I'm EU citizen living in Scandinavia and have majority ownership in two companies (digital products and services), one in my country in residence, another one in Estonia. I have multiple employees in both companies and minority shareholders (but I have complete control of both companies). I also have plans to get involved in few other international startups in different fields. Companies under my ownership started to do fairly decent and I realised that holding all these shares as private person, it's not really financially wise. I'm looking into opening holding company to transfer current ownership to (and use for any new endeavours), primarily to minimise my taxation, but I would also like to have decent level of privacy and protection (I have no active claims or legal cases on my property, but there are few people around who don't wish me well). I will be looking into changing my personal residency as well within next 6 month, as both me and my partner can do our works remotely and we are fed up with the life in the north, so any recommendations for good setup are welcomed. I don't mind paying some taxes, as long as they are minimised and for now, super pricey places like Monaco or Andorra are not really an option.
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Recommendations for offshore holding company
- Thread starter Nixter41
- Start date
You simply wait until you are ready to move and then move to either a tax free country or to a country that allows you to be a resident non-domicile. The later solution you will have no problems with as the income is passive and can be received offshore tax free. You don't need to change or add anything to your structure other than change of address.
You can search the forum there are plenty of threads on countries with a resident non-domicile scheme and also tax free countries.
Scandinavia countries are notorious for not letting a penny in tax go. Although he wanys a non dom solution I dont think that will work. Correct me if I'm wrong but wont he have to pay tax on the dividend at source regardless of where he is.
The companies need to be moved to a better Jurisdiction. Or he moves first the sets up the companies and then keeps uses the other companies purely to do the work. Therefore he keeps his employees and benefits from the tax situation.
UAE is perfect for this set up there would be no need for a holding company. Just a central invoicing company which the pays the other companies what is required to do the work.
QUOTE="Nixter41, post: 141220, member: 18004"]
I'm EU citizen living in Scandinavia and have majority ownership in two companies (digital products and services), one in my country in residence, another one in Estonia. I have multiple employees in both companies and minority shareholders (but I have complete control of both companies). I also have plans to get involved in few other international startups in different fields. Companies under my ownership started to do fairly decent and I realised that holding all these shares as private person, it's not really financially wise. I'm looking into opening holding company to transfer current ownership to (and use for any new endeavours), primarily to minimise my taxation, but I would also like to have decent level of privacy and protection (I have no active claims or legal cases on my property, but there are few people around who don't wish me well). I will be looking into changing my personal residency as well within next 6 month, as both me and my partner can do our works remotely and we are fed up with the life in the north, so any recommendations for good setup are welcomed. I don't mind paying some taxes, as long as they are minimised and for now, super pricey places like Monaco or Andorra are not really an option.
[/QUOTE]
You say you are an EU citizen what is your nationality exactly. The laws are different from Germany and France who are very aggressive to Romania and Czech who are a bit more relaxed on tax avoidance.
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He will pay tax where he is considered tax resident as a simple shareholder minus any withholding taxes. Btw no WHT for Estonia dividends.
Once he is not tax resident in his home country he could do I suppose. But having staff etc is not so easy to relocate all of that.
@Nixter41 Consider moving to Estonia. You would live there completely tax free. Your companies will pay the corporate income tax in their home countries and that’s it. You can also use an Estonian holding company but it’s not even necessary.
Estonia has taxation based on residency, so you only need a “permanent home” there. I don’t think anybody will care much if you’re traveling in Southern Europe for much of the year.
This should also work with all other countries that have a territorial taxation/no tax on unremitted/passive income (even Portuguese NHR) or no tax at all (obviously).
But I wouldn’t want to live in Cyprus, Malta etc. - maybe Portugal, but I don’t really trust the authorities there. Cyprus and Malta also have a bad reputation for tax evasion etc.
I would really strongly consider Estonia in your case, unless you want to move the company as well and/or move to a country like the UAE.
More info here:
https://www.offshorecorptalk.com/threads/tax-free-residency-in-estonia.29531/
Tax declarations are supposedly very simple, everything is online and available in English. The complete opposite of countries like Portugal. It is probably much more like what you are used to from your home country.
An Estonian holding company probably isn’t a bad idea either. You could move the dividends from your companies into the Estonian holding tax free (parent subsidiary directive) and then either pay out to yourself free of tax as a tax resident of Estonia. But you could also move to Italy and only pay tax if you distribute money from the holding to yourself, like in your home country. And if you move to the UAE, I don’t think Estonia applies withholding tax to the dividends. But if you lived in the UAE and transferred the dividends from your Scandinavian companies directly to yourself, I’m pretty sure there would be withholding tax.
