DTA Opportunities for Belgian resident

[heaven]

Do you guys know of any Double Taxation Agreements opportunity that is especially interesting for Belgian residents?

I know we can have tax free dividends from Seychelles if we hold more than 10% of the company, same for Hong Kong. I found this out in the ‘EY Worldwide Corporate Tax Guide 2019’ under Belgium. However I think it will be difficult for me to show substance in these locations when living in Belgium.

I’m also interested in places where the DTA is not strict on management and control. In Belgium companies are considered resident where management of control is. I’m interested for example if there are DTA’s with countries that doesn’t have this requirement.

Anyone? Thanks!

 

[JustAnotherNomad]

I can’t really help. Even if management and control was abroad, you can probably bet that there would be a permanent establishment in Belgium.
Maybe check out Iven de Hoon - not sure if he’s actually any good, but he’s “the” guy for Belgian tax reductions (at least the one with the most successful marketing ;-)).

 

[heaven]

I can’t really help. Even if management and control was abroad, you can probably bet that there would be a permanent establishment in Belgium.
Maybe check out Iven de Hoon - not sure if he’s actually any good, but he’s “the” guy for Belgian tax reductions (at least the one with the most successful marketing ;-)).

Why do you think so? And would that be bad? Or can I simply say nothing is earned here.

He definitely is, I've come to his site many times. Love the content!

 

[JustAnotherNomad]

Sorry, unclear wording: What I meant was that even if there is no “management and control” rule, there would still most likely be a “permanent establishment” per Belgian domestic law.
I’m not a lawyer, but I would think that the only proper and legal solution is - as you have written - to have proper substance in the other country, so that management and control clearly is exercised in that other country, and that there wouldn’t be any PE in Belgium.
But even then, it would still be subject to CFC rules.

 

[heaven]

Sorry, unclear wording: What I meant was that even if there is no “management and control” rule, there would still most likely be a “permanent establishment” per Belgian domestic law.
I’m not a lawyer, but I would think that the only proper and legal solution is - as you have written - to have proper substance in the other country, so that management and control clearly is exercised in that other country, and that there wouldn’t be any PE in Belgium.
But even then, it would still be subject to CFC rules.

Thank you for the clarification!
Why do you think CFC rules will take effect?

 

[JustAnotherNomad]

Because the effective tax rate would be so low. But as you wrote, substance and a good business case should help you avoid them. But you should definitely get advice from a professional on that...

 

[eastern]

The best place to setup would be in Hong Kong, Seychelles is easy to setup but authorities will not believe you can setup substance in Seychelles. You will need to get professional assistance to establish partial onshore activities and the rest will be deemed as offshore activities and not subject to Hong Kong tax. This needs to be structured correctly and have a reliable partner in Hong Kong that will assist.

 

[heaven]

Because the effective tax rate would be so low. But as you wrote, substance and a good business case should help you avoid them. But you should definitely get advice from a professional on that...

I will, thanks!

The best place to setup would be in Hong Kong, Seychelles is easy to setup but authorities will not believe you can setup substance in Seychelles. You will need to get professional assistance to establish partial onshore activities and the rest will be deemed as offshore activities and not subject to Hong Kong tax. This needs to be structured correctly and have a reliable partner in Hong Kong that will assist.

Hong Kong is great but it's not a very logical choose to build economic substance there in my case/business. The average salary of one employee is €35.000 annually compared to €5.000 in Georgia for example. Or do you know of other solutions?

 

[eastern]

i suppose you need to weigh the risk and reward, in this economic uncertain times personally i would have reservation with Georgia but thats just me.

building economic substance do not require a full time employee
probably more important to look for someone that can provide reliable service at a reasonable cost.

 

[JohnLocke]

building economic substance do not require a full time employee
probably more important to look for someone that can provide reliable service at a reasonable cost.

I believe the costs to employ someone in Georgia or in Hong Kong (whereever you are going to setup your company) are cheaper compared to any service that will try to offer you a solution that is meant to convience the tax authorities in Belgium that you run something with substance in an offshore jurisdiction.

people who underestimate the tax authorities are stupid in my world. If you think that they do not keep up with what is happening around and above all are up to date with various loopholes then you are even out if you are discovered.

 

[eastern]

in some places such as HK you can pay taxes on income derived from HK and as a tax resident entitled to a tax residency certificate. obviously not full proof and still need to satisfy and report to the Belgium authorities. depending on how far you need to go with convincing the Belgium tax authorities, that would be case by case basis.

 

[JohnLocke]

satisfy and report to the Belgium authorities. depending on how far you need to go with convincing the Belgium tax authorities, that would be case by case basis.

I totally agree with that, but you should not think that the task will be easy even if you think you have a professional Chinese sitting in Hong Kong who can just convince the Belgian authorities that you run a business in Hong Kong and therefore not must pay taxes in Belgium. It is simply too thin and naive.

 

[eastern]

I totally agree with that, but you should not think that the task will be easy even if you think you have a professional Chinese sitting in Hong Kong who can just convince the Belgian authorities that you run a business in Hong Kong and therefore not must pay taxes in Belgium. It is simply too thin and naive.

exactly the point, it is case by case basis but at the very minimum on paper it is a tax resident of another jurisdiction. also that person does not have to be Chinese.

 

[JohnLocke]

You're trying to sell a service here. It is not case by case. If that were so easy then Belgium would be inundated by tax evaders and speculators from all over the world.

Forget about the fact that you can just hire a professional Chinese in Hong Kong with a nice dragon office and then the Belgian authorities clap their hands and let you get away with 0% tax! In what part of this world do you actually live?

 

[eastern]

Just to be straight I m not trying to sell a service nor will I recommend any providers, this is based on personal experience, so don't get offended because it is something new and not in your scope of service.

In fact, I never mentioned zero tax. I said specifically taxes would need to be paid in HK but it only applies to taxation derived in HK.

 

[JohnLocke]

this is based on personal experience, so don't get offended because it is something new and not in your scope of service.

Why would it at all be in "my scope of service" ? You can post whatever you want here on the forum as long as it isn't advertising or contains something that looks like you want to sell a service.

 

[heaven]

I believe the costs to employ someone in Georgia or in Hong Kong (whereever you are going to setup your company) are cheaper compared to any service that will try to offer you a solution that is meant to convience the tax authorities in Belgium that you run something with substance in an offshore jurisdiction.

Can you think of some other countries where I can have no/low tax and access to cheap labour?

 

[JustAnotherNomad]

Maybe Bulgaria/Hungary? Malta? Ireland? Cyprus?
But I agree that Romania probably isn’t a bad choice.

 

[JohnLocke]

After all the reading about Romania Micro Comapanies and Bulgaria as well as Georgia I would say you have to do some research in that direction. Cyprus is still great if you have an old setup and someone there you can count on.