Sub-year offshore company

[anticfc]

I see a lot of CFC laws that in order to simplify the definition of ownership, defines ownership at the end of the tax year only.

This is interesting as it seems CIT of 0% is then possible by simply not owning the company at the end of the year. This creates dividends or capital gains that must be taxed locally, but that's only one level of taxation.

Does anyone have experience with this idea?

 

[negon]

That's indeed new to me but very interesting news. Will have to read about it and consult some of the professionals to ask if this can be true. It would be a great way to avoid reporting.

 

[sialala]

any updates in this case ?

 

[Honest Junior]

One of the best ideas I've heard on this topic. I am not well versed in this matter, but I will follow the discussion with interest.
And what kind of jurisdiction are we talking about? I would have done a little research question)

 

[totlori9]

I keep bumping into the 'last day of calendar year' regarding CRS reporting on statements issued by banks too.

I was just thinking about the same with bank accounts. Keeping no or neglible balance on the last trading day of the calendar year, use normally throughout the year. Never did proper due diligence about how CRS data is handled though, just an idea.

 

[anticfc]

@Honest Junior I'm working on compiling an overview of CFC rules - focusing on high-tax EU countries.

But there's also management & control to consider. If the company is operated from your jurisdiction, then it will have to pay taxes there.

One option that I think hasn't been discussed much, that could work with sub-year CFC companies is to describe everything that the company should do in the articles of association. Exactly which bank account to open, what agreements to enter into, when to close down the company etc.

Then if those are the only decisions that are ever done in the company, and there is a nominee director that acted on these instructions from the articles of association (not from the owner), then was any control exercised from your own jurisdiction? Maybe, maybe not.

 

[totlori9]

@Honest Junior I'm working on compiling an overview of CFC rules - focusing on high-tax EU countries.

But there's also management & control to consider. If the company is operated from your jurisdiction, then it will have to pay taxes there.

One option that I think hasn't been discussed much, that could work with sub-year CFC companies is to describe everything that the company should do in the articles of association. Exactly which bank account to open, what agreements to enter into, when to close down the company etc.

Then if those are the only decisions that are ever done in the company, and there is a nominee director that acted on these instructions from the articles of association (not from the owner), then was any control exercised from your own jurisdiction? Maybe, maybe not.

I really like that idea, kudos for you!

Maybe it is even possible to make the company for a limited timespan in the articles of association? Like a close end fund?

 

[Jessie]

I started reading about CRS just today but also noticed that they mention they report the balance at the end of the year.
However, if the account was closed before the end of the year they might report the closing amount. I suppose they mean the last amount before your last withdraw and closure, since you can't really close account with money.


Anyway as mentioned here if you don't close it but get it to a low amount for the end of the year they should report just that. As stupid as it seems.

However, one other thing to consider, drastically lowering your balance for the end of the year wouldn't it be a reason to file "suspicious activity" report?

Does anyone know how exactly does the data they exchange look and based on what exactly they label some as "reportable accounts"?