Help Needed: Best Country to Establish a Company

[gap]

Hello!
I'm a Hungarian tax resident and the sole owner of a Hungarian KFT (Design & IT services). Due to some clients' preferences (GB, NL), I need to establish a company in a more "prestigious" country. My question is: which country would be the best for this purpose?

As of 2024, the Double Taxation Treaty (DTT) with the US has been terminated, so that option is off the table I guess. Here are the criteria that are important to me:

1. Low or close to 0 initial capital requirement
2. Better reputation
3. Easy management
4. Single ownership structure
5. Relatively low fees (my Annual Revenue is between 200k and 350k EUR)
6. Regular bank or EMI both fine (I deal with some crypto)

CIT paid abroad is tax-deductible in Hungary up to a certain amount, but it would be ideal if the company were a tax-transparent entity so that only the owners would have a tax liability. I understand that a Canadian LLP fits this description, but I would need a 2nd partner there.

Any help and tips are welcome, even a completely different approach. Thank you!

Spoiler: DTTs of Hungary

Double taxation treaties of Hungary - Nemzeti Adó- és Vámhivatal

You will find hereunder the most recent double taxation treaties of Hungary. Some other ones with earlier effective dates are also attached.

nav.gov.hu

 

[CyprusLawyer101]

You can set up a Cyprus company managed from and taxed in Hungary

 

[Martin Everson]

Due to some clients' preferences (GB, NL), I need to establish a company in a more "prestigious" country.

Ask them which countries they consider more "prestigious" firstly before bothering to do anything.

 

[Marzio]

UK LTD treaty non-resident in Hungary = UK facade with HU CIT

If you're smart you can even setup the LTD in an area without the 1-2% communal surcharge (like Budapest) to achieve 9% CIT which is awesome.

 

[gap]

UK LTD treaty non-resident in Hungary = UK facade with HU CIT

If you're smart you can even setup the LTD in an area without the 1-2% communal surcharge (like Budapest) to achieve 9% CIT which is awesome.

My KFT is currently based in Újlengyel instead of Budapest. 0% local business tax.
Many accountants have warned me, because these are usually small family houses where 200 companies are registered and called a "company cemetery". But you just have to choose a good provider.

UK LTD sounds good

Ask them which countries they consider more "prestigious" firstly before bothering to do anything.

Anything that is not Balkan or Central/Eastern Europe I guess.
I'm not sure about Cyprus, how is perceived.

 

[Martin Everson]

Anything that is not Balkan or Central/Eastern Europe I guess.

I see.

I'm not sure about Cyprus, how is perceived.

Will be perceived same as Malta. They will look at you like...

 

[CyprusLawyer101]

I'm not sure about Cyprus, how is perceived.

Depends on the eye of the beholder. A little bit of a tarnished reputation from past events but also one of surrvivorship and adaptation.

 

[Forester]

UK LTD treaty non-resident in Hungary = UK facade with HU CIT

Yes; but what about banking? A UK company with a non-resident director => a problem, especially when some crypto is involved, I am afraid... Or am I wrong?

Depends on the eye of the beholder. A little bit of a tarnished reputation from past events but also one of surrvivorship and adaptation.

Yes; yet I am afraid that @Martin Everson is pretty right here Help Needed: Best Country to Establish a Company – for this particular case.

But what about US LLC? If properly incorporated, an one-member LLC is tax transparent, and if no US business (there is none, apparently) then no US taxing at all, hence non-existence of DTT is not an issue. Reputation is solid, especially if established in e.g. DE and not NM or WY and banking is doable (although not as easy-breezy as it was in the past). All other requirements are fulfilled. Or am I missing something?

 

[Marzio]

Yes; but what about banking? A UK company with a non-resident director => a problem, especially when some crypto is involved, I am afraid... Or am I wrong?

It's not a UK company with non-resident HU director.

It's a UK LTD treaty non resident in Hungary so he is not limited to UK banks but any HU bank and EEA EMI

 

[saintjohnny]

It's not a UK company with non-resident HU director.

It's a UK LTD treaty non resident in Hungary so he is not limited to UK banks but any HU bank and EEA EMI

Serious question... Do people still consider the UK a reputable jurisdiction? All I needed was a little walk around London to completely change my mind.