Estonia has taxation based on residency, so you only need a “permanent home” there. I don’t think anybody will care much if you’re traveling in Southern Europe for much of the year.
This should also work with all other countries that have a territorial taxation/no tax on unremitted/passive income (even Portuguese NHR) or no tax at all (obviously).
But I wouldn’t want to live in Cyprus, Malta etc. - maybe Portugal, but I don’t really trust the authorities there. Cyprus and Malta also have a bad reputation for tax evasion etc.
I would really strongly consider Estonia in your case, unless you want to move the company as well and/or move to a country like the UAE.
More info here:
https://www.offshorecorptalk.com/threads/tax-free-residency-in-estonia.29531/
Tax declarations are supposedly very simple, everything is online and available in English. The complete opposite of countries like Portugal. It is probably much more like what you are used to from your home country.
An Estonian holding company probably isn’t a bad idea either. You could move the dividends from your companies into the Estonian holding tax free (parent subsidiary directive) and then either pay out to yourself free of tax as a tax resident of Estonia. But you could also move to Italy and only pay tax if you distribute money from the holding to yourself, like in your home country. And if you move to the UAE, I don’t think Estonia applies withholding tax to the dividends. But if you lived in the UAE and transferred the dividends from your Scandinavian companies directly to yourself, I’m pretty sure there would be withholding tax.
Also even if you sell your companies, if they are owned by an Estonian holding company, there would be no tax, as long as you company doesn’t distribute profits to you. Only on the distribution you would pay 20% CIT.
You could also use a Cyprus holding. Cyprus doesn’t have capital gains tax, so unless I’m mistaken, the sale of the shares would be tax free in Cyprus. Then you could distribute the profits to yourself without paying tax in Cyprus, since Cyprus doesn’t charge WHT on dividends either. But I think that Estonia would charge 20% personal income tax on distributions in that case since the money hasn’t been subject to tax.
But you could of course just keep the money in Cyprus and then move to the UAE for a year and distribute the profits then. I’m just not sure if Estonia has any exit tax.
The big advantage with Estonia over Cyprus is that it’s a Schengen country with a good reputation. If that’s not an issue for you, you could also just go for personal residency in Malta, Cyprus etc. as mentioned.
You could also use a Cyprus holding. Cyprus doesn’t have capital gains tax, so unless I’m mistaken, the sale of the shares would be tax free in Cyprus. Then you could distribute the profits to yourself without paying tax in Cyprus, since Cyprus doesn’t charge WHT on dividends either. But I think that Estonia would charge 20% personal income tax on distributions in that case since the money hasn’t been subject to tax.
But you could of course just keep the money in Cyprus and then move to the UAE for a year and distribute the profits then. I’m just not sure if Estonia has any exit tax.
The big advantage with Estonia over Cyprus is that it’s a Schengen country with a good reputation. If that’s not an issue for you, you could also just go for personal residency in Malta, Cyprus etc. as mentioned.
You can also look at the Estonian tax code, it’s available online, in English. Try that in Portugal...
They have no requirement to spend a certain number of days there (unlike Cyprus), you must have your permanent home there. Just like what France, Portugal, Germany, Denmark and many other countries use to determine whether you’re tax resident.
Obviously if you buy a house in Italy and spend most of your time there, it won’t work. Or if you spend >183 days in any other country, etc. (closer ties to another country). But if you only have an apartment in Estonia and you spend some time there and also travel a bit to Spain, a bit to Italy, a bit to Greece as a tourist - I don’t see why you wouldn’t be tax resident in Estonia. I would actually ask an Estonian tax lawyer and not give the authorities any wrong ideas that you only want to move there to save taxes.
They have no requirement to spend a certain number of days there (unlike Cyprus), you must have your permanent home there. Just like what France, Portugal, Germany, Denmark and many other countries use to determine whether you’re tax resident.
Obviously if you buy a house in Italy and spend most of your time there, it won’t work. Or if you spend >183 days in any other country, etc. (closer ties to another country). But if you only have an apartment in Estonia and you spend some time there and also travel a bit to Spain, a bit to Italy, a bit to Greece as a tourist - I don’t see why you wouldn’t be tax resident in Estonia. I would actually ask an Estonian tax lawyer and not give the authorities any wrong ideas that you only want to move there to save taxes.
