will then look at the tax treaty and agree that taxes shall only be paid in Belgium (unless the treaty says otherwise, which is unlikely), probably after talking to their colleagues from the Belgian tax office.

There are two ways this can go: They can either say that the company is effectively managed from Belgium, so it shall be regarded as a Belgian company for tax purposes entirely. Then they would basically say "France doesn't have anything to do with the taxes for this company, Belgium is responsible."
Or they could say "This is still a French company in our eyes, but there definitely is a permanent establishment in Belgium, so any work carried out in Belgium is taxable in Belgium."
If all work is only carried out in Belgium, then the result is the same: Corporate income tax will be paid in Belgium.
No French taxes will be paid at all - at least that is how double taxation usually is avoided.

Yes, there are some cases where you essentially pay the full taxes in country A. And in country B, you also pay the full taxes, but you can deduct what you have already paid in taxes in country A. But I believe that is more the exception than the norm.
The usual case is that they look at which part of the income was earned in country A and which part was earned in country B and then each country gets to tax that part (possibly at a higher tax rate because they can take into account the income from the other state).


I agree, but durinf that time (we speak about YEARS), both countries could ask for tax payment! That is the truth.
 
Maybe I have just been lucky, but in my cross-border dealings, it’s been a lot of paperwork, but I never had to pay double. Yes, they’ve asked me to pay double, but after enough explaining they always let me off the hook.
But of course you’re right, it’s generally a headache. You must have very good reasons for such a setup.
 
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Fucks sake Bureaucracy sucks!!! This is giving me a headache to just read about... I'm wondering the same as the original poster. But i realize everyone is a slave to the system.. If you can't easily set up what he asked about. s**t.