Switzerland vs Singapore vs Hong Kong Tax Set up for Foreign income?

[banafinfodafuggiano]

Doesn't work like that. It's about what the company does, where it's based, who the owners/directors, et cetera are.

A Singapore company selling ebooks with owners/directors resident in Malaysia is different form a Singapore company selling toxic waste materials with owners/directors based in Ivory Coast.

Accountants just told me Singapore requires any company that is incorporated in Singapore to open a local bank account, therefore making the remittance tax exemption useless, is this correct?

 

[Sols]

Accountants just told me Singapore requires any company that is incorporated in Singapore to open a local bank account, therefore making the remittance tax exemption useless, is this correct?

Never come across that requirement before. But if there is some valid reason you have to, you could do it, and only remit into that account the amount of money you need to remit into Singapore. If there are some government fees that can only be paid by local bank transfer, wire that money to Singapore, make the payment, and keep the rest outside.

I'd push back on the supposed requirement and get an explanation for why it's required. Might be good to speak with multiple accountants/service providers.

 

[banafinfodafuggiano]

Never come across that requirement before. But if there is some valid reason you have to, you could do it, and only remit into that account the amount of money you need to remit into Singapore. If there are some government fees that can only be paid by local bank transfer, wire that money to Singapore, make the payment, and keep the rest outside.

I'd push back on the supposed requirement and get an explanation for why it's required. Might be good to speak with multiple accountants/service providers.

I don't know , i'm talking to her now and she just said any income regardless of the bank account location, has to be declared and tax paid on it...

 

[Sols]

That's not what she's saying. She's not saying everything has to be taxed. Her point is that everything has to be declared and included in the accounting of the company. Declaring isn't the same as paying tax. It's just basic bookkeeping.

It's correct that money held outside of Singapore may be taxed in Singapore, if for example the work done to earn that money took place in Singapore or if it's royalties or some other forms of income.

 

[jafo]

Her point is that everything has to be declared and included in the accounting of the company. Declaring isn't the same as paying tax. It's just basic bookkeeping.

This freaks me out! This makes me look over my shoulders every picosecond.
Is there a jurisdiction where this is NOT a requirement?

 

[BritishSecret]

It's doable in Singapore, if you have no presence there, and if you don't move the money to Singapore or use the money for payments/transactions in Singapore.

great to know thanks

white hat sales

what are white hat sales?

 

[Sols]

Is there a jurisdiction where this is NOT a requirement?

Not that I can recall, but I'm not the one filling in tax forms — at most I look at them before they get submitted. AFAIK, it's a general rule that you have to declare all of your company's income/profits, and in jurisdictions with territorial/remittance/similar basis tax system, there are separate boxes for taxable and not taxable income.

 

[banafinfodafuggiano]

Not that I can recall, but I'm not the one filling in tax forms — at most I look at them before they get submitted. AFAIK, it's a general rule that you have to declare all of your company's income/profits, and in jurisdictions with territorial/remittance/similar basis tax system, there are separate boxes for taxable and not taxable income.

Do you have any official source/link that states clearly (black and white) that income generated and not remitted and not spend in Singapore, is therefore not taxable in Singapore? (on a corporate level).

 

[Don]

This freaks me out! This makes me look over my shoulders every picosecond.
Is there a jurisdiction where this is NOT a requirement?

In Estonia you don't need to declare anything with a company if you don't distribute profits, with exceptions to non-cooperative jurisdictions.
You declare profit distributions and taxes paid abroad when you need to access tax credits or participation exemption.

Even for individuals there exists a tax deferral regime under which you don't declare untaxed dividend and interest income in limited cases.

Do you have any official source/link that states clearly (black and white) that income generated and not remitted and not spend in Singapore, is therefore not taxable in Singapore? (on a corporate level).

https://taxsummaries.pwc.com/singapore/corporate/corporate-residence
https://www.iras.gov.sg/taxes/corpo...y is a non,the company's policy and strategy.
https://www.iras.gov.sg/taxes/corpo...r-a-certificate-of-residence-tax-reclaim-form

 

[Sols]

Do you have any official source/link that states clearly (black and white) that income generated and not remitted and not spend in Singapore, is therefore not taxable in Singapore? (on a corporate level).

What @Don said and also look into Section 13(8) of the Singapore tax code.

https://www.iras.gov.sg/taxes/corpo...-companies/companies-receiving-foreign-incomehttps://www.iras.gov.sg/media/docs/...mption-under-section-13(12)_(8th-edition).pdf

 

[banafinfodafuggiano]

In Estonia you don't need to declare anything with a company if you don't distribute profits, with exceptions to non-cooperative jurisdictions.
You declare profit distributions and taxes paid abroad when you need to access tax credits or participation exemption.

