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Incorporation ideas for swiss freelancers

WorldBuilder

WorldBuilder

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Feb 9, 2017
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#1
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Hello,

I have the following problematic and I did not find threads that suit my current situation nor talking about a solution for Swiss residents in the forum.

I am Swiss resident and national and would like to form a corporation in an offshore country (other than Switzerland, so...).

With an associate, we sell our software worldwide through app stores and have our own small software company. As we intend to have a large sums of revenue with our last product, we were eager to find the right jurisdiction and legal form that will match our business requirements.

As our market is purely virtual, we do not have proper office and as we are currently kind of freelancers as the people that work for us, the location of the company does not really matter from a business development point of view. The only liability and tax purpose are in scope.

I intend to incorporate an holding company that will hold my software company and other subsidiaries, but firstly I will just make it as simple as possible and form my only software company. As I am working with Google's and Apple's administrations that allow only certain countries to own the Merchant Account status the company's jurisdiction should be in one of them.

Here is Google's supported merchant account list:
Supported locations for developer & merchant registration - Developer Console Help


I am particularly concerned with keeping my business private and separated from my personal fortune as to avoid such as debt/legal issues that could happened and make me lose everything.

I am posting this because I thought that maybe someone will have an idea on that.

Thank you in advance.
 
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#4
You may check what jurisdiction actually is supported by Google and then do some research on the different jurisdiction. The list of countries supported by Google, you already found as I see from the link you provided, that's good.

Now I would check what other goals you may have. All you will get here are replies that this and that jurisdiction is best based on each person experience!

However what would be of your interest, is to find out what entity will help you achieve your goals! It can be that a Scottish LP is good for exactly what you are looking for but it could also be that long term a Cyprus company would be better or even a Irish company or UK corp. or even a complete different jurisdiction.
 
#6
Hello @FullDISK ,

I have checked about the Scottish LP on internet.

It says that according to Scottish tax legislation, the income of a SLP is considered to be the income of its partners. Therefore, the income of offshore companies domiciled in Scotland are taxable in the countries of residence of its partners. Does that mean that the full generated incomes will by in my own name and therefore entire taxable?
As I want to separate the income of the company generate of my own fortune, this is something I really want to avoid. Keeping company's liability out of my scope as much as possible.
Also, Scotland, by the UK is part of the OCED "CRS" agreement and Switzerland have signed it as well too, so if I use a bank account in Scotland with the automatic exchange the tax dept will be right after my incomes... :(
 
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#7
You will troubles to find a workaround for the CRS as almost any country in Europe has signed these agreements. If someone tell you it is possible with nominees forget about it.

I checked the Google list of accepted countries all possible countries (where it would be possible to find a way to cu corners) are not supported by Google. So only way of doing this would be to find a country to incorporate your company that has signed double tax treaties with Switzerland!
 
#8
@auric @Admin
We made some research on the approved countries in the Google's list prior posting this thread and:

Malta, Ireland, Cyprus, and Panama were those who got us interested. (Panama was the only country that did not sign a treaty with Switzerland)

Therefore, we made few contacts with some corporate service providers mainly for Panama, like Corpag, Offshore Worldwide, famously bad rated SFM :) and some others...
The main idea was to form a Panamanian company which revenues will be generated from outside Panama.



For that we needed to have at least 3 individuals directors and at least 1 Shareholder.


Our first plan was not to use nominees at all and assign ourselves as directors and shareholders of the company.



By making it this way, we were aware that we would end up with explicit jobs in the company, our names would have been on the documents and we would have received incomes such as salaries and bonuses.

- So exposition and financial incomes.

But I would not have been a problem to report ourselves to avoid penalties from Swiss Tax Authority.


Especially, because we intend to give us relative average Panamanian wages (around 70k per year) as directors' salaries.

See the main purpose is to be legal at all point without risking to receive penalties from Swiss Tax Authority. They could know that we are director of a legal Panamanian company but they could only tax us on what we receive as income.

Tax on personal incomes would be 70k p.a. x 20% = 14k (Swiss Tax Rate For Individuals) we should have no problem paying that.

Then, we got more curious and ask to know if it was possible to only use nominee shareholders:

Q. Could we be directors of the company and use nominees shareholders? Or are the two not working together (one should cancel the other)?
Q. Therefore, would it be detrimental for us to have this position in the company? (The directors position)
Q. How would our director functions affect our confidentiality regarding our country tax residence?
Q. Could our tax authority easily retrace nominee or final shareholders from the information that we are directors of the company?

We had no response on that...

Even if we would register as Shareholders we intended not receiving any dividends but instead reinvesting them directly into the company to develop it further. Without paying ourselves any dividends we should have no problem with the reporting according to this point of view, right?


Q. Question is to know, if the fact of being shareholders or sole shareholder of the company would make the company seen as a "personal property" and therefore would it be possibly personally taxed? How? And would it be on the company's total value, revenue?

Right now, we don't know if we should go all undercover and f ind a legal solution keep us out of scope (full confidential, use of nominees p.e.) our be entirely transparent and fully report ourselves as owner and directors but we won't know how much how much taxes will be taken.

This is our current situation...

Many thanks.

PS: @auric We sell our products under our Company's name
 
#9
In Europe will be hard.
You can get privacy with nominees.

Also, you need consider if you will use paypal. If yes, then forget companies outside of Europe.

A LP does not have bureaucracies and can be easy configured with full privacy.
Cyprus also, but have Audits, that sucks.
 
#12
WorldBuilder said:
Q. Question is to know, if the fact of being shareholders or sole shareholder of the company would make the company seen as a "personal property" and therefore would it be possibly personally taxed? How? And would it be on the company's total value, revenue?
Click to expand...
Honestly I don't know nothing about the Scottish LP and it seems @FullDISK want to sell something where it is impossible to get any real tax advise unless you pay for it.

That said, for a Cyprus company you need to proof the management and control is in Cyprus, this can be done with nominees, so you will need a good local tax lawyer to help you once you need to report your tax. This is almost the same procedure as for any other jurisdiction as long as we speak about that you live in Switzerland! You will only be taxed from the profits that you take out of the company and transfer to your own personal account.

Most often if we don't speak hundred of thousands euros you don't need any complicated setup, but anyway I would make some sort of arrangement with a local tax lawyer as already mentioned.
 
#13
OP what is the annual turnover expected for your business? and, do you mind to mention a number for your budget? it's important to know what we are looking at in order to give any suggestions.
 
#14
auric said:
Honestly I don't know nothing about the Scottish LP and it seems @FullDISK want to sell something where it is impossible to get any real tax advise unless you pay for it.
Click to expand...
Sorry but I did not understand you. I want to sell something?!
I just gave my opinion... my only experience is with LP. Also, you can read in the Internet about SLPs jurisdictions :)
What I know and what I read is that Cyprus have a lot of burucracies like Audits, reports, etc...
Search in the google by "Offshore scottish LP".
 
#19
Regardless how you do I would setup a Cyprus or Irish company for your purpose and consult a local CPA to help you with the tax report for your person once you need to file it next year! If you setup everything legally it will work.

I wonder why no one suggest dark docs for the entire setup and skip a real bank account cig-:,
 
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#20
For a Cyprus company you can avoid personal taxation if you find a good tax lawyer and plan how to do it! I doubt they will recognize a Scottish LP to be a valid entity for tax avoidance at any point. Nor do I believe that double tax treaties can be used for such entities since they don't pay tax at all. Only partners in an Scottish LP pay tax (if they do) so DT can't be used.
 
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