Help Needed: Best Country to Establish a Company

[JohnLocke]

I agree, you can find an accounting firm like @James Turner that can handle the entire company for you at a very reasonable price per year.

 

[sebastian]

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

https://nav.gov.hu/en/taxation/double_taxation_treaties

Where did you setup your company after all, I'm interested in to learn a little?

 

[AlicaFunk]

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

That may help a lot to get started. Some customers just complain to complain at the end of the day you won't satisfy them anyway.

 

[aage]

Cyprus Holding and Hungary company for trading could work well out for tax savings.

 

[GPT]

Cyprus Holding and Hungary company for trading could work well out for tax savings.

That would be the "normal" use of the parent-subsidiary directive if you talk about dividends.
In Hungary you will be taxed "normally" for Corporate tax and VAT (insofar applicable) and other duties and or excises.

 

[diro]

Cyprus holding and Hungary trading makes only meaning if you live in one of the countries right?

 

[LFGC]

It absolutely still is, individually FIG (foreign earned income and gains) has replaced non-dom status. Some of the world's biggest ecom and fintech companies are domiciled in the UK as LTD companies and they pay ZERO taxes by paying management fees to owned companies in other tax-friendly jurisdictions. London is still the most powerful city in the world. It is the center of finance for not just Europe, but the world. There are many extremely talented and wealthy individuals in London in a myriad of industries from finance to technology. Capital availability for businesses is only rivaled by NYC and SF.

As for London, I am not sure where you are from or where you walked, but central and west London are bar none some of the most elite places in the world with virtually no equivalent. The architecture, private clubs, sophistication and refinement of people you see just walking, not to mention the sheer concentration of wealth, and consumer comforts (farm to home delivery services delivering the best grass fed pasture raised beef and organic vegtables being one of those) is unrivaled. You can also live in London tax free for 4 years now with FIG and remit that money to the UK without any taxes. 4 years is enough time to plan for the future or monitor for further progressive changes which are highly likely.

 

[GPT]

Cyprus holding and Hungary trading makes only meaning if you live in one of the countries right?

No, not at all.

It depends a bit on the tax regime of where you live but in most cases it will be beneficial for you to not live in Hungary or Cyprus.

 

[diro]

Thank you for explaining. I will search advise with my tax consultant.

 

[daniels27]

It absolutely still is, individually FIG (foreign earned income and gains) has replaced non-dom status. Some of the world's biggest ecom and fintech companies are domiciled in the UK as LTD companies and they pay ZERO taxes by paying management fees to owned companies in other tax-friendly jurisdictions. London is still the most powerful city in the world. It is the center of finance for not just Europe, but the world. There are many extremely talented and wealthy individuals in London in a myriad of industries from finance to technology. Capital availability for businesses is only rivaled by NYC and SF.

As for London, I am not sure where you are from or where you walked, but central and west London are bar none some of the most elite places in the world with virtually no equivalent. The architecture, private clubs, sophistication and refinement of people you see just walking, not to mention the sheer concentration of wealth, and consumer comforts (farm to home delivery services delivering the best grass fed pasture raised beef and organic vegtables being one of those) is unrivaled. You can also live in London tax free for 4 years now with FIG and remit that money to the UK without any taxes. 4 years is enough time to plan for the future or monitor for further progressive changes which are highly likely.

Ok, so you use one UK Ltd and then companies in Singapore and Hong Kong? Do you have more detail about this?

 

[LFGC]

Most often in terms of e-commerce, it is a Dutch B.V that is used to transfer profits via marketing and advertising away from the UK LTD. However, there is no one size fits all. You'll need to talk to the big four to really establish a list of structures and weigh the benefits and drawbacks of each one. This would also exclusively apply to businesses doing at a very minimum £5M in yearly turn over that are digital.

 

[daniels27]

Most often in terms of e-commerce, it is a Dutch B.V that is used to transfer profits via marketing and advertising away from the UK LTD. However, there is no one size fits all. You'll need to talk to the big four to really establish a list of structures and weigh the benefits and drawbacks of each one. This would also exclusively apply to businesses doing at a very minimum £5M in yearly turn over that are digital.

Have you done it?

 

[EliasIT]

Dutch B.V. isn't cheap to setup also you need some good accounting firm to help you with all of it to maintain the company.

 

[daniels27]

Dutch B.V. isn't cheap to setup also you need some good accounting firm to help you with all of it to maintain the company.

Do they have mandatory audits there?

 

[GPT]

Dutch B.V. isn't cheap to setup also you need some good accounting firm to help you with all of it to maintain the company.

Setup starts around 700 euro's. That is not too bad.

Do they have mandatory audits there?

Annual accounts of companies and institutions must be audited by an accountant if they meet two of the three criteria for two consecutive years:

* Balance sheet value above €6 million
* Net turnover above €12 million
* On average more than fifty full-time employees.

If your company does not meet the criteria, your annual accounts may also be drawn up by an accountant.

 

[daniels27]

If your company does not meet the criteria, your annual accounts may also be drawn up by an accountant.

By an accountant or can I do it myself. I am very, very vary of any company where I cannot do it myself.

 

[GPT]

By an accountant or can I do it myself. I am very, very vary of any company where I cannot do it myself.

You can also do it in-house (yourself) if you do not meet the criteria.

The only thing to keep in mind is that its better to outsource it in NL to an accountant (for most companies that dont meet the above criteria, outsourcing accounting will cost in the 2500-3500 range annually) as you are then less likely to encounter a random tax authority audit.

 

[LFGC]

If you're attempting to create a multinational structure yourself to avoid taxation, you're clearly not at a level of income or turn over to even consider it, continue paying taxes n your home country and grow your business, you'll likely end up costing yourself far more headache...

 

[daniels27]

If you're attempting to create a multinational structure yourself to avoid taxation, you're clearly not at a level of income or turn over to even consider it, continue paying taxes n your home country and grow your business, you'll likely end up costing yourself far more headache...

How come? I think we discussed the minimums here and I am well above it. As long as I can file myself, I have no issues. I have all the reports done in a couple of hours if there is no auditor involved (in which case I easily waste a week for just one filing).

You would recommend a UK Ltd. and then a Dutch B.V. to transfer for matketing and ads. And then get the money out in form of dividends?

 

[LFGC]

How come? I think we discussed the minimums here and I am well above it. As long as I can file myself, I have no issues. I have all the reports done in a couple of hours if there is no auditor involved (in which case I easily waste a week for just one filing).

You're going to file the necessary accounting documents and other filings in the UK and NL? You're going to properly structure the contracts and agreements necessary between the companies involving the transfer of profits through administrative expenses at the proper intervals and per the accordance of the contracts forged between the two entities to have proof of a bonafide structure? Even if possible, seems like a poor use of time for someone running a multi-million dollar business.