 

[Marzio]

Do people still consider the UK a reputable jurisdiction?

Perception ≠ Reality

 

[Forester]

It's not a UK company with non-resident HU director.

It's a UK LTD treaty non resident in Hungary so he is not limited to UK banks but any HU bank and EEA EMI

Well, maybe I am misunderstanding the case but in my perception, UK LTD treaty non resident is not tax resident in the UK, nevertheless legally it is still a subject incorporated in the UK, or not?
Could you please clarify, @Marzio ?
(BTW, if were not, that in this particular case it would not help OP as he wants to avoid HU resident company.)
And if it is so, then banking with EEA subjects become not much easy, many (not all, of course) EEA subjects onboard only EEA registered companies (or even more – but unfortunately not UK, as e.g. Zen since 31.12.2023...)
I agree that such a company can be probably quite easily (with a proper explanation) onboarded with HU bank, yet if the customers consider HU untrustworthy (I do not share this perception but this is not the topic), they probably will not like to pay to HU bank...

 

[Marzio]

it is still a subject incorporated in the UK, or not?

Correct.

if the customers consider HU untrustworthy (I do not share this perception but this is not the topic), they probably will not like to pay to HU bank...

He can open with any of the EEA available EMIs

 

[Forester]

He can open with any of the EEA available EMIs

For sure, there exist some. Even maybe some of ~300 UK EMIs can onboard such company, of course.

 

[GPT]

Depends on the eye of the beholder. A little bit of a tarnished reputation from past events but also one of surrvivorship and adaptation.

The reputation of Cyprus is bad you look through the eyes of Dutch government.

The main reason for this is Toine Manders who got arrested in Cyprus in (if I remember correctly) 2014, extradited and prosecuted by the Dutch.
Ever since Cyprus is frowned upon.

 

[CyprusLawyer101]

The reputation of Cyprus is bad you look through the eyes of Dutch government.

The main reason for this is Toine Manders who got arrested in Cyprus in (if I remember correctly) 2014, extradited and prosecuted by the Dutch.
Ever since Cyprus is frowned upon.

I checked a few news articles on the internet. Apparently he was a lawyer and politician who adviced on tax structuring through Cyprus trusts and Seychelles cos. He was investigated and was to be tried, bur haven't found any references to the verdict of whether his advice stood the test of the court. Any references you could provide?

 

[GPT]

I checked a few news articles on the internet. Apparently he was a lawyer and politician who adviced on tax structuring through Cyprus trusts and Seychelles cos. He was investigated and was to be tried, bur haven't found any references to the verdict of whether his advice stood the test of the court. Any references you could provide?

In sofar I know it never got to a trial.

A quick search does tell me that info has been scrubbed. I can barely find anything anymore about that case.
He was for quite some time in prison. It's true that he tempted faith. Since then doing business with Cyprus receives a lot of attention in The Netherlands. Hence why I say that Cyprus is -in my opinion- not the best option for "gap".

 

[uplana]

My KFT is currently based in Újlengyel instead of Budapest. 0% local business tax.
Many accountants have warned me, because these are usually small family houses where 200 companies are registered and called a "company cemetery". But you just have to choose a good provider.

UK LTD sounds good


Anything that is not Balkan or Central/Eastern Europe I guess.
I'm not sure about Cyprus, how is perceived.

You may tell us where this landet? it's the least you could do with all this help you got from here, other users may be in an equal situation as you and like to learn.

 

[JohnLocke]

Serious question... Do people still consider the UK a reputable jurisdiction? All I needed was a little walk around London to completely change my mind.

Depends on what it is you want to setup there. If you just want a company you don't need to consider how the country is if you do business outside it and only need the company as a kind of pass through for instant.

 

[GPT]

Depends on what it is you want to setup there. If you just want a company you don't need to consider how the country is if you do business outside it and only need the company as a kind of pass through for instant.

I would then add to the above to find a country where it is relatively easy and cheap to register and file. UK in that sense isn’t the worst as you can do a lot yourself and because of that pricing is very competitive when you outsource it.