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Shifting profits offshore?

Zaiga

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Jul 24, 2022
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Hey guys,

I've a company based in an EU country which makes good profits, but in the end of the day I've to pay huge taxes (Once on the company level and then on the individual level.)
The company exports goods out of the EU, it wouldn't be a problem to use another company as an intermediate for shifting the profits there.

At the moment I can't give up my residency, this will change in a couple of years.
But I am open for opening a company which will inherit the profits.

Is it possible to open for example a holding structure in Dubai for keeping the profits inside the company?
Therefore, no need for taxation on the individual level.

EU Company -> Dubai Company1 (operative) -> Dubai Company2 (asset management) (1 is 100% daughter of 2)
Or any other suggestions how I can safe taxes?

Thank you!
 
This is exactly what BEPS (Base Erosion and Profit Shifting) regulations were created to prevent. Taken in combination with modern standards of tax residence and a plethora of other mechanisms now in place, there is no legal or sustainable way to achieve this.

It'll only work for as long as you aren't caught. With increased automation of data sharing and handling of such data, that period of time is only getting smaller.

The short of it is you are artificially lowering the tax burden of your EU company. That's where BEPS kick in. Then you have money sitting in a foreign company. That company is tax resident wherever you live, meaning it has to act just like a normal domestic company for tax purposes.

If you just want to defer taxes, have you looked into what your options are if you set up a local holding company? Have you spoken to a tax adviser about optimising your local taxes without involving criminal tax evasion structures?
 
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This is exactly what BEPS (Base Erosion and Profit Shifting) regulations were created to prevent. Taken in combination with modern standards of tax residence and a plethora of other mechanisms now in place, there is no legal or sustainable way to achieve this.

It'll only work for as long as you aren't caught. With increased automation of data sharing and handling of such data, that period of time is only getting smaller.

The short of it is you are artificially lowering the tax burden of your EU company. That's where BEPS kick in. Then you have money sitting in a foreign company. That company is tax resident wherever you live, meaning it has to act just like a normal domestic company for tax purposes.

If you just want to defer taxes, have you looked into what your options are if you set up a local holding company? Have you spoken to a tax adviser about optimising your local taxes without involving criminal tax evasion structures?

Thank you very much for your answer.

I've here two questions:
1.) I buy goods with a discount and sell them abroad with a mark-up, but the mark-up can vary. After doing a bit of research, making this type of profit shift is extremely hard to prove.
2.) If this option is still too risky, I would be also willing to set up a company in Dubai which would acquire the goods directly from the producer. But the only issue stays that I am still an EU resident.
Is this still an issue? Can I own a holding in Dubai without actually cashing out, this actually shouldn't be an issue.

Local holding company is expensive and the taxation of the earnings on the company level is already 30+ %.
 
Thank you very much for your answer.

I've here two questions:
1.) I buy goods with a discount and sell them abroad with a mark-up, but the mark-up can vary. After doing a bit of research, making this type of profit shift is extremely hard to prove.
2.) If this option is still too risky, I would be also willing to set up a company in Dubai which would acquire the goods directly from the producer. But the only issue stays that I am still an EU resident.
Is this still an issue? Can I own a holding in Dubai without actually cashing out, this actually shouldn't be an issue.

Local holding company is expensive and the taxation of the earnings on the company level is already 30+ %.
There may be ways to go about structuring this. Which is your country of residence in the EU ? And which is the country of your company in EU , if different.
 
The company exports goods out of the EU, it wouldn't be a problem to use another company as an intermediate for shifting the profits there.
you may do as I did, relocate to another country. I will live here for the next 5 months and relocate again until I find the best place for me where taxes suits my spirit.
 

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