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Best jurisdiction for company to hold shares

J

Jmeery1

New member
Sep 30, 2019
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#1
I am looking for the best offshore jurisdiction to hold on to passive shares. My main concern is reducing capital gains tax as much as possible (I'm not worried about dividends or income) since the investments will be high growth technology companies.

I will be personally tax resident in the UK, which means there must be real substance behind the company where the shares are held.

I will need minimum 3 directors, and to hold physical board meetings in the country where the company holding the shares is tax resident.

I was considering a Singapore resident company, but the rules regarding capital gains are unclear. Has anyone had experience with Singapore treatment of capital gains? If the sole purpose of my company - an investment company - is to buy shares and then sell them for a profit, would the shares be able to be sold tax free because they would be treated as Capital Gains? Or would the gains be treated as trading income, since what the company does, is buy shares (stock) and then sell them for a profit? I expect the holding periods will be 3-5 years minimum.

I was also looking at a Luxembourg SPF, which has much higher running costs than a Singapore company. However, this type of company seems more designed for what I need. However Luxembourg has more of a tax haven taint.

Can anyone suggest any other type of company in any other jurisdiction, that allows me to have real substance in the jurisdiction, yet still hold and sell investments capital gains tax free?

Thanks in advance for any advice and recommendations!
 
#4
Jmeery1 said:
Cyprus looks like it could be an option although I'm not sure how long I can trust any EU jurisdiction.
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Cyprus is ideal for this type of company. There no CGT on sale of shares, unless such shares are connected to real estate assets.

Substance can be created by the provision of nominee services that can be provided by a law firm, noting that the costs related to your line of business I expect them to be manageable.

Happy to PM you to discuss this.
 
#5
CyprusLaw said:
Cyprus is ideal for this type of company. There no CGT on sale of shares, unless such shares are connected to real estate assets.

Substance can be created by the provision of nominee services that can be provided by a law firm, noting that the costs related to your line of business I expect them to be manageable.

Happy to PM you to discuss this.
Click to expand...
Hi, could you PM me? I have a few questions regarding Cyprus since you seem to know your stuff.
 
#6
What would you expect the costs to be ro create substance? Bearing in mind, the substance needs to satisfy HMRC in the UK, more than the Cypriot authorities. This means the directors need to (at the very least, appear to) take or participate in decisions on which investments to make.
 
#7
First off all there is no clear definition of substance. For groups with international transactions, the a risk cannot be eliminated.

Each case needs to be treated separately. Your target is to minimize the risk at with the optimum cost.

Strong criteria that prove substance:
1) Own or rent offices
2) Local (i. E CY tax residents) directors should be qualified with proper experience and knowledge that is line with the business activity.
3) Avoid power of attorney for various agreements.
4) Part of the payroll should be located in CYPRUS (if applicable)
5) No suspicious (not arm length) transactions between related companies in order to transfer the profit to the Country with low or NIL tax.

Please note the above information is for general awareness only and cannot be used as a professional advise.
 
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#8
Jmeery1 said:
What would you expect the costs to be ro create substance? Bearing in mind, the substance needs to satisfy HMRC in the UK, more than the Cypriot authorities. This means the directors need to (at the very least, appear to) take or participate in decisions on which investments to make.
Click to expand...
The costs would depend on a case by case. It could be better to have an individual as a director. Happy to discuss further
 
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