Question Luxembourg PE Rules, a good country for residency?

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cyprustoomuch

New member
Hello,

I was checking for the PE rules in Luxembourg and they seem to be quite easy to manage:

  • The place where meetings of the board of directors are held.
  • The place where shareholders meetings are held.
  • The place where the company’s officers make their decisions.
  • The place where the company’s books and records are kept.
  • The place where other, similar factors evidencing management control occur.
Would it be possible to live in Luxembourg, have an office in UAE with 2 employees working from there and just 2-3 times per year fly over to do some meetings there?

The last point indeed looks a bit like trouble, so I am not sure if I would live in Lux. and have a bank access may be the reason that I suddenly have a PE in Lux.

Does anyone know some detail about how the Lux. tax department is handling this?
And could you recommend any other high quality nothern european country where you could live, work from home in your ecommerce business and have some employees in UAE?

I am specially thinking about Netherlands, Belgium, Austria, Switzerland.

Thanks in advance!
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Would it be possible to live in Luxembourg, have an office in UAE with 2 employees working from there and just 2-3 times per year fly over to do some meetings there?

Yes

Does anyone know some detail about how the Lux. tax department is handling this?

They handle according to their tax code.

And could you recommend any other high quality nothern european country where you could live, work from home in your ecommerce business and have some employees in UAE?

You can do this from any Northern European country.


Maybe if you were a bit more clear about what you are trying to achieve here. Is it tax saving related or something else?
 

cyprustoomuch

New member
They handle according to their tax code.
What do you mean by their tax code? What is that?
You can do this from any Northern European country.
Germany will not allow you this when you still have control over the bank account and just 2 or 3 indians working there.
Maybe if you were a bit more clear about what you are trying to achieve here. Is it tax saving related or something else?
Yes sure, the main goal is to live in a high quality country and yet achieve a stress free 0% corporate tax.

I am in ecommerce and have a lot of physical goods that cant be pulled off as company expenses directly when they are purchased, it becomes an expense when the goods are sold. This leads to the situation where you start the year with 100k€, purchase goods and sell them, then you have 200k in the bank, buy new goods from it and have zero in the bank again, but as your inventory increases you suddenly have to pay taxes on the increased inventory. Even tho your company has 0€ in cash.

Very annoying and limits the growth.

Having a 0% company would solve this.


But the main goal is really to live (and work a bit) from a high class country and yet have a 0% company recognized by your local tax department.

Question is how harsh luxembourg goes after my "2 Indians in Dubai" solution.
 

JimBeam

Entrepreneur
Yes sure, the main goal is to live in a high quality country and yet achieve a stress free 0% corporate tax.
I don't think that's possible.

As long as you're the UBO they'll tax hell out of you in most European countries (with except maybe Cyprus or Malta).

Maybe I'm wrong so I'd really like Martins answer on your questions above.
 

Konstanz

Entrepreneur
Hello,

I was checking for the PE rules in Luxembourg and they seem to be quite easy to manage:

  • The place where meetings of the board of directors are held.
  • The place where shareholders meetings are held.
  • The place where the company’s officers make their decisions.
  • The place where the company’s books and records are kept.
  • The place where other, similar factors evidencing management control occur.
Would it be possible to live in Luxembourg, have an office in UAE with 2 employees working from there and just 2-3 times per year fly over to do some meetings there?

The last point indeed looks a bit like trouble, so I am not sure if I would live in Lux. and have a bank access may be the reason that I suddenly have a PE in Lux.

Does anyone know some detail about how the Lux. tax department is handling this?
And could you recommend any other high quality nothern european country where you could live, work from home in your ecommerce business and have some employees in UAE?

I am specially thinking about Netherlands, Belgium, Austria, Switzerland.

Thanks in advance!
Yes it's possible if you reside in Monaco or Andorra. Other case you still risk paying high tax rates of those "northern" countries
 

Dandyline

Mentor Group Light (Private use!)
Hello,

I was checking for the PE rules in Luxembourg and they seem to be quite easy to manage:

  • The place where meetings of the board of directors are held.
  • The place where shareholders meetings are held.
  • The place where the company’s officers make their decisions.
  • The place where the company’s books and records are kept.
  • The place where other, similar factors evidencing management control occur.
Would it be possible to live in Luxembourg, have an office in UAE with 2 employees working from there and just 2-3 times per year fly over to do some meetings there?

The last point indeed looks a bit like trouble, so I am not sure if I would live in Lux. and have a bank access may be the reason that I suddenly have a PE in Lux.

Does anyone know some detail about how the Lux. tax department is handling this?
And could you recommend any other high quality nothern european country where you could live, work from home in your ecommerce business and have some employees in UAE?

I am specially thinking about Netherlands, Belgium, Austria, Switzerland.

Thanks in advance!

You pay CIT for the profits after each year. In many EU countries this tax is due maybe 12-15 months after the end of the year.

Regarding your question, there are option. For example Sweden. UAE is included in Swedens white-list which means no CFC. You still need substance to avoid PE.
 

cyprustoomuch

New member
It goes much better. If you move to Germany from abroad as a self-employed person without employees, in the best case you pay no taxes at all on your income/profit for 15 years, e.g. 100.000€ p.a.
To what tax trick are you referring here? I know that germany allows tax detuctions when you bring in a company from abroad into germany and that way can write off the full company value (13.7x annual profit) over a period of 10 years I guess. Is it that what you mean?

You pay CIT for the profits after each year. In many EU countries this tax is due maybe 12-15 months after the end of the year.

Regarding your question, there are option. For example Sweden. UAE is included in Swedens white-list which means no CFC. You still need substance to avoid PE.
CFC is in luxembourg not the issue, its only the question about the PE and how to structure it so they assume that more substance and control is in UAE (or take any other white list 0% CIT juristiction).

Would be interesting if somebody has deeper knowledge on these topics and could clarify what the tie breakers are for them and on which parts they are more relaxed. I am speciall referring to Luxembourg, Belgium, Austria and Switzerland as they all have more or less "relaxed" conditions compared to Germany.
 

RealDude

Entrepreneur
To what tax trick are you referring here? I know that germany allows tax detuctions when you bring in a company from abroad into germany and that way can write off the full company value (13.7x annual profit) over a period of 10 years I guess. Is it that what you mean?
Correct, up to 15 Years.

 

I'mRobot

Offshore Agent
Mentor Group Gold
I know a guy who is doing exact what you try to do. Your list is correct, but he also rent a small apartment in Luxembourg which just has enough room for his bed, a very small kitchen and bath.

He isn't in any of the countries more than 6 months at a time.
 

cyprustoomuch

New member
I know a guy who is doing exact what you try to do. Your list is correct, but he also rent a small apartment in Luxembourg which just has enough room for his bed, a very small kitchen and bath.

He isn't in any of the countries more than 6 months at a time.
Okay but BE and Lux dont even consider you a tax resident when you are less than 6 months there and have another tax residency. So the PE can also easily be assumed in his other country of residence.

He could live in Bahamas or UAE for 6 months and have his office there, have enough substance for a PE to be only considered there and spend the rest in BE or Lux.

This doesnt help us have a main residency in these countries and just be the UBO of a 0% CIT company.
 

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