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Low tax Setup Spain resident

Sir Gelato

Sir Gelato

Member Plus
May 8, 2019
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#1
Three partners, Spanish nationality and residence. Currently with a UK Ltd but without income or billing as we had not yet closed any deal so far.

We put buyer and seller in contact, they make a contract for the supply of material and we take a commission for each purchase made by the buyer.
The commissions are high (at least for us), we are talking about $300K to $1MM per month in some cases.

The activity is totally brokerage.

We want to avoid paying corporate tax in Spain and we have thought about incorporating a company in Estonia, maybe Lithuania or going a little up in Switzerland, Louxembourg.... But without substance at the moment.
Would it be a viable and legal option while we continue residing in Spain? In the future, if we go ahead we would like to change the personal residence to another country with less taxes but at the moment we do not have that option.

I had thought about Cyprus, but it would be more complicated in terms of bureaucracy and audited accounts.

Even so the main idea is to incorporate a company that allows us to be taxed at a low corporate tax rate and that we can remain residents in Spain. Without having double taxation or problems with the tax authorities.

Thank you for your help
 
#3
You might be interested in establishing a Spanish company in low-tax zones like ZEC and have at least one of you to relocate there (or at least to relocate the main residency there).
 
#4
Sir Gelato said:
Three partners, Spanish nationality and residence. Currently with a UK Ltd but without income or billing as we had not yet closed any deal so far.

We put buyer and seller in contact, they make a contract for the supply of material and we take a commission for each purchase made by the buyer.
The commissions are high (at least for us), we are talking about $300K to $1MM per month in some cases.

The activity is totally brokerage.

We want to avoid paying corporate tax in Spain and we have thought about incorporating a company in Estonia, maybe Lithuania or going a little up in Switzerland, Louxembourg.... But without substance at the moment.
Would it be a viable and legal option while we continue residing in Spain? In the future, if we go ahead we would like to change the personal residence to another country with less taxes but at the moment we do not have that option.

I had thought about Cyprus, but it would be more complicated in terms of bureaucracy and audited accounts.

Even so the main idea is to incorporate a company that allows us to be taxed at a low corporate tax rate and that we can remain residents in Spain. Without having double taxation or problems with the tax authorities.

Thank you for your help
Click to expand...
Without substance means youll be 100% exposed to tax risk in Spain. Anti tax avoidance directives are there for a reason. That doesn't mean you cant possibly avoid tax with careful planning though.
 
#5
Sir Gelato said:
Spanish nationality and residence.
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This is unfortunate.

Sir Gelato said:
Would it be a viable and legal option while we continue residing in Spain?
Click to expand...

No No No......and for the avoidance of doubt NO.

Sir Gelato said:
Even so the main idea is to incorporate a company that allows us to be taxed at a low corporate tax rate and that we can remain residents in Spain.
Click to expand...

Forget it. Leave Spain or pay taxes there. Mess around with setups and Spanish tax man will deal with you.
 
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#6
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#7
Sir Gelato said:
Three partners, Spanish nationality and residence.

We want to avoid paying corporate tax in Spain.
Click to expand...

Ain't gonna happen BUT you can minimize it to 4% if you relocate your business in the Canary Islands, invest 50K and hire at least 3 people there + resident director.

The next step would be to setup a holding company in a favorable country like Estonia so that when the time will come you will cash out without paying 19% tax on dividend distributed to the holding BUT you also need to move your personal tax residency in favorable jurisdiction as well.
 
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#9
That's not possible unless you do a workaround which we can't discuss here but only in mentor group gold.
 
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#10
I left Spain for this reason, there is no option and even doing everything perfectly they will go after you to try to take a nice % portion

Even Banks, every X months they block your account and ask for documentation, or to fill forms etc

Spain is an authentique HELL for Entrepreneurs
 
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#13
Lucas32 said:
Spain is an authentique HELL for Entrepreneurs
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Well, yes and no. Yes, it's much more difficult to do business here comparing to the US or even UK. Some might say that Spain has one of the worst entrepreneur climate in the EU - combining a typical South Europe bureaucracy and general slow pace of doing things with notorious zeal of local taxmen.
However there is much less competition, pretty solid local market and a good place to expand into South America. Expenses are low, there are plenty of expats willing to work for less while enjoying the lifestyle, workforce is generally cheap. I know a whole bulk of local startups who flourish exactly because everyone else got stuck in the local bureaucracy and there are many investors (mostly British and German) who actively invest in Spanish startups.
So long story short - Spain is a terrible country if you want to run a greyish setup and have a peace of mind. It's a wonderful country if you want to enjoy the lifestyle and plan to make money on Capital Gains rather than trading income or salary.
 
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#14
manukahoney said:
It's a wonderful country if you want to enjoy the lifestyle and plan to make money on Capital Gains rather than trading income or salary.
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CGT may be reasonable in Spain but you forget Large Fortunes Tax you will pay each year. You will end up loosing all your wealth before retirement due to Spains Large Fortunes Tax :(.

https://www.offshorecorptalk.com/th...duces-tax-on-large-fortunes.39950/post-243256
Bottom line is be poor and enjoy Spanish lifestyle and weather. Be rich and regret the day you ever set foot in the country.
 
#17
manukahoney said:
That is a sad development indeed. LTF is planned as a one-time tax, however there is a non-slim chance it will stay in one form or another.
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Yes that is what they said about the last wealth tax...lol. Look at their track record and facts below. Maybe Spanish government have their own definition of temporary. But 31 years from 1977 to 2008 alone is not mine and one can argue basically it has continued till today with just a different name and a short break in between :confused:.

------ quote start

Spanish Wealth Tax was introduced as a temporary tax in 1977 and suspended in 2008. It was then reintroduced, supposedly on a temporary basis, from 2012 onwards as an emergency economic measure due to the financial crisis. It has ultimately been extended until the present day and is in force in all the 17 autonomous regions of Spain.

---- quote end

Spain is a tax hell hole for those with real money who choose to live and follow the tax laws there.
 
#20
pomegranate said:
and make sure to cut most links with Spain and not spend too much time there. Spanish authorities will watch you.
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All YouTuber from Spain are in Andorra, no more >50% tax, immediately 10% maximum. Wealth tax, gift tax, inheritance tax 0%.
But what's new is you have to learn Catalan, a lot of complaints now, it's really crazy that they force you to learn Catalan.
 
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