Swedish company relocation - To where? (12M € turnover, 3M € yearly profits)

[JustAnotherNomad]

I am able here to sell my Swedish business at my acquired cost to the Cyprus part (since I started this, the cost is just the shares-value which is 2500€)

This is something you really have to check. In most countries this would not work (you would have to sell it at today's market value), but it seems like Sweden may be much less strict about this, so it could work.

Stay in Sweden maximum 120days.

You can be tax resident in Sweden even if you spend max. 120 days there.

Still have option to own my apartment in Sweden, have a car staying in garage the whole time, still have a Swedish bank account for mortgage or other fixed expenses which can not be avoided.

No, they would most likely consider you tax resident if you still have access to the apartment. You can own it, but it should be rented out. If you still have your life in Sweden, they will consider you tax resident.
Which isn't a problem if you have access to a tax treaty that would limit Sweden's right to tax you, however...

Stay there in Cyprus for 70+days +any other third country for remaining days. I would be treated as Cyprus tax resident.

...if you only spend 60+ days in Cyprus, Cyprus will not consider you tax resident as they only consider you tax resident with so little days if no other country considers you tax resident. As soon as Sweden has a claim against you, Cyprus will go: "Ok, he's yours then"
You have to spend 183+ days in Cyprus for Cyprus to "protect" you against Sweden.
So it would be the same as moving to Dubai basically.

There may be other countries with less strict rules than Cyprus. Many countries are similar like Sweden where simply having an apartment there makes you tax resident. Or you may have to declare that it's now your center of life.
However, when it comes to the situation that both countries consider you tax resident (Sweden will always consider you tax resident, as long as you are registered as a resident), then you will have to prove to which country you have the closer ties. 183+ days in one country should always work well for this purpose, but if you spent 120 days in Sweden and 90 days in the other country and all your family and friends are in Sweden and so on, you may have a hard time winning that battle.

I could also be able to travel to Dubai, become tax resident in Dubai as well. Cash out my dividends from my Cyprus company to my Dubai bank account.

You could become tax resident in many countries, but it wouldn't help you in any way if Sweden still has a claim against you.

Option 2:
Stay in Dubai for 190 days. Form a Dubai company. I have to sell everything that I have in Sweden, including Apartment, car, mobile subscriptions and so on. Basically cancel everything I have here and make a move to Dubai.

You probably don't have to sell it, but you can't have a permanent home in Sweden.
You should probably be able to keep it and rent it out. Then it's easy to prove that it's no longer your own home.

I am only allowed to travel and visit Sweden up to 180 days and maximum 3 months at a time. (to be on safe side lets say I would only visit Sweden for 3 months a year only during summertime).
The Dubai company would now somehow need to be able to be VAT registered in EU, it will probably be much harder to have PSP, continue agreement with 3PL warehouses, probably much harder to import goods to EU also as well as make the reports for VAT (both import and sales vat).

I don't think VAT registration should be a problem. You may have to appoint a VAT representative in the EU, which could probablt be a family member or an accountant.
But I don't have any experience with this.

Let's say I do not want to move from Sweden at all. I want to stay in Sweden 365 days a year except for some short holidays.

Can I still form a Cyprus company, dissolve the Sweden company and have all the company profits generated being taxed in Cyprus only?

Only if you hire local staff in Cyprus to run everything. You have to be able to show you're not involved in the business, you're only a passive investor. And you can expect that the tax authorities might take a closer look at such a sudden change.
And even then, CFC rules could still become a problem, though it's less likely if the company is in an EU country, simply because they can't go too hard after EU companies compared to non-EU companies.

If this option would not work. Would it work if my Swedish partner living in Turkey would be the director and major shareholder here?

You can't be involved in the business at all. If you do any kind of work from Sweden, they will try to find out how much value was created by you from Sweden, and that part of the profit will be taxable in Sweden (this is called permanent establishment or fast driftsstalle).
This is the problem with such an online business vs. something like a hotel or restaurant where you can easily show "look, I have a general manager in the hotel in Cyprus, he makes 100k per year, I'm just a passive investor".
In theory, you could have an office in Cyprus and only work 2 days per week from Cyprus and have 5 days off, which you spend in Sweden. In theory, then you might be able to explain that you really only work from Cyprus and that the company should only pay taxes in Cyprus etc. - but I doubt that the tax authorities would believe that. They would probably still say you also work from Sweden.
I'm not sure if there may be some wiggle room if you can show that you have a proper office with employees in Cyprus and you only have a home office in Sweden where you sometimes reply to emails etc. (so everything is just online), but I strongly doubt it would work.
If your partner was owning 100% of the company and you were just a simple employee, then maybe working from Sweden might not be considered a permanent establishment (but you should still have to check this with a lawyer). But then he'd be owning everything, I doubt that's what you want.

