Perfume Dupe International Setup

[nurredon]

Hi Offshorecorptalk Team,

I hope you're having a great Halloween weekend! I'm reaching out again to pick your brain. I am setting up a new structure for a client who wants to launch a perfume dupe e-commerce business in Europe.

The plan is to establish a company in Malta with a nominee director and nominee shareholder. The company's owner (behind the nominee shareholder's trust deed) will be his Cook Islands LLC. We'll be using a two-tier structure with a holding company and a trading company to benefit from the fiscal unit and achieve an effective tax rate of 5%.

We'll register the Maltese company for VAT and use Malta's VAT system to pay VAT in every country through the EU's One Stop Shop mechanism.

A couple of considerations I'd like to get your input on:

• Legal Challenges and Content Management: We anticipate potential cease and desist letters from original manufacturers. Fighting legal battles can be costly and time-consuming, with a high chance of unfavorable outcomes. To manage this risk, we're considering ignoring the C&Ds or responding by stating that the editorial content and marketing are delegated to a company in jurisdictions like Costa Rica, or Turkey.
  • Jurisdictional Advantages: These jurisdictions are known for legal environments that can make it more complex and costly for foreign entities to initiate legal action. For example:
    • Costa Rica: Costa Rica doesn't readily recognize foreign judgments or fines (they must be obtained through a lengthy process), making legal proceedings very burdensome and difficult.
    • Turkey: Turkey might take a long time to sue in due to lengthy legal processes and language differences, adding layers of complexity to any legal action.
    • Nevis: this is just an example, but Nevis requires significant bonds to be posted before legal action can proceed (e.g., a $100k bond), which can deter potential lawsuits.
  • Industry Examples: I've noticed that some other perfume dupe companies adopt similar strategies by delegating their content and marketing operations to entities in these jurisdictions. For example, XXXXXXXX utilizes a setup where their marketing and editorial arm is based in a Turkish company, and I believe it's for the reasons I'm explaining.
  • Realistic Limitations: I know that all of this doesn't eliminate the risk entirely, and they can still pursue legal action against the Maltese company issuing invoices. However, I guess it's a way to deter them and make it more difficult for them to proceed.
  • Questions: Has anyone here had experience with structuring their operations in this way? Are there specific legal or operational challenges we should be aware of when delegating content and marketing to companies in these jurisdictions? Any advice on how to effectively implement this strategy would be greatly appreciated.
• Shipping and Logistics: We'll be sourcing the dupes from a German manufacturer and plan to use a shipping company to pick up the packages in Germany and distribute them across Europe, essentially operating in a dropshipping model. From my understanding, this setup should be compliant with EU regulations.
  • Questions: Does anyone have experience with this kind of arrangement? Are there any potential regulatory hurdles or logistical challenges we should anticipate with cross-border dropshipping within Europe?

Thanks a lot for your help!

Best regards,
Nurredon

 

[Sols]

Not sure what you're worrying about. Scents cannot be copyrighted. Just don't use competitors' names and branding in your marketing materials. You can have influencers and reviewers independently compare your perfumes to well known ones, though.

 

[Martin Everson]

@nurredon I am editing your post to remove advertising/reference to that company.

 

[Despina]

It’s a dumb business, no real differentiator between your client business and all the other competitors.

If you are paid only to set things up fine, get paid and leave.

If your deal involves getting paid a % of revenue then you’ll work basically for free because the only differentiator is the selling price so it will be a race to take price to the bottom.

 

[nurredon]

Yes, I’m just an advisor here, no equity involved—but thanks for the thought! The business is already bringing in $20M in revenue and $6M in profit annually with a different brand. Not too bad.

As for scents, they can be copyrighted in some countries, but most brands choose not to patent their formulas—similar to Coca-Cola—to keep the details private. However, they do pursue legal action for unfair competition and other claims, even if a product is labeled as “inspired by” the original, and they constantly send C&Ds to dupe companies and influencers. There are many cases like this; I went down that legal rabbit hole myself and consulted with different lawyers. It varies by jurisdiction, but in the end, the brands often win.

Any thoughts?

Thanks a lot!

 

[yngmind]

There are physical stores in Dubai selling perfume dupes. I love their stores.

It seems like you can easily do that offline and set up a company and a bank account. It's called Parfum.ae if anyone was wondering.

They have stores in Moscow too.

 

[JohnnyDoe]

There are physical stores in Dubai selling perfume dupes. I love their stores.

Same in NYC Just ask the clerk.

 

[yngmind]

Our creation of Dior, Chanel etc

Don't they get the CND?

How do you plan to open a bank account for a such complicated structure with nominee director, nominee shareholder, owned by the Cook Islands trust selling dupe perfumes..

 

[Despina]

How do you plan to open a bank account for a such complicated structure with nominee director, nominee shareholder, owned by the Cook Islands trust selling dupe perfumes..

Pretty much impossible imho.

In Malta you can’t open a bank account with BOV even if your business is a coin-operated toilet.