Even for individuals there exists a tax deferral regime under which you don't declare untaxed dividend and interest income in limited cases.


https://taxsummaries.pwc.com/singapore/corporate/corporate-residence
https://www.iras.gov.sg/taxes/corpo...y is a non,the company's policy and strategy.
https://www.iras.gov.sg/taxes/corpo...r-a-certificate-of-residence-tax-reclaim-form

But but... i need to distribute profits... otherwise how can I pay for all those fancy hotels?

 

[Don]

But but... i need to distribute profits... otherwise how can I pay for all those fancy hotels?

If you are not a tax resident anywhere or in a jurisdiction where personal income is not taxed, you can take out everything as a salary.
If you account for substance, this is the cheapest and one of the most accessible operational 0% tax structures available, with decent banking options.
The only "but" is to do it correctly, with proper legal structure (most people don't really have a clue about it).

 

[jesuschrist]

I know people who opened accounts for Singaporean companies in Hungarian and Austrian banks.
Since you are also an EU citizen it shouldn't be too difficult.

 

[jafo]

I know people who opened accounts for Singaporean companies in Hungarian and Austrian banks.
Since you are also an EU citizen it shouldn't be too difficult.

Any banks e.g. the names and branches, in particular?
You can DM if you prefer not to advertise them.

 

[Gediminas]

Is there any set up that I can create (as a EU citizen living in Asia) to launch a company in any of these following counries
and pay ZERO corporate Tax since 100% of my income is sourced from outside these countries?


- Switzerland
- Singapore
- Czechia
- Austria


Or do all of these countries tax foreign sourced corporate income? (director non resident)

Hey,

Generally, foreign-sourced income would be taxable, provided that the company is tax resident in the country.

However, there is one possible, but rather difficult solution: if management is not the country, you could create a permanent establishment for tax purposes for such company in some foreign country (preferably treaty partner) which has lower tax rate. Then local tax would not be applied.

Another much simpler option is to withdraw profits by sending invoices from a company in a low-tax country. Provided that in high-tax country, you won't have substance, management, etc. under transfer pricing rules having proper agreements you can withdraw a lot of funds to lower-tax country.

Of course, not all is so easy and should be properly structured.

 

[Don]

Hey,

Generally, foreign-sourced income would be taxable, provided that the company is tax resident in the country.

However, there is one possible, but rather difficult solution: if management is not the country, you could create a permanent establishment for tax purposes for such company in some foreign country (preferably treaty partner) which has lower tax rate. Then local tax would not be applied.

If you are talking about Singapore, on a treaty basis, it only works if the company is also a Singapore tax resident because it will not be able to access treaties without tax residency.

It's getting really expensive over there to maintain local directors for tax residency for certain reasons:
https://www.businesstimes.com.sg/si...ce-providers-restrictions-directors-next-year
However, some other jurisdictions which don't tax foreign income at all or exempt dividend income could be a better choice for this approach, but this is getting a bit offtopic since OP was asking about how to pay 0% tax.

Just as an example, if you want to base yourself in these jurisdictions and pay some tax, Switzerland has the lowest corporate income tax.

You can set up an Estonian company with a branch in Switzerland.

• pay 12% corporate tax in Switzerland and redistribute this income to yourself without any further tax
  • The branch's income is, in general, subject to the same CIT rules that apply to Swiss corporations. It is worth noting that there is no Swiss withholding tax (WHT) on profit transfers from the Swiss branch to its foreign head office and no WHT on the Estonian level.
• Since Estonia does not tax undistributed profits, you can shift some activities to Estonia, where you can reinvest tax-free or pay out your salary, which might not be taxed at all (depending on your personal tax residence).

 

[JustAnotherNomad]

You can set up an Estonian company with a branch in Switzerland.

• pay 12% corporate tax in Switzerland and redistribute this income to yourself without any further tax

Shouldn't this work just as well with a Swiss subsidiary? The treaty rate seems to be 0%.

 

[Marzio]

Shouldn't this work just as well with a Swiss subsidiary?

Yes but with the branch you can remit money to the head in Estonia without the 35% WHT on dividends headache that you would have by using a subsidiary.

 

[JustAnotherNomad]

What headache? The treaty rate is 0%? Or do you always have to pay the 35% first and then apply for a refund?

 

[Marzio]

Or do you always have to pay the 35% first and then apply for a refund?

This.