But please, please, please get proper legal advice for this and only take it as a baseline for what to ask a lawyer about.

 

[ShillGates]

honestly my mind is boggling you asking questions like this on a forum with numbers you are claiming to be multiple millions. Go and get some real advice. I think you will find option 1,2 and 3 will not work at all. Either you exit Sweden and do NOT come back for more than a few weeks at most for the next couple of years, or you risk Sweden saying, well you never left in the first place. Lets not jump round the bush , you trying to save tax, whereas you might as will keep on growing your business and do an exit. Think operationally, your bank account seem to work. Do not assume this from another location - go and get some real advise and spent 10k euro on it - which makes it 0.33% of your claimed yearly profit.

Agree with what justanothernomad wrote just now

 

[JustAnotherNomad]

There can be some options like having a second company/subsidiary in a low-tax country. For example, you could hire people in Cyprus (or Dubai) to do all your online marketing. Then you could show you're not involved in the online marketing part, there's a local director doing everything with his staff.
Then that company invoices your Swedish company for the online marketing. But they can't charge $5,000 per hour, they'd have to charge a realistic price (this is called transfer pricing) - otherwise it won't be accepted by the Swedish tax authorities.
And then you have the additional cost of running that company.
Something like that might make sense, but it really has to be planned well, and you should be able to give better reasons than just "I wanted to save taxes" - otherwise you also risk them not accepting this.
If you set up something that is low in tax in Asia and you can explain that it's needed for handling your suppliers locally, it might work. But again, this needs to be planned extremely well with good lawyers.
And then there's always a risk of CFC rules ruining everything (where you have to pay tax simply because you own something, even if you're just a passive investor). So it really requires good planning.

 

[Sols]

Option 1:
Cyprus Company, with myself as official shareholder and director. VAT register this company in Netherlands/UK to be able to continue operations.

You register it for VAT in Cyprus (covers all of EU/EEA) and UK (for UK sales).

Sweden company dissolves and sells everything to the Cypriot company. Meaning I have no business being done in Sweden.
I am able here to sell my Swedish business at my acquired cost to the Cyprus part (since I started this, the cost is just the shares-value which is 2500€)

Have a Swedish lawyer help you with this, to make sure the sale is done at a fair market value. There may be better ways to transition ownership of the

Stay in Sweden maximum 120days. Still have option to own my apartment in Sweden, have a car staying in garage the whole time, still have a Swedish bank account for mortgage or other fixed expenses which can not be avoided.

For the first five years, you need to be extra careful. Again, have a lawyer help you with the details.

Above would probably work for Malta also, perhaps with an adjustment for amount of days to stay in Malta.

Malta doesn't have a 60-day residence programme, and the taxes and corporate structures are more complicated.

Option 2:
Stay in Dubai for 190 days. Form a Dubai company. I have to sell everything that I have in Sweden, including Apartment, car, mobile subscriptions and so on. Basically cancel everything I have here and make a move to Dubai.

I am only allowed to travel and visit Sweden up to 180 days and maximum 3 months at a time. (to be on safe side lets say I would only visit Sweden for 3 months a year only during summertime).
The Dubai company would now somehow need to be able to be VAT registered in EU, it will probably be much harder to have PSP, continue agreement with 3PL warehouses, probably much harder to import goods to EU also as well as make the reports for VAT (both import and sales vat).

Correct analysis (but keep in mind the five year rule in Sweden, and at 180 days you're playing with fire even after five years).

Dubai can register for VAT in EU, but getting PSPs and so on can be more complicated than if you're based in EU.

Option 3:
Let's say I do not want to move from Sweden at all. I want to stay in Sweden 365 days a year except for some short holidays.

Can I still form a Cyprus company, dissolve the Sweden company and have all the company profits generated being taxed in Cyprus only?

No, because the company is tax resident in Sweden. For Swedish tax purposes, there is no difference between a Cypriot company and a Swedish company in this case.

If this option would not work. Would it work if my Swedish partner living in Turkey would be the director and major shareholder here?

