hello everybody,
what if one creates a holding company in a 0% tax jurisdiction (i.e. bvi) and put 1 mio € equity
then incorporate spanish operating company, 100% owned by the holding, with 10k€ equity
the bvi holding lends 1 mio to the operating at 8% p.a. which can be considered arm's lenght as of today (it is even low for a corporate unsecured loan)
with the borrowed money the operating purchases real estate
at that point the spanish operating will have to pay 80k per year to the holding in interests, which can be deducted from renting revenues, i.e. producing 0 taxable income
can this work? or what am I missing?
what if one creates a holding company in a 0% tax jurisdiction (i.e. bvi) and put 1 mio € equity
then incorporate spanish operating company, 100% owned by the holding, with 10k€ equity
the bvi holding lends 1 mio to the operating at 8% p.a. which can be considered arm's lenght as of today (it is even low for a corporate unsecured loan)
with the borrowed money the operating purchases real estate
at that point the spanish operating will have to pay 80k per year to the holding in interests, which can be deducted from renting revenues, i.e. producing 0 taxable income
can this work? or what am I missing?
