Hello from Sweden! Complicated situation

[GORDY]

Hello guy!
I am glad to find this amazing forum.

I wonder if anywone have tips how i can set up my company structure for optimal TAX planing.
I have a TAX advisor right now but he is a pussy and can not think outside the box.

My situation:
i have 4 compnays, i live in sweden and i pay way to mutch taxes.
1 Swedish Holding Company (Owned By Me)
2 Swedish Construction Company (Owned by Swedish Holding Company)
3 Swedish Construction Company (Owned by Swedish Holding Company)
4 UAE freezone company

My first ide was do get rid of my swedish TAX residens and cash out in UAE .
But as i come to learn with all assets, compnies i have even if im not living in sweden i will still have to pay the TAXes there becous of my stong conections to sweden...
So now im looking to make some kind of offshore structure, any one have some tips how to get out of this s**t hole of taxation ?

 

[aage]

It's probably a bit late for you to think about not wanting to pay tax after you have established yourself like that in Sweden! But you must get hold of an accountant who can advise you. I can't immediately see how you will get out of Sweden without paying tax first with that setup!

It's a bit of a classic, you have to think carefully before establishing your company structure, you can't always do that.

But I believe that you have to move out of the country, establish a company in the respective country, and over time transfer the activity. But you need a good accountant for such a maneuver.

 

[Cloudbanck]

First of all feel you bro, mutcho taxes sucks! Best course of action is of course to leave Sweden (or other tax hells) before getting "Volvo, Villa, Vovve" and before establishing a business.

But given the situation, to get out of the Swedish tax net, you got to cut the significant ties to Sweden, and that includes ownership of Swedish businesses. Read Väsentlig anknytning till Sverige | Rättslig vägledning | Skatteverket

You can own like 10% of a Swedish business, not more. And if you try wiith indirect ownership via foreign companies you control, tax authorities will probably find out. Best to cut clean and not own a any significant chunk of a business in Sweden. The world is a big place, lots of other places where you can run a business, no?
And you can still live abroad, have a business abroad, and sell services to Swedish clients.

 

[wellington]

Wind down existing businesses and establish overseas entity - overseas entity takes on new business and pays taxes in Sweden whilst the wind down occurs

After existing businesss are wound down move away from Sweden

Then deal with the Swedish tax for operations in Sweden from there on

Probably means liquidating all assets personally owned and moving all immediate descendants out of the country

Only connection you want is a local director for local business operated through Sweden owned by a parent company operating in a favorable country tax wise where you’ll operate or operate from another favorable tax zone country with most of the business operational management in the first favorable tax country.

For Sweden the only connections you want is family that are still alive until they pass

Same applies across Europe pretty much.

 

[Cloudbanck]

Only connection you want is a local director for local business operated through Sweden owned by a parent company operating in a favorable country tax wise where you’ll operate or operate from another favorable tax zone country with most of the business operational management in the first favorable tax country.

Agree with everything else you wrote, but if you own a parent company, and the parent company owns a Swedish company - then it counts as you having control of the Swedish company and that means tax residency in Sweden.

 

[GORDY]

Thanks for all the feedback!
hehe well its looking dark for my dreams of low taxations..

 

[wellington]

Agree with everything else you wrote, but if you own a parent company, and the parent company owns a Swedish company - then it counts as you having control of the Swedish company and that means tax residency in Sweden.

Tax residency for the subsidiary - correct?

Parent company shouldn’t have tax in Sweden unless it’s operated from there or operating within Sweden (being a holding company of various companies shouldn’t bring it onshore unless management or operations are fully or majority in Sweden I’d imagine)?

 

[GORDY]

Agree with everything else you wrote, but if you own a parent company, and the parent company owns a Swedish company - then it counts as you having control of the Swedish company and that means tax residency in Sweden.

Yhe thats the fckt up part. Even if i sell my assets and register the companies under a Holding company in Schweiz and leave Sweden. IM STILLLLL going to be a Swedish TAX resident becous i am the "Beneficial Owner" there for a to strong bond to Sweden...

 

[Cloudbanck]

Tax residency for the subsidiary - correct?