Considering that Turkey doesn't recognize Cyprus as a country, this may introduce some complications. That particular detail aside, it might work in that the company instead becomes tax resident in Turkey and has to pay Turkish tax.

I don't know what would happen with a company incorporated in an unrecognized territory. Maybe you've uncovered a tax loophole.

But in any case, there is a risk that the Swedish authorities would decide that the company is partly tax resident in Sweden, and/or has a permanent establishment there, in which case profits attributable to Sweden could be taxed in Sweden. That doesn't mean money sent to Sweden. It means sales as a result of actions taken in Sweden. A simple calculation I've seen tax authorities use is to look at beneficial ownership of a company. So if you hold 25% of the shares in this case, 25% of the company's profits would be taxed in Sweden.

 

[Dandyline]

Appreciate the activity in this topic very much.

So to summarize all above content. Please correct me if I am mistaken somewhere in below possible options which are valid for my case. There are probably few other options also which we have not dug ourselves into.

Option 1:
Cyprus Company, with myself as official shareholder and director. VAT register this company in Netherlands/UK to be able to continue operations. Sweden company dissolves and sells everything to the Cypriot company. Meaning I have no business being done in Sweden.
I am able here to sell my Swedish business at my acquired cost to the Cyprus part (since I started this, the cost is just the shares-value which is 2500€)

Stay in Sweden maximum 120days. Still have option to own my apartment in Sweden, have a car staying in garage the whole time, still have a Swedish bank account for mortgage or other fixed expenses which can not be avoided.
Rent a place in Cyprus. Stay there in Cyprus for 70+days +any other third country for remaining days. I would be treated as Cyprus tax resident. I would here be able to take advantage of 12.5% effective tax and unlimited dividend cashout to my personal bank account (but this bank can not be a Swedish bank).
If I would make a company exit, it would also be taxed here at 12.5% and I could cash these amounts out as dividends as well.
I could also be able to travel to Dubai, become tax resident in Dubai as well. Cash out my dividends from my Cyprus company to my Dubai bank account.

Above would probably work for Malta also, perhaps with an adjustment for amount of days to stay in Malta.


Option 2:
Stay in Dubai for 190 days. Form a Dubai company. I have to sell everything that I have in Sweden, including Apartment, car, mobile subscriptions and so on. Basically cancel everything I have here and make a move to Dubai.

I am only allowed to travel and visit Sweden up to 180 days and maximum 3 months at a time. (to be on safe side lets say I would only visit Sweden for 3 months a year only during summertime).
The Dubai company would now somehow need to be able to be VAT registered in EU, it will probably be much harder to have PSP, continue agreement with 3PL warehouses, probably much harder to import goods to EU also as well as make the reports for VAT (both import and sales vat).


Option 3:
Let's say I do not want to move from Sweden at all. I want to stay in Sweden 365 days a year except for some short holidays.

Can I still form a Cyprus company, dissolve the Sweden company and have all the company profits generated being taxed in Cyprus only?
The profits would never leave the Cyprus company bank account, no dividends paid out and so on. Also no business is made in Sweden, no offices are rented in Sweden, no utility bills. The only happening would be order would be shipped from Netherlands to Swedish customers using our NL VAT number. If I in future decides to cash out any allocated company profits, I could then make a move to any other favorable low-tax country and make it a reality using that countries taxation rules.

I would then be paid a regular yearly salary from the Cyprus company as consultant working from my home. This salary would be taxed with Swedish tax rate.
If this option would not work. Would it work if my Swedish partner living in Turkey would be the director and major shareholder here?

No, you need to sell your apartment. You can't keep the apartment, even if it's rented out.

UAE alone is not ideal since you need EU banks and PSPs which often requires EU residency, especially now when UAE is blacklisted.

 

[Sols]

No, you need to sell your apartment. You can't keep the apartment, even if it's rented out.

Yes, you can, and it does not by itself make you tax resident. The rental income is taxed in Sweden, though, and you have to pay property tax in Sweden on the property.

 

[mud]

Option 3:
Let's say I do not want to move from Sweden at all. I want to stay in Sweden 365 days a year except for some short holidays.

Can I still form a Cyprus company, dissolve the Sweden company and have all the company profits generated being taxed in Cyprus only?
The profits would never leave the Cyprus company bank account, no dividends paid out and so on. Also no business is made in Sweden, no offices are rented in Sweden, no utility bills. The only happening would be order would be shipped from Netherlands to Swedish customers using our NL VAT number. If I in future decides to cash out any allocated company profits, I could then make a move to any other favorable low-tax country and make it a reality using that countries taxation rules.

