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Switzerland CFC rules
- Thread starter D0naldDuck
- Start date
No the bank account is in a different country.
I came up with this setup myself. Perhaps this thread should better be moved into the Gold group as we don’t want this solution to become of public domain if it’s unusual.
Well it’s unusual at least to me.
In any case this setup has a lifespan of 6 months because i’ve read in some Cyprus thread that starting next year a non res CY company will have to be resident somewhere else, otherwise will be treated as a CY resident.
You are right, starting from 1 Jan 2023 the party is over.
However, the new rules can be useful for other types of setup. In some instances, people wanted to make their CY company resident in CY but they couldn’t so easily due to the burdensome requirements that will no longer be in place from 2023.
Sorry that is not working any longer. I'm right now in Switzerland and work with some attorney here to get a setup for a customer. I asked out of curiosity if this is working, and they told no it is not.
But if it has been working for you then is is very smart.
Out of curiosity, what is required right now in terms of substance in order for an offshore company not to be resident in Switzerland?
Very very interesting, so if I open a holding company in Cyprus and keep my patents in that holding company, move my tax residency to Lugano in switzerland which is less than 3 hr drive to my R and D company in italy and my place of interest, receive 200k euros per year as interest / royalty from the cyprus company and pay tax on that and keep the swiss authorities happy, sell my company in Cyprus for 50mil euros in the next 5 years, I pay 0 capital gains or any taxes if i keep the money in the holding company in Cyprus? As an Italian citizen i dont need to negotiate any tax deal with any canton right ?? I have freedom of movement to move to Switzerland ? Can this structure work ? Ofcource i will move my tax residency to Switzerland and will actually move with my family.
I have IPs too, will it work? Or you think malta and Cyprus are better for company and personal taxes?
It might not work well:
https://www.ibanet.org/ATAD3-overview-latest-developments-13-March-2023
New regulations are coming to EU about EU holding companies. If you don't have substance in Cyprus, normal directors full time , offices and employees it might not work
Good to see you back, my holding company in Cyprus will have a nominee director and an office and all board meetings will happen there, just trying to see the feasibility of Switzerland if it can work, ofcource i am not trying to save 10k or 50k euros, I have more than 6 digits at stake if there is a screwup
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Just read the proposed directive. Director will have to work full time. He will not be able to have other job. Office will have to be separate etc etc. Just nominee directors and board would not be enough
This regulation will kill holding companies in EU
My fair advice would remain the same. Just rent apartment in Monaco for your family and forget all taxes.
The rules for non-EU holding companies are typically even stricter. Rules for EU holding companies are only more lax because too strict rules would go against EU treaties.
So just as an exercise and to recap:
Non res CY company with US EIN is seen as resident in CY from US (otherwise US would not accord relief under DTA) but CY sees as not resident.
CH sees the non res CY company as resident outside CH (because shareholder ia not CH resident nor director)
The non res CY enjoys 0% tax and Johnny receives dividends tax free in Cyprus.
This doesn't make sense? The DTA only applies to companies that are resident in one of the contracting countries? Sounds like a mistake on the part of the IRS...?
So I don't have any other option in europe to save on capital gains and minimise corporate tax? Only left with Malta, cyprus and Monaco for personal tax residency? Cyprus holding which allows me to pay 2.5% on qualifying patent income? Any other solutions then please let me know, thanks
Holdings is thing which is decreasing for 5 years now. After ATAD3 regulation will be almost impossible to have holding in EU. Only for large corporations who can have full time employees and not only holding business.
I don't think this Cyprus 2.5% option will exist next year. After google scandal of tax avoidance through IP rights this area is very very strict now
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