Structuring a holding company is one of the most challenging tasks for tax advisors and businesses, because there are so many factors to consider in terms of taxation, residence and optimisation. The simple fact that a holding regime exists in a given country will not make the whole structure work. Here are the key aspects to consider when choosing a holding jurisdiction:
Income tax. In favourable holding jurisdictions, income derived from qualifying participations (i.e. dividends and capital gains) will ideally be fully exempt from corporate income tax. In many holding countries, full tax exemption is possible under specific participation exemption rules established by local legislation. Outbound distribution of dividends. Dividends paid by a holding company to its parent company may be exempt from withholding tax under certain conditions. The final withholding tax rate may vary, depending on the residence status of the beneficial owner. Double taxation treaties and the EC Parent-Subsidiary Directive. Tax treaties are aimed at reducing withholding tax rates on inbound and outbound dividends. Therefore, the most appropriate holding jurisdiction depends on the respective locations of the parent company and the subsidiary. Tax residence status. Achieving tax residence status can be crucial for utilising the benefits of a holding company. Obtaining a tax residence certificate can be challenging but may be possible under certain conditions, such as having a resident director, a local rented office, local employees and others. Other obligations, like annual financial accounts, statutory accounts and tax returns, must be complied with at all times. Substance. Very often there are substance requirements, with some countries stipulating a certain amount of substance in the holding jurisdiction before tax benefits can be obtained (so-called anti-abuse legislation).
With the right paperwork and initial outlay, it is possible for a foreign citizen to open a bank account in New Caledonia. This opportunity for international accounts and investments offers several advantages based on economic regulations and tax structures. Interest rates, tax laws, and fees vary depending on the specific country in which you are investing; careful research and strategic financial moves could result in significant portfolio growth.
When considering opening a bank account in New Caledonia, one must enlist the help of international experts to guide them through the process.
Legal structures in New Caledonia Every international jurisdiction abides by a different set of legal structures for taxation and banking. Confidus Solutions helps you to understand the nuances of each country's legal structures. To do business in New Caledonia, it will be critical for you to have a firm grasp on the financial and legal implications.
Initial investments The vast majority of bank accounts in New Caledonia will require an initial financial outlay to secure account opening. This value differs from bank to bank and also depends on variable rates of currency exchange. An international finance expert will help to navigate these conversions as well as the assorted fees and minimums involved in sustaining a bank account. Be sure to understand interest and growth rates associated with any potential international bank account so that you are able to maximize your earnings while minimizing risk.
Tax structures in New Caledonia For best results and to avoid bureaucratic and legal pitfalls, enlist the support of an expert in international finance and economics. This initial investment in proper processes and research will help to avoid a litany of long-term costs and fees associated with unforeseen errors and legal miscues. Language expertise, financial knowhow, and bureaucratic experience will ensure that your account opening is handled smoothly and without unintended consequences.
A shelf company, also sometimes called a shelf or aged corporation, is a company that has been incorporated some time ago, but was not operationally active, therefore – has been put on shelf. While a ready-made company has similar characteristics, the main difference between both is that ready-made company has been registered recently as opposed to a shelf company.