I would then be paid a regular yearly salary from the Cyprus company as consultant working from my home. This salary would be taxed with Swedish tax rate.
If this option would not work. Would it work if my Swedish partner living in Turkey would be the director and major shareholder here?

I don't think Option 3 would work as Sweden appears to have strong CFC laws that tax shareholders of companies situated in low tax countries.

Sweden - Corporate - Group taxation

Detailed description of corporate group taxation rules in Sweden

taxsummaries.pwc.com

 

[CyprusLawyer101]

You should target changing your operational structure, without changing residency. If you change residency and the company's operation you are creating tax risk exposure at two levels making you more vulnerable to general anti-avoidance rules ( GAAR) which have a more subjective application in case of a challenge. Specific anti-avoidance rules like CFCs are easier to structure through because of their objectivity in application and their specific description. You should seek to appropriately divert operations and risks so you justify the shift of profits in a way in which it would resemble commercial reasoning and not travelling around counting days and making your life more difficult. Also start thinking how you could commercially improve your operation by changing operational structure.
You could still maintain a position on the board of Directors and participate in the decision making process. The new set up should avoid conducting business in Sweden. Choosing an EU country to divert operations would generally provide a more secure option due to the protection afforded by EU regulations and European court's precedent. Run any potential structure through a local Swedish tax lawyer who also understands local practice of the Tax Office. Dont be aggressive with tax saving. Create a set up that will provide you with piece of mind.

 

[Dandyline]

Yes, you can, and it does not by itself make you tax resident. The rental income is taxed in Sweden, though, and you have to pay property tax in Sweden on the property.

In Sweden it makes you tax resident.

 

[Cloudbanck]

In Sweden it makes you tax resident.

Indeed, you can have a holiday home in Sweden that isn't equipped for year round use though, without becoming tax resident. But basically, you can't have significant connection to Sweden which means, no permanent residence (even if rented out), no business, and no immediate family (spouse, non-adult children).

If you are ambitious/driven/entrepreneurial, I guess the lesson is to leave Sweden or any high tax country first, and then start a business, buy a home, find a life long partner (leave first, "volvo, villa, vovve" later!) Life is so much more difficult if you do these things in the opposite order. But anyway, congrats on the business success, that's fantastic, and I hope it works out with the move abroad, so you don't have to pay crazy high taxes!

 

[JustAnotherNomad]

I think this thread should be warning enough not to trust random people. Get some inspiration, but only trust people who are licensed to advise on Swedish law.

 

[Sols]

In Sweden it makes you tax resident.

It isn't that clear cut. Some countries, such as Sweden, have different degrees of tax residence (limited and unlimited). Owning a property makes income related to that property taxable in Sweden and creates a connection to Sweden, which means you'd have limited tax liability, i.e. you must file and pay tax on Swedish sources of income.

You can own Swedish property and have a Swedish bank account, but as long as they aren't your primary economic interests and you don't stay in Sweden more than a certain number of days per year, and provided that have established bonafide tax residence somewhere else, your tax liability would not go from limited to unlimited.

In this particular case, though, it's clear that @factual is trying to be as resident in Sweden as possible, and that creates an enhanced risk of remaining (or regaining) unlimited tax status. Owning a property and spending a lot of time there (or in Sweden) right from the start risks looking to the tax authority like the person does not intend to genuinely leave Sweden. Hopefully a good lawyer can steer them away from problems.

 

[Jabbar]

Option 3:
Let's say I do not want to move from Sweden at all. I want to stay in Sweden 365 days a year except for some short holidays.

Can I still form a Cyprus company, dissolve the Sweden company and have all the company profits generated being taxed in Cyprus only?
The profits would never leave the Cyprus company bank account, no dividends paid out and so on. Also no business is made in Sweden, no offices are rented in Sweden, no utility bills. The only happening would be order would be shipped from Netherlands to Swedish customers using our NL VAT number. If I in future decides to cash out any allocated company profits, I could then make a move to any other favorable low-tax country and make it a reality using that countries taxation rules.

I would then be paid a regular yearly salary from the Cyprus company as consultant working from my home. This salary would be taxed with Swedish tax rate.

