Spain CFC Rules

[jeffbean]

Anyone have experience with UK/ Estonia/ Spain and CFC Rules?

My firm is based in the UK registered as ltd, it's a digital business and pays taxes in the UK, all operations/ hq etc are in the UK.

I'm looking at paying my salary and taxes in Spain but profits from the company in the form of dividends paid to Estonia company.

But it seems with the CFC rules the dividends would still be taxed.

Does anyone know if more directors owned the Estonian company this would be avoided being taxed in Spain?

Any other work arounds?

The tax burden in Spain is significant and would see me pay 45% of my income.

 

[John Andrews]

So you want to use the Estonian company as a holding for the UK Limited company?

 

[Gediminas]

Hi,

As a general rule, CFC is not applied either if the individual does not have significant control over the company (usually less than 25%, but depends on the country) or this company has enough economic substance – employees, office, other. In that case treaties for the avoidance of double taxation do not allow taxing income of that company in the residency country of the individual.

 

[MarkusM]

So, that means if the company is incorporated in a country which doesn’t have a DTA with your country of residence, it will be taxed twice, even if it have economic substance there? Only because you are the shareholder?
That’s what I understood from your post!

 

[jeffbean]

Hi,

As a general rule, CFC is not applied either if the individual does not have significant control over the company (usually less than 25%, but depends on the country) or this company has enough economic substance – employees, office, other. In that case treaties for the avoidance of double taxation do not allow taxing income of that company in the residency country of the individual.

Thanks.. hmm so if the dividends are taxed in the UK then sent to Estonia company they wont be taxed in the future when taken out of the company due to double taxation.

Looks like i need to find someone to take 75% of the firm on paper.

 

[MarkusM]

Hi,

As a general rule, CFC is not applied either if the individual does not have significant control over the company (usually less than 25%, but depends on the country) or this company has enough economic substance – employees, office, other. In that case treaties for the avoidance of double taxation do not allow taxing income of that company in the residency country of the individual.

Hi, Gediminas!

This means that if the company is incorporated in a country which doesn’t have a DTA with your country of residence, it will be taxed twice, even if the company have economic substance there, only because you are the shareholder?
That’s what I understood from your post!