Lower the tax, easiest country in EU to deduct business expenses

[bendon]

Hello,

Old reader, new writer on the site.
Having read a ton of useful information on this wonderful site I have a question for the more knowledgeable in here.

Having a company in EU will allow you deduction of business expenses related to the business.
Some countries will question expenses to be deducted more than other countries.
For the sake of keeping a low declared tax, which EU country would be the best and easiest allowing more deductions of expenses than others?

If I have a company in a very high tax EU country, I could set up a company in e.g. Cyprus and run the business from there being able to deduct way more expenses than in my home country.
The company will fall under CRC law so I will be taxed as if the company would have been local in my home country. That is ok.
But I would be able to minimize the total corporate income by deducting expenses that I would normally not do in my home country.

Expenses coming to mind is travel expenses, renting car when traveling, accomodation when traveling. I'm guessing it would be easier to let these kind of costs slip through the company books compared to my home country.
My home country would never see the details of all these expenses as they are in the books with the accountant in Cyprus lowering the total tax declaration there. My home country will only see the total declared tax amount. Right?

Have I come up with a wonderful idea or do I look stupid now?

 

[Martin Everson]

Have I come up with a wonderful idea or do I look stupid now?

No its a good idea.

But I would be able to minimize the total corporate income by deducting expenses that I would normally not do in my home country.

You would need to look at your local tax laws its a complex area if the foreign company is taxed in your home country. Also the rules around deductions are not easy however nowadays in EU. Your looking ideally for the lowest effective tax rate by avoiding the headline tax rate figure after deductions. Effectively your doing what Google or Starbucks used to do by reducing profit on paper despite huge revenue .

 

[fshore]

Corporate residency rules will most likely make your foreign company tax resident in your home country. Then you have to threat it as a local company.

And, even if only hit by cfc rules, the ones I've seen makes you have to deliver complete accounting for the cfc company, not just the profit. If that was the case then it would be super easy to run Seychelles company massive unquestioned expenses and no profit.

 

[happyjohn]

Most often you ant to consult a local tax advisor to help you with the complicated tax matters. Or you spend time reading on how you can avoid taxes legally there are useful information all around the forum here.

To move your assets between a regular EU entity with high tax and say Cyprus or Malta is most often a good idea and legal way of doing it if your paperwork is in place.

 

[bendon]

Suppose I will not be hit by the CFC rules and not be taxed in my home country for the offshore company.
Then which country is sloppier with the checks and will let me deduct expenses easier than others?
I imagine Malta/Bulgaria/Cyprus/Slovakia/Romania will allow far more business expenses than e.g. Germany, Holland, Scandinavian countries, UK.

I'm referring to business expenses with valid invoices from local businesses, not made up invoices to companies in Seychelles, Belize and so on. With valid invoices I mean that the invoices are for delivered services from say a local Greek travel agency, but the services are for my own private usage so should not be in the company at all.

Will it pass or is it time to drop this idea?

 

[Artemis Eleutheria]

It would seem a difficult question to answer as it would require an understanding of allowed expense rules ... and practice across a wide range of countries.

Would suggest you try to narrow down the options by eliminating>

1. Countries whose language you do not understand (unless you can afford a local lawyer for support)
2. Countries close to going broke (not sure if any countries left) as they automatically try to squeeze more juice from the same oranges.
3. Eliminate Germany, France and the Nordics (if you did not already)

Which, after the UK leaves, probably leaves you with one option>Your home country.