Tax planning for Swedish online entrepreneur

[noaa]

Hello!
I'm an online entrepreneur from Sweden that does CPA affiliate marketing for a living.
The corporate tax rate in my country is 21.4 percent. Ideally I want to achieve a single-digit corporate rate. But a corporate tax rate of 12.5 percent (like in Cyprus) is still somewhat acceptable.



My question is: Can I open a foreign company without having to move abroad while avoiding triggering CFC- and permanent establishment-rules.
As for Sweden the CFC-rules are generally triggered if the corporate tax rate is below 12.5 percent, according the Swedish tax authority.


If I run a Cyprus company where the tax rate is 12.5 percent so the CFC-rules wont be triggered will I be okay? Or will I still run into trouble due to PE since I still live in Sweden?

What would the best option for me be otherwise?

Any advice will be much appreciated. Thanks.

 

[TurnedToRobot]

You want to setup a real office in Cyprus if you go that route in that way it will be difficult for the tax office in Sweden to come after you. It's normal that if the tax office see a shelf company say in Cyprus or any other offshore jurisdiction they will use CFC right away and if you are really lucky they will also fine you or claim tax evasion.

So regardless where you are going to setup something do it right and get a real office and at least real human nominee director with phone number that can confirm towards auth. he is the director for the company and the company is controlled and managed in Cyprus.

 

[Sols]

The Swedish tax authority is aggressive, ruthless, and effective. I've seen examples of other countries working with Sweden to learn about tax collection methods and investigations.

You would need a very sound (and expensive) solution to legally reduce your corporate tax situation.

You cannot expect to legally save on taxes without moving away from Sweden or otherwise setting up a PE outside of Sweden (but even then, you'd only solve the corporate tax, there's still the matter of paying yourself). Swedish tax authority tends to operate on the assumption that you're guilty until proven innocent. Renting a tiny office in Cyprus and putting a single person there will not change the fact that you control the company, and - worst case - it's up to you to prove that's not the case.

Speak with a Swedish tax adviser about what you might be able to do. I've noticed a lot of people in high-tax jurisdictions don't take full advantage of the tax benefits available to them at home.

Barring that, best option: leave Sweden. Malta and Cyprus are popular destinations if you want to stay in EU. Lots of Swedes in Malta.

 

[Martin Everson]

Yup if you want to save taxes in Sweden then invest in buying yourself a plane ticket out of there.

 

[AND2]

Similar situation here but with the Spanish tax auths. The only real solution seems to be to relocate and still keep ana eye on double taxation treaties that might hide nasty surprises.

 

[blockchain4ever]

You are all wrong about Sweden!

CFC in Sweden does not apply to "real" establishments within EU. The Swedish CFC rules are based on black/white list, so you can check each country and get a clear answer. All EU countries are on the whitelist.

You can get something like EUR 100k/y out of your Swedish company at 5-15% total tax, so really there's no need to even move out of Sweden. That's compared to 70% tax if you earn EUR 100k as an employee!

When you make significantly more than that and want to keep it in your company, you make a subsidiary in another low-tax EU country.

If you have development skills, and your income is <EUR 1M, I'd suggest not going for Cyprus, Malta etc, but rather a country with good R&D deductions. That way you will pay 0% corporate tax as long as you hire some local labor and give yourself a salary. The tax office really does not like Malta, so why go there?

As I'm sure you are aware, you can relocate to Dubai for 12 months under Swedish rules and basically drain your company completely at 0% tax using Swedish laws.

Sweden is a very competitive economy where there are two types of people: Those that pay taxes and those that don't. Swedish policy nowadays is to not tax the rich (they tried in the 70's, didn't work out well).

I'd take the Swedish tax laws over the Spanish any day!

 

[GrumpyMess]

Sweden is a very competitive economy where there are two types of people: Those that pay taxes and those that don't. Swedish policy nowadays is to not tax the rich (they tried in the 70's, didn't work out well).

you are talking about some strange things like rich people do not pay taxes in highly developed countries, it is simply not true

As I'm sure you are aware, you can relocate to Dubai for 12 months under Swedish rules and basically drain your company completely at 0% tax using Swedish laws.

in most countries, relocation for such a short period will be considered as a tax evasion

If you have development skills, and your income is <EUR 1M, I'd suggest not going for Cyprus, Malta etc, but rather a country with good R&D deductions. That way you will pay 0% corporate tax as long as you hire some local labor and give yourself a salary. The tax office really does not like Malta, so why go there?

can you share this scheme, how to get 0% tax while living in a developed country like Sweden? I just can't believe that the Swedish tax office will know about such a scheme and for them it will be ok

 

[blockchain4ever]

you are talking about some strange things like rich people do not pay taxes in highly developed countries, it is simply not true

in most countries, relocation for such a short period will be considered as a tax evasion

can you share this scheme, how to get 0% tax while living in a developed country like Sweden? I just can't believe that the Swedish tax office will know about such a scheme and for them it will be ok

I'm talking about Sweden, not "highly developed countries" in general.

In Sweden, relocation for a short period of time will not be considered tax evasion in itself, but of course you have to not behave like an idiot. Sweden is extremely lenient when it comes to foreign income IMO. Study the Swedish DTAs and you'll find great loopholes.

I mentioned 0% corporate tax, not 0% total tax (though I said 5-15% total tax at EUR 100k/y).

 

[fshore]

Hello!
I'm an online entrepreneur from Sweden that does CPA affiliate marketing for a living.
The corporate tax rate in my country is 21.4 percent. Ideally I want to achieve a single-digit corporate rate. But a corporate tax rate of 12.5 percent (like in Cyprus) is still somewhat acceptable.



My question is: Can I open a foreign company without having to move abroad while avoiding triggering CFC- and permanent establishment-rules.
As for Sweden the CFC-rules are generally triggered if the corporate tax rate is below 12.5 percent, according the Swedish tax authority.


If I run a Cyprus company where the tax rate is 12.5 percent so the CFC-rules wont be triggered will I be okay? Or will I still run into trouble due to PE since I still live in Sweden?

What would the best option for me be otherwise?

Any advice will be much appreciated. Thanks.

You need to consider corporate residence rules.

 

[GrumpyMess]

I mentioned 0% corporate tax, not 0% total tax (though I said 5-15% total tax at EUR 100k/y).

0% corporate tax and 5-15% total tax at EUR 100k/y seems a very good option for me. Do you know for sure this scheme works and the Swedish tax office accepts it?

 

[JohnSpain]

Some time ago Portugal had some great tax offers to people who wanted to relocate, I think half tax for 10 years if you run your own business. You might want to check if they still offer this deal. I dont know the details, but I heard that a lot of people in Spain have relocated to Portugal because of this deal. Stay away from Spain!