Will this proposed offshore structure and corporate tax avoidance strategy work?

[electric]

Please tell me if you think this offshore structure will work. My goal is to try and avoid paying corporate taxes for my business. (My company does search engine optimization and web design. About $500k/year revenue.)

• I live in the EU.
  
• I register an IBC in Seychelles. (I do not use nominees since the director and shareholder registry it not public in Seychelles.)
  
• The Seychelles IBC opens a corporate bank account in Hong Kong. (I must use my real name and information, since I'm the beneficiary.)
  
• The Seychelles IBC opens a merchant account to receive payments from customers. (I must use my real name and info since it's impossible to get a merchant account otherwise.)
  
• The merchant account settles the funds into the Hong Kong bank account.
  
• I use the Hong Kong bank account debit card to withdraw cash from local ATMs in the EU. (Never in my city, though.)
  
• I pay for most day-to-day living expenses using cash. (Gas, groceries, small items, and anything that can be paid with cash, etc.)
  
• The Seychelles IBC hires me as its "operations manager" to run the company for a small salary. (I receive an official employment letter.)
  
• The Seychelles IBC sends my salary payments from the Hong Kong bank account to my personal EU bank account using wire transfer.
  
• I declare and pay personal income tax on all the salary money that arrives into my personal EU bank account.
  
• I use the salary money from my personal EU bank account to pay for my house mortgage, car payment and other expenses that require direct bank withdrawal.
  

What do you think of this plan? Are there any holes? Do you have any suggestions for changes?


My concerns are:

1. My name will be associated as the beneficial owner for the Hong Kong corporate bank account and mechant account. However, can't think of any way to get around that because it is required in order to open a bank account or merchant account anywhere. (I chose Hong Kong only because it is a huge financial center and is much less suspicious than receiving wire transfers from "1st bank of Seychelles".)
   
2. I would have a letter from the Seychelles IBC saying I am hired as the "operations manager" for the company. However, is this enough so that I am not considered the "Mind & Managerment" of the company? If I show this employment letter to my country's tax authority, will they accept it? Or will they be able to determine that I am actually the owner of the Seychelles IBC, even though the shareholder and director information is not public for a Seychelles corporation?
   

Thanks for any insight!

 

[buzzoffshore]

• The Seychelles IBC hires me as its "operations manager" to run the company for a small salary. (I receive an official employment letter.)
  

That's an BIG NO GO, your tax office will rip you off with taxes. Because they will claim the company to be operated in your country and city, so it has to pay corporate tax there.


You will need a EU entity to avoid corporate tax and to stay legal with the international tax laws in the EU. A Cyprus company is what you need and you must make use of the double tax treaty that Cyprus has with your country. Nominees are a MUST HAVE as well, otherwise they will get back to you and claim the company to be managed and operated in your country and not abroad.

 

[buzzoffshore]

In addition I would recommend to consult a local tax advisor to help you with the tax filing once evrything is set up, that will keep the tax office away from your doors.

 

[cyprusbanker]

Hong Kong companies don't provide any privacy, they are totally transparent! Any tax office can get access to the latest audited financial report and bank accounts!! Be warned!

 

[electric]

Hong Kong companies don't provide any privacy' date=' they are totally transparent! Any tax office can get access to the latest audited financial report and bank accounts!! Be warned![/quote']
I did not suggest using a HK company. I proposed using a HK corporate bank account.


As far as I am aware, a EU government is not able to demand access to HK corporate bank account details...

 

[cyprusbanker]

I did not suggest using a HK company. I proposed using a HK corporate bank account.


As far as I am aware, a EU government is not able to demand access to HK corporate bank account details...

Sorry my fault... I would not relay on that part with the HK bank account.. from what I have read and heard a HK bank does NOT provide any privacy or protection against any authority request! I would not at all bank in HK if it was for privacy and anonymity.


Here are some links to read:


http://www.lowtax.net/information/hong-kong/hong-kong-banking-confidentiality.html


AND


http://gabriel-zucman.eu/files/JohannesenZucman2014


MOST Interesting one is this:


http://www.finfacts.ie/irishfinancenews/article_1027638.shtml

 

[clemens]

HK is not a jurisdiction you should bank if privacy and anonymity plays a role for you. There are many other jurisdictions that are better also looking at the fees and Internet banking makes HK to a fail.

 

[JohnLocke]

I almost agree with clemens in regards to HK for banking, it depends very much what your goals are. If privacy and anonymity isn't a question you may be fine with HK however if not you must look for another jurisdiction otherwise you will find youself lost very soon.