This is best option for you if you do not want to relocate.
First of all you need to change you structure.
1. Cyprus company as a main campany with office and 1 employer for substance.
2. Cyprus company will buy all goods from chinese suppliers. Goods wil be shipped straight to UK an NL warehouses.
3. Then I would set up new VAT registered UK company for UK sales only. You can do it cheap and fast. It will cover your UK fullfitment part.
4. Cyprus company need to register for OOS in the EU and NL VAT
5. You can deduct corpotate VAT in CY to 5% rate so you can save 17% at the beginning (22% swedish corporate tax)
6. You can keep your swedish company to invoice UK company for some reasonable € and keep that money for living in Sweden

Also do not show any ties with cypriot company in Sweden salary etc.
Send me message if you want I have similar structure.

 

[JustAnotherNomad]

Substance or not, if he runs things from Sweden, the CY company has to pay tax in Sweden. If you get caught lying to them, it won't be pretty.
CFC rules can also spoil this idea.

 

[Cloudbanck]

It isn't that clear cut. Some countries, such as Sweden, have different degrees of tax residence (limited and unlimited). Owning a property makes income related to that property taxable in Sweden and creates a connection to Sweden, which means you'd have limited tax liability, i.e. you must file and pay tax on Swedish sources of income.

There is only limited and unlimited. And when comparing to other countries it makes sense to translate as per:
Limited - Not tax resident
Unlimited - Tax resident

And a funny thing is that technically these categories apply to everybody in the world. So if you were born in say Burkina Faso, and have never been outside Burkina Faso, you are still limited tax liable to the Swedish tax authorities.

And for people in the limited category, yes, they still need to pay tax to Sweden in some cases, income from Swedish sources I think, and capital gains taxes for 10 years after leaving Sweden (unless offset by DTAs).

 

[Jabbar]

Substance or not, if he runs things from Sweden, the CY company has to pay tax in Sweden. If you get caught lying to them, it won't be pretty.
CFC rules can also spoil this idea.

His stuff based in CY will be responsible for running things.

 

[Dandyline]

It isn't that clear cut. Some countries, such as Sweden, have different degrees of tax residence (limited and unlimited). Owning a property makes income related to that property taxable in Sweden and creates a connection to Sweden, which means you'd have limited tax liability, i.e. you must file and pay tax on Swedish sources of income.

You can own Swedish property and have a Swedish bank account, but as long as they aren't your primary economic interests and you don't stay in Sweden more than a certain number of days per year, and provided that have established bonafide tax residence somewhere else, your tax liability would not go from limited to unlimited.

In this particular case, though, it's clear that @factual is trying to be as resident in Sweden as possible, and that creates an enhanced risk of remaining (or regaining) unlimited tax status. Owning a property and spending a lot of time there (or in Sweden) right from the start risks looking to the tax authority like the person does not intend to genuinely leave Sweden. Hopefully a good lawyer can steer them away from problems.

No, for Sweden in particular, you can't own a residence other than a holiday home.

 

[AndyAresa]

5. You can deduct corpotate VAT in CY to 5% rate so you can save 17% at the beginning (22% swedish corporate tax)

Hello Jabbar, what exactly did you mean here? what is 5% rate in Cyprus? VAT or corporate tax?

 

[ShillGates]

This is best option for you if you do not want to relocate.
First of all you need to change you structure.
1. Cyprus company as a main campany with office and 1 employer for substance.
2. Cyprus company will buy all goods from chinese suppliers. Goods wil be shipped straight to UK an NL warehouses.
3. Then I would set up new VAT registered UK company for UK sales only. You can do it cheap and fast. It will cover your UK fullfitment part.
4. Cyprus company need to register for OOS in the EU and NL VAT
5. You can deduct corpotate VAT in CY to 5% rate so you can save 17% at the beginning (22% swedish corporate tax)
6. You can keep your swedish company to invoice UK company for some reasonable € and keep that money for living in Sweden

Also do not show any ties with cypriot company in Sweden salary etc.
Send me message if you want I have similar structure.

Cyprus company as a main campany with office and 1 employer for substance.
-> who is running the Cyprus company, who is the ultimate decision maker?

 

[Jabbar]

Hello Jabbar, what exactly did you mean here? what is 5% rate in Cyprus? VAT or corporate tax?

Corporate tax is 12% but you can lowered it to approx. 5% if you gonna be invoiced by some offshore company for example

Cyprus company as a main campany with office and 1 employer for substance.
-> who is running the Cyprus company, who is the ultimate decision maker?

Officially his cyprus staff