I only want to move there for the ladieeeeees!
Haha. I mean, I guess you can ask them what the rules for tax residency are, if you have to spend a certain number of days. But they will probably just quote the law.
Unless one wants to actually live in Cyprus or one of the non-dom countries in Europe, I think Estonia is a vastly superior option because it’s a Schengen country and you’re free to move around.
Or maybe if you know you will sell your companies soon, then you should probably consider something like Cyprus for lower taxes, at least for the holding company. But I’ve heard that Cypriot holding companies are now subject to a lot of scrutiny by other countries (very strict and high substance requirements etc.), unlike Estonia. Not sure if that’s true though.
I guess it could be a good option to move to Estonia and use a Cypriot holding company. Then the worst thing that could happen is that the Estonian rules apply, which would still be favorable.
Unless one wants to actually live in Cyprus or one of the non-dom countries in Europe, I think Estonia is a vastly superior option because it’s a Schengen country and you’re free to move around.
Or maybe if you know you will sell your companies soon, then you should probably consider something like Cyprus for lower taxes, at least for the holding company. But I’ve heard that Cypriot holding companies are now subject to a lot of scrutiny by other countries (very strict and high substance requirements etc.), unlike Estonia. Not sure if that’s true though.
I guess it could be a good option to move to Estonia and use a Cypriot holding company. Then the worst thing that could happen is that the Estonian rules apply, which would still be favorable.
F*ck Malta, f*ck Cyprus. Going Estonia.I only want to move there for the ladieeeeees!
It's way more complex than that. If you have a company in your home country in the nordics, it's usually enough to give you unlimited tax liability.
The only way is to sell apartment/house, close all bank-accounts, close companies and move from the country.
That’s the first time I’m hearing this. Getting rid of your house, yes. Or maybe renting it out long term? Anyway, those are normal rules.
Then there may be continued tax liability for a couple years and you can’t spend more than X years in the country. There may also be exit tax. Yes.
But making you tax resident for owning a company? Never heard of that.
It's normal. You cant have shares or sit in a board in a company in your home country and have limited tax liability.
Are you talking about Sweden? I googled and it seems the Swedish rules are indeed more strict and also more vague than the Norwegian and Danish rules. I didn’t check Iceland or Finland.
Nevertheless, even Sweden has signed DTA’s. That’s why I recommend moving to Estonia as a tax-friendly option. Since it’s an EU country, it will be harder for Sweden to discriminate against them.
The treaty signed by Estonia and Sweden clearly states that if you don’t have a home available to you in Sweden, you are not considered Swedish tax resident. That’s the tie-breaker with the highest priority.
Actually, the SE-CY treaty uses the same rule, so that should work as well.
You obviously need to discuss all this with an experienced tax lawyer, but I wouldn’t be so pessimistic.
Nevertheless, even Sweden has signed DTA’s. That’s why I recommend moving to Estonia as a tax-friendly option. Since it’s an EU country, it will be harder for Sweden to discriminate against them.
The treaty signed by Estonia and Sweden clearly states that if you don’t have a home available to you in Sweden, you are not considered Swedish tax resident. That’s the tie-breaker with the highest priority.
Actually, the SE-CY treaty uses the same rule, so that should work as well.
You obviously need to discuss all this with an experienced tax lawyer, but I wouldn’t be so pessimistic.
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Estonia is interestng, but i saw that taxation on foreign sourced income is only taxed if/when funds are brought into the country which means you cant take the money into a Estonian bank account. Question is if you can pay for stuff in Estonia with a offshore-company card, or is that counted as bringing money into Estonia.
Lol, where did you read that? Estonia doesn’t have territorial/remittance-based taxation. You can spend everything or just transfer it to your personal bank account.
For business owners, Estonia only taxes the corporate income. Dividends paid from post-tax corporate income is not taxed again. And that also applies to foreign companies. Unless the company is on a blacklist, if corporate income tax has been paid, you can receive dividends from that company completely tax-free.
For business owners, Estonia only taxes the corporate income. Dividends paid from post-tax corporate income is not taxed again. And that also applies to foreign companies. Unless the company is on a blacklist, if corporate income tax has been paid, you can receive dividends from that company completely tax-free.
Isnt it the other way around? If you own a Company in your home country you have Limited tax liability. Like all income from Company in your home country is taxed like you live there.
Which country are you talking about?
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