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What is the best set up to pay minimal to zero taxes?

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What is the best set up (no matter how expensive) to legally avoid paying all taxes or reducing it close to zero
when living in a high tax country such as the US/UK/Australia for an online business based on e-commerce where the warehouse
is based in China?
 

user9823671

Entrepreneur
You need to setup in a tax free jurisdiction and actually have the substance of the company there and be able to show it is run / managed from there. i.e. you do not run it from your home country.

If you are in a high tax country and you are running the business, it is irrelevant where the company is incorporated, it will be tax resident in your home country - i.e. where it is run from.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
If you physically store products and distribute products from the UAE, that gives you substance.

Your only option is to relocate for a couple years.
 

user9823671

Entrepreneur
If you physically store products and distribute products from the UAE, that gives you substance.
Is that enough in all cases? open shut case? An EU national, living in the EU, is the sole owner of a UAE company, they manage the company from their home in the EU, they run the day to day operations and have just minimum wage staff posting things from the UAE? Will the EU tax authorities see this and say "ok they do not owe tax". It would pass an audit, all above board?

From my (admitted inexperienced) understanding, it is about control. Where is the business controlled from. That would be the EU.
 

khinkali

New member
The problem can be a PE (working for or managing the company) or it can be a CFC (owning or managing the company).

This depends on which high tax country you live in. It can also depend on your legal status there (e.g. non-citizen or non-dom can get better treatment in some countries).

For most people living in most high tax countries I'd agree with @CaptK that relocation is necessary. Even then, some high tax countries follow you for a while (exit tax or difficulty proving you're no longer tied) or even forever (USA citizens).

You need to know the rules of where you live, before you can work out your offshore plan.
 

lavel

Offshore Agent
Mentor Group Gold
You need to know the rules of where you live, before you can work out your offshore plan.
How would guys to in the following scenario:

I have 400K EURO for this investment.

Take a flight to the UAE, hire some good and reputable lawyer and tax professional there, they will help me to find a nice office, staff and even a cleaning company that will clean up the mess every week. I hire a director for this company who is operating it for the day to day business.

Would I still be liable for the profits this operation makes if I live in a different country?
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
If substance is clearly defined and day to day running is done by your manager then it can work.
You can invoice the company for salary and expenses and keep the profits offshore.

When you are ready to cash out you will need to spend a year there and only then you can move your funds back tax free.

You can use various different vehicles to bring the funds back legally without paying tax.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
How would guys to in the following scenario:

I have 400K EURO for this investment.

Take a flight to the UAE, hire some good and reputable lawyer and tax professional there, they will help me to find a nice office, staff and even a cleaning company that will clean up the mess every week. I hire a director for this company who is operating it for the day to day business.

Would I still be liable for the profits this operation makes if I live in a different country?
This could work subject to the country of residence and of course citizenship are your major factors.
 

JustAnotherNomad

Mentor Group Gold
If you physically store products and distribute products from the UAE, that gives you substance.

I find it hard to believe that where products are stored and shipped would count as substance. Quite often warehouses don’t even count as permanent establishment.

I hire a director for this company who is operating it for the day to day business.

Would I still be liable for the profits this operation makes if I live in a different country?

That depends on the country you live in. It’s definitely more complex than “I’ll just hire a local director and pay no tax.”
You’d probably have to prove that you don’t manage the company from your home country, that you don’t work for the company from your home country and that you have good reasons for setting up a company in the UAE, i.e. that it’s not just for tax reasons.
Depending on whether your country has CFC rules and how strict they are, you might still have to pay taxes in your home country. If your country has exit taxes, then they’d usually also apply to offshore companies, so you won’t be able to cash out without paying taxes in your home country, not even if you move to the UAE later.

You can probably still save a lot of taxes, but it needs to be set up correctly. You’d be a fool to attempt this without good legal counsel from your home country all along the way.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
I find it hard to believe that where products are stored and shipped would count as substance. Quite often warehouses don’t even count as permanent establishment.



That depends on the country you live in. It’s definitely more complex than “I’ll just hire a local director and pay no tax.”
You’d probably have to prove that you don’t manage the company from your home country, that you don’t work for the company from your home country and that you have good reasons for setting up a company in the UAE, i.e. that it’s not just for tax reasons.
Depending on whether your country has CFC rules and how strict they are, you might still have to pay taxes in your home country. If your country has exit taxes, then they’d usually also apply to offshore companies, so you won’t be able to cash out without paying taxes in your home country, not even if you move to the UAE later.

You can probably still save a lot of taxes, but it needs to be set up correctly. You’d be a fool to attempt this without good legal counsel from your home country all along the way.
He said he is willing to throw money at it.
So an office, a manager, staff, warehouse and stock is a lot of substance to ignore. If you make the offshore jurisdiction the centre of your business it's very plausible.

If you know people out there who live and work there making them a director and having your own agreement will work

I have personally seen people get away with less because they still pay a fair amount of tax in their home country.
 
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