Best strategy for minimum taxes of online tech company with income from worldwide?

[BlueBerry]

Hello
We have a tech company developing software and our income is from worldwide.
We the founders are phisically based in EU. Our employees are from all over the world though. Everything is online based.

We are looking for legal strategy to minimize our taxes.
Ideally we are looking to establish a company in jurisdiction with no tax on foreign income, as our income will be foreign for most jurisdictions.
And from this company to pay dividends to the owners and pay just dividends tax which is quite low in EU.

So, two questions here:
1. Do you see a better way to do this?
2. What would be appropriate jurisdiction to register our company in? It needs to be something respactable though. If we are Belize based for example, I suspect we will lose some business because of the bad reputation of this jurisdiction.


Thanks.

 

[john Ashby]

Try an Ajman or RAK free zone company (both within the UAE). The Use has a good reputation but has no corporate or income taxes

 

[john Ashby]

Sorry - auto spell correction got in there - I meant the UAE has a good reputation

 

[negon]

You want to look into jurisdictions like Cyprus, Maltha and similar also don't forget to consult a tax lawyer or CPA!

 

[john Ashby]

Malta has a corporate tax rate of 35%. This can be mitigated to as low as 5% for certain income and dividends, but to fully benefit that would require you to have a holding company in another jurisdiction. Cyprus also has corporate tax requirements, so again not the perfect solution. You could try Hong Kong (which only taxes profits on sale made within Hong Kong) but that will require you to have accounts audited in Hong Kong. UAE does not require audited accounts and also offers you the possibility of claiming tax residency there.

 

[mnschwarz]

Hello
We have a tech company developing software and our income is from worldwide.
We the founders are phisically based in EU. Our employees are from all over the world though. Everything is online based.

We are looking for legal strategy to minimize our taxes.
Ideally we are looking to establish a company in jurisdiction with no tax on foreign income, as our income will be foreign for most jurisdictions.
And from this company to pay dividends to the owners and pay just dividends tax which is quite low in EU.

So, two questions here:
1. Do you see a better way to do this?
2. What would be appropriate jurisdiction to register our company in? It needs to be something respactable though. If we are Belize based for example, I suspect we will lose some business because of the bad reputation of this jurisdiction.


Thanks.

Depends on which EU country. The main issue to look in to is CFC laws. Basically means if you control a foreign company, you will still be taxed as though it was a resident company. If your country has these laws, you could look at a Foundation (& possibly nominees) owning the company to distance yourself from the ownership and management. Even with this setup though, banking gets difficult with the AEOI and CRS. And dividends would then go to the Foundation (as legal owner), not yourself. You'd probably end up 'employing' yourself to take income from the company and then paying local personal income tax rates. But if your country doesn't have CFC laws you're sitting pretty! Agree with @auric about consulting a professional.

Hong Kong can be a great solution is you want low/no taxes with a reputable image. However you need to be doing a pretty high turnover and profit to validate the additional headache and expense of auditing etc.

Another option may be to use a local EU country for the image, and reduce your onshore taxes by shifting profits to an offshore company by means of consulting agreements, intellectual property or trademark fees, loans etc. Again it depends if your profits are high enough to warrant the additional costs of this kind of structure.

 

[BlueBerry]

Thank you all. Here is what I gathered so far.

Singapore no good, has 8% income taxes over everything over 100 000 SGD anually and rises from there.
Cyprus was offered here, but after they did a hair cut of 30-40% of all their bank depositors few years ago, I wouldn't touch it. Not to mention I believe they have significant income tax as well?
Belize seems to fit the bill but it sounds shady as hell, we would lose business just for having it
Saychelle about the same deal like Belize

So we are left with Hong Kong and UAE?

UAE seems to be new player in offshore game, any first hand info on how are they and if we can count on pollitical stability with them?

We are based in Bulgaria, will have to check about those CFC laws now. Thank you

 

[BlueBerry]

Controlled foreign companies (CFCs)
The Bulgarian tax legislation does not provide for any CFC rules.


source: http://taxsummaries.pwc.com/ID/Bulgaria-Corporate-Group-taxation

so we are good?

 

[negon]

Controlled foreign companies (CFCs)
The Bulgarian tax legislation does not provide for any CFC rules.


source: http://taxsummaries.pwc.com/ID/Bulgaria-Corporate-Group-taxation

so we are good?

thanks great share..

 

[diablo]

Try an Ajman or RAK free zone company (both within the UAE). The Use has a good reputation but has no corporate or income taxes

It's very expensive as far as I understand.. while St. Kitts, Belize, Seychelles and even BVI and Cyprus are way cheaper?

 

[BlueBerry]

How expensive exactly?

Unfortunately St. Kitts, Belize, Seychelles don't have great reputation and we need reputable destination.

 

[JohnLocke]

You may want to approach a few service providers, Cyprus is typically starting at 2800 euro and BVI aprox 2000 euro.