Parent company shouldn’t have tax in Sweden unless it’s operated from there or operating within Sweden (being a holding company of various companies shouldn’t bring it onshore unless management or operations are fully or majority in Sweden I’d imagine)?

No, tax residency for the person owning the parent company. This person will be tax resident of Sweden, meaning tax on worldwide income, CFC rules etc.

 

[Dandyline]

Tax residency for the subsidiary - correct?

Parent company shouldn’t have tax in Sweden unless it’s operated from there or operating within Sweden (being a holding company of various companies shouldn’t bring it onshore unless management or operations are fully or majority in Sweden I’d imagine)?

No, tax residency for the UBO.

 

[GORDY]

Somthing like this was my plan!

Move everything from Sweden to a Schweiz holding company so i cut my tie´s to Sweden (I take out NO money here)
Move to Dubai and take out salary on my UAE company. (this company is not conected to any other of my company)

But my TAX advisor said to me i will still have a to strong conection to sweden so i will still have a Swedish tax residence.
He give me no further explination....

 

[wellington]

Dependent on how much tax you are paying - the company can pay for citizenship in another country for tax purposes (corporate) and then you can renounce your personal citizenship to Sweden.

It would be a prudent investment in the company by the company.

 

[Cloudbanck]

Somthing like this was my plan!

Move everything from Sweden to a Schweiz holding company so i cut my tie´s to Sweden (I take out NO money here)
Move to Dubai and take out salary on my UAE company. (this company is not conected to any other of my company)

But my TAX advisor said to me i will still have a to strong conection to sweden so i will still have a Swedish tax residence.
He give me no further explination....

When you say move everything in Sweden to a Swiss holding company, do you mean to keep all businesses in Sweden but let them be owned by a Swiss holding company (that you control). Then yes, you still have a tie to Sweden.

If you on the other hand close down the businesses in Sweden, or sell them (at least 90% of them) to some entity you do not control, then you dont have ties to Sweden (via business ownership, but you might still have ties via family or permanent residence)

Dependent on how much tax you are paying - the company can pay for citizenship in another country for tax purposes (corporate) and then you can renounce your personal citizenship to Sweden.

It would be a prudent investment in the company by the company.

Having a different citizenship wouldn't change anything here. Gordy would still be a tax resident in Sweden based on having lived there a long time and owning a Swedish business directly or indirectly.

Also Swedish citizenship is much better than any of those one can buy (with the possible exception of Malta which is kind of equivalent).

 

[GORDY]

When you say move everything in Sweden to a Swiss holding company, do you mean to keep all businesses in Sweden but let them be owned by a Swiss holding company (that you control). Then yes, you still have a tie to Sweden.

If you on the other hand close down the businesses in Sweden, or sell them (at least 90% of them) to some entity you do not control, then you dont have ties to Sweden (via business ownership, but you might still have ties via family or permanent residence)


Having a different citizenship wouldn't change anything here. Gordy would still be a tax resident in Sweden based on having lived there a long time and owning a Swedish business directly or indirectly.

Also Swedish citizenship is much better than any of those one can buy (with the possible exception of Malta which is kind of equivalent).

Yep you are right there are no leagal way around it !

 

[Cloudbanck]

Yep you are right there are no leagal way around it !

Well, time to think outside the box! Just brainstorming here, havent tried any of this myself.

-How about you have a non-Swedish friend (cant be immediate family) who lives in a low/no tax place that you trust that owns the Swiss holding. And then you can have a total return swap between yourself and this friend where on one leg you receive and pay all the proceeds from the Swiss holding, and on the other leg you pay your friend a fee. Not clear how enforceable this total return swap is though - guess you have to trust the friend to some extent here.

-Or you find someone in a similar situation from another high tax country, and you can own each others holding companies. Trust is needed here too, and maybe not so easy to find such a person.

-You set up a company in a far off country with no CRS and weak institutions where authorities dont cooperate at all with western tax agencies, and dont even respond to email. Like Burkina Faso, Guinea Conakry, Guinea Bissau, either of the Congos, Niger or some place like that. Then this company can own the Swiss holding. And the far off country company doesnt need to have a bank account or anything.

-Or you let the far off country company be owned by a local that gives you a power of attorney. And this local can be someone that is illiterate, doesnt speak english and has no passport - there are millions such people. So this person doesnt have the skills to take over the company even if he/she wanted to. And anyway, you'll treat this person really well, so it's a win win.

