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So I have a question let’s say I have a online business that roughly makes 50.000$ Profit a month and I really don’t like how high the tax is where am from. Could I register my online business in example Panama where you don’t have to pay tax and send it to a offshore account. And would this be illegal in any way?
(And no I am not trying to "launder money" just to make that clear)
 
Yes, that would be called tax evasion and tax evasion is illegal.
But what for example if I had a friend in Panama and he would register it there and me and him would do the company 50/50 and all the profit would go to a offshore bank account in Panama since my friend lives there and registered it there and I would live in example germany and I would like to cash out some money from that offshore account. Would that be possible and would I be doing anything wrong?
 

Sols

Staff member
Mentor Group Gold
If you perform work in Germany, that work is taxable in Germany. Doesn't matter if you do it through a Panamanian or German company. To the tax authority, it's all the same.

The company becomes tax resident in Germany and has to pay German tax. You might be able to argue that only the portion of the company's profits that you generated are taxable in Germany, but that's an argument with the German tax authority (or courts) that I wouldn't want to be involved in.

Anything you pay yourself is taxable income in Germany and has to be taxed in Germany.
 

kkein

Active Member
How about the other way around? What if someone resident in UAE opens a company say in france, and a bank account for it say in UAE/wherever.
Then reporting 0 company income to France, and reporting proper dividends to UAE. As far as i understood, CRS would report to UAE/wherever the owner is resident, or?
 

Sols

Staff member
Mentor Group Gold
How about the other way around? What if someone resident in UAE opens a company say in france, and a bank account for it say in UAE/wherever.
Then reporting 0 company income to France, and reporting proper dividends to UAE. As far as i understood, CRS would report to UAE/wherever the owner is resident, or?
France is an interesting example because it has something akin to a classic territorial tax system for companies (like Panama and Hong Kong). If you had said Germany or Spain, the general guidance would be that the company still owes taxes there simply by being incorporated there, and you'd have to convince the authorities otherwise. But in the example of France, you might indeed be able to get away with 0% tax, legally, in this particular setup if you have no income deriving from France. Obviously discuss the details in depth with French and UAE tax advisers first.
 

kkein

Active Member
France is an interesting example because it has something akin to a classic territorial tax system for companies (like Panama and Hong Kong). If you had said Germany or Spain, the general guidance would be that the company still owes taxes there simply by being incorporated there, and you'd have to convince the authorities otherwise. But in the example of France, you might indeed be able to get away with 0% tax, legally, in this particular setup if you have no income deriving from France. Obviously discuss the details in depth with French and UAE tax advisers first.
Thanks, so let's say germany or spain then.
What happens when CRS is reporting to the country of residency of the owner and the owner is declaring 0 to the country of incorporation?

And then, thanks for the info as well.. Any provider for french companies? I can imagine that, if this is the case, plenty of users in here would be interested in a french company instead of having to go through banking troubles and whatnot using UAE or other offshore companies
 

kkein

Active Member
After a second thought, if nobody talks about this or does this (running a french company while residing offshore to dodge taxes from !french biz), the feeling is that it doesn't work. I quickly googled and found nothing. about UAE, cyprus, etc with a french company..
 
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