Seychelles corp. German tax how to avoid?

[bonzo]

I am very new to this and of course leaning and this means I am bound to make some mistakes and not be clear on some things. After consulting with a company we are involved with a thing came up that I am not sure of a way of dealing with.


Our payments/profit comes from a company based in Germany which means we pay 19% VAT that they have to deduct before payment comes to us. I know that we can avoid the income tax by opening a company in a tax haven like the Seychelles but what can we do about the German VAT?


The Germany company tells me that for them not to deduct the VAT I will need a personnel or company EU VAT-ID, better a UK one as that is where I am from. The reason is, with this new way of doing this business for us, which is far more profitable “I” (not the company) need to be seen as living in the EU, the company it does not matter where it is based.


If it comes to the crunch and I have to compromise and get the 19% deducted and get it back from business expenses as in, claim back the VAT that way, then I will do it but this means I need a company set up in that way, can this be done if there is no alternative.


Which bank do I use for my offshore company?

 

[JohnLocke]

In regards to the VAT then the German company you mention cannot Invoice a non EU company ie Seychelles company for VAT the invoice must be without VAT, if they do not believe you ask them to consult a tax advisor who will confirm this as well.


In regards to the bank account there are lots of banks available in Cyprus but as well in the Seychelles for instant Barclays in the Seychelles or BMI are such banks.

 

[pchees]

I agree with Admin. You should not have to pay VAT if your company is an IBC located outside of the EU.


I am not an expert on German law, but this is definately the case in the UK


If you search on the HM Revenue and Customs website you will find the information. I can't post the link unfortunately.


So if you setup an IBC then you should be fine.


I thought the rules for EU VAT were unified so there shouldn't be an issue

 

[bonzo]

So non EU company means no VAT to be paid at all and other companies cant issue VAT?

 

[pchees]

Yes. As long as your IBC is outside the EU then companies invoicing you should not add VAT. If they do then I would write to them stating that you are not liable for VAT.


The CEO of my company is German and he agreed that IBCs outside the EU should not be invoiced with VAT.


I don't speak German but I would google and try and find the website for the German tax authorites. If you can find the right section then you can quote it your clients.

 

[fxstarter]

This is a great information we have been invoiced by several sub contractors for VAT even if we have formed a Seychelles corp. time to get this money back now... thanks a thousands time.

 

[tropico]

I am very new to this and of course leaning .... I know that we can avoid the income tax by opening a company in a tax haven like the Seychelles ....

How do you legaly avoid to pay income tax ???! Are you living on the Seychelles, or where ? What´s your nationality ?


Indeed, the german company is may not invoicing VAT, if either you are not living in the EU or the company, if you are running one, is not EU-based.

 

[bonzo]

Very old thread but may still be valid.


I'm not a Seychelles citizens nor am I from the UK. The way I did is was through advanced loan agreements and an anonymous debit card the latter was not agreed with my tax advisor (PWC in Europe) but rather something I'm testing btw. it is a Swiss debit card.


You'r right also this was confirmed by our tax advisor we do not have to charge VAT even though our payment processor is doing so and refuse to lesson.

 

[BusinessMan]

Yes the good old loan agreement still works, just don't over do it so any auth. get curious about how you can afford it.

 

[JohnLocke]

A loan agreement is one of the instrument's we see in force while invoicing between several ring's of companies is another model.

 

[belaster]

Is that legal to do? What will the tax authorities do if they find out? What will this "ring" of companies look like, offshore company + onshore company or only a ring of offshore companies?

 

[pesto]

Is that legal to do? What will the tax authorities do if they find out? What will this "ring" of companies look like, offshore company + onshore company or only a ring of offshore companies?

That will be a really interesting answer, since admin didn't reply yet I assume this is a secret?

 

[bonzo]

The loan agreement did the trick Admin.. almost 5 years after I posted this my offshore company is still alive and I didn't had any troubles. Everything was streamlined with PWC and a good Tax lawyer so it works.. thanks for the tip.

 

[Lyanna]

The loan agreement did the trick Admin.. almost 5 years after I posted this my offshore company is still alive and I didn't had any troubles. Everything was streamlined with PWC and a good Tax lawyer so it works.. thanks for the tip.

I'm glad to hear that someone gets back to this forum and say thanks for the good advices that these wonderful Admins gave. I hope more people would learn a lesson from this forum.

 

[negon]

The loan agreement did the trick Admin.. almost 5 years after I posted this my offshore company is still alive and I didn't had any troubles. Everything was streamlined with PWC and a good Tax lawyer so it works.. thanks for the tip.

Did you had a lawyer or accountant to help you drafting the agreement?

 

[andreas]

You need an accountant to help you with drafting the loan agreement, have him coorporate with your tax lawyer and have them to backup the documents if the tax office calls you! That's the only way you have a chance to get this work.

 

[JohnLocke]

If it comes to the crunch and I have to compromise and get the 19% deducted and get it back from business expenses as in, claim back the VAT that way, then I will do it but this means I need a company set up in that way, can this be done if there is no alternative.

You may also consider to setup a Cyprus company that is registered for VAT. You can invoice your German company with VAT and claim back the VAT in Germany.