-Or a mix of all of the above, you own like 5% of the holding, two far off country companies and a trusted friend owns the rest.

 

[daniels27]

You wilt need an Irish, British, etc. Holding company on top of the Swiss to get the money out. Otherwise you went up paying 35% on the dividends.

Hence the way would be that you get a Swiss company owned by a Hong Kong one. Then you can easily roll all the income around and get the dividends out tax free. I am not sure if you actually need the Swiss one, maybe not.

If you do get a Swiss company, you can have 10% or the shares and my brother the remaining one but without entitlement to dividends.

But again please check how you really to get the money out. Salary is limited and dividends are expensive in Switzerland.

 

[clemens]

dividends are expensive in Switzerland.

How expensive ?

. Like Burkina Faso, Guinea Conakry, Guinea Bissau, either of the Congos, Niger or some place like that. Then this company can own the Swiss holding. And the far off country company doesnt need to have a bank account or anything.

The plan sounds really smart when written down here. But in reality and in the real world, it would look very strange if a Swiss company was owned by a company, for example, in Congo! What do you think the authorities in Switzerland would say?

And theoretically, it also sounds smart to move around the shares in the Swedish company, but that would require a tax maneuver extraordinary to escape the Swedish tax authorities' hunt for overdue tax on the sale of the shares!

I believe in the proposal to establish a new company, for example in Ireland or Switzerland, start the activity there, and slowly shut down the activity in Sweden! In my opinion, that would be the most viable way.

 

[GORDY]

-Or a mix of all of the above, you own like 5% of the holding, two far off country companies and a trusted friend owns the rest.

This is a very smart ide.
Only problem is that i would never put so much trust in friends or family even they get gready when it is about money...

Probly i will milk the company with admin fee´s witch will go to my UAE company.
And in about 1-2 years i sell the Swedish companies and move to Dubai.

-How about you have a non-Swedish friend (cant be immediate family) who lives in a low/no tax place that you trust that owns the Swiss holding. And then you can have a total return swap between yourself and this friend where on one leg you receive and pay all the proceeds from the Swiss holding, and on the other leg you pay your friend a fee. Not clear how enforceable this total return swap is though - guess you have to trust the friend to some extent here.

You made me think and yes this will absolutly work, but it should not be a friend...

 

[Cloudbanck]

How expensive ?

The plan sounds really smart when written down here. But in reality and in the real world, it would look very strange if a Swiss company was owned by a company, for example, in Congo! What do you think the authorities in Switzerland would say?

I dont think they'd say anything, lots of African dictators have their money/assets/businesses in Switzerland. Gabon's ex dictator famously practically lived in Switzerland. I have an acquaintance who worked for the oil fund of a Sub-Saharan African country and was based in Switzerland, at the Swiss office of the African oil fund. Nothing unusual at all with african entities owning stuff and having operations in Switzerland.

But anyway, agree that doing a gradual roll-off of the Swedish company is probably the most sensible idea!

This is a very smart ide.
Only problem is that i would never put so much trust in friends or family even they get gready when it is about money...

Yeah, whenever you put anyone in a position where they legally can take over your business, that is a huge risk.

It depends on what kind of family one has. Mine are from the traditional protestant, do your duty, dont show off, 100% "spara" , 0% "slösa" mentality, which has its own set of issues, but greed isnt one of them. My old man has a large stock portfolio, enough for a few lifetimes, but would never buy a new car or even a nice second hand car, never splurges on anything, would never dream of flying business class, does have a boat but we are taking a small wooden sailboat with no engine kept in pristine condition since like the 1960s.

 

[Konstanz]

Usually just owning company (or being UBO) is not enough to be considered tax resident.
If you don't live in Sweden, don't have home in sweden, don't work in Sweden how can they say you are tax resident if you live , for example , in UAE?
I am not expert on Sweden, but it sounds not logic, unless you spend time in Sweden - then YES, you can be considered resident

Many rich people , billionaires etc. who move their tax residence to UAE, UK non dom etc, they still hold businesses in their home countries and successful do that

The important part is were you really live and your family , not what you own