Shelf companies are generally divided into two categories: a new shelf company, or an aged company:
Acquisition of a new shelf company provides you with a guarantee that this business has not engaged in trading, is clear of debts and has a perfectly clear history. The investor can be certain that it will be possible to start the business operations without any administrative or financial burdens that could have occurred prior to purchase. Generally, these companies have been created in the past with the sole purpose of selling them later as a ready-made company. In this case, the seller is able to show a certificate confirming that no trading has taken place and the company is free of any business debts and liabilities; Acquisition of an aged shelf company provides you with a previously active business with its trading history and possible liabilities. Therefore it is crucial to receive a letter of confirmation from the seller that any commitment – including debt – prior to acquisition are incumbent upon the seller instead of the buyer. Aged shelf companies are preferred for commercial and branding purposes. Advantages of a shelf company acquisition The new shareholders can gain from various benefits if they prefer an acquisition of already established company instead of incorporating a new one. Below are the most common benefits:
Often may be done remotely – generally, an acquisition of a ready-made company is also allowed from abroad – the shareholders are not required to take part in the process of acquisition in person. In this case, the buyer receives a sample of power of attorney via e-mail, which then needs to be signed, legalized and sent back by post. With the power granted by the power of attorney, new shareholders of the company are registered and all corporation documents are sent to the buyer by post. Afterwards, bank account can also be opened remotely. This procedure may differ among countries and service providers; Less time-consuming – among other benefits, one of the most important one is a possibility to save time through an acquisition of a shelf company. While the average time needed to incorporate a new company differs greatly among countries, according to World Bank, the average time to start a business in the world was almost 21 day in 2016. The acquisition process is believed to be simple and straight forward and the company is able to begin its operations immediately. Furthermore, all service providers will advise on all uncertainties, facilitating the acquisition process; May be acquired as a whole package – one of the reasons why an acquisition of a ready-made company is less time consuming is the fact that the buyer is able to acquire a fully registered company with a VAT and registration number, particular licenses, if needed, and even a bank account. In addition, usually the new owner receives all documents and tax returns that have been submitted to the office prior the purchase. Although an acquisition of a shelf company will cost you more than opening a new company, this option can even be more cost-effective if taking account the time saved and a possibility to start earning money almost immediately.
Low maintenance cost territories are jurisdictions with especially favourable tax regimes, where the annual company maintenance expenses are lower. An effective tax planning strategy often revolves around these jurisdictions, as low taxes and maintenance costs are among the most effective and straightforward cost-reducing tools for any business.
Company maintenance In general, company maintenance includes any operations that ensure a business is active in its day-to-day endeavours. In addition, many favourable tax jurisdictions require every international company to undergo a company renewal procedure on an annual basis, by submitting a renewal application and paying a certain fee to the state. In terms of tax planning, company maintenance is normally understood as referring to the expenses associated with paying taxes, state fees, stamp duties, charges and any other costs that may arise from operating a company. These include, but are not limited to:
Taxes Import/export duties Salaries License fees Office rental Stamp duties Annual renewal fee Notary fees State fees Maintenance usually does not include any expenses directly related to business transactions, such as the cost of raw materials to be used in production or the purchase of goods for resale.
Depending on the jurisdiction, company maintenance can either be the biggest source of expenses (especially due to taxes and renewal fees) or a barely noticeable cost of conducting a profitable business. This is the main reason why jurisdictions with low maintenance costs are so popular with companies seeking to optimise their taxes.
Steps for maintaining a company The first step in effective company maintenance is financial planning, including tax planning. A company needs to identify its biggest source of expenses and then find a way to gradually reduce these costs. One of the primary goals for maintaining a company effectively is reducing its tax burden and annual renewal fees. The second step is to choose a jurisdiction with low maintenance costs and an advantageous tax regime. Confidus Solutions will be happy to share our professional knowledge in this matter, in order to help you analyse the options and choose the best jurisdiction in which to incorporate.
The third step is relocating the actual business or incorporation to the jurisdiction of your choice. The particular details of this process may vary between jurisdictions and legal business structures, so each company should carefully assess which business structure is most advantageous in their particular case.
In the long term, maintenance costs are mainly related to wages, taxes and supplies. Wages are effectively determined by the labour costs in each jurisdiction, which, in turn, are influenced by working culture, education and skill levels, competition level, etc. Taxes depend on the legal business structure and the activities performed by a company — some will require licenses and patents, which must be regularly renewed for a fee. Finally, the supplies required will depend on each particular company, but usually include rent (supply of premises), utility bills (supply of heating, electricity, water, etc.) and operational resources, such as petrol and office supplies.
The Marshall Islands are highly geographically isolated, being situated in the middle of the Pacific Ocean, midway between the Philippines and Hawaii. The country has a population of about 66,000, and its inhabitants speak English as well as Marshallese. The Marshall Islands offers commercial and corporate services to non-resident companies and is a well-known and successful offshore financial centre. The Republic of the Marshall Islands (RMI) provides sustainable corporate programmes that have attracted thousands of international companies and holdings, such as limited liability companies (LLCs), partnerships and limited partnerships (LPs). The Marshall Islands Associations Law governs all non-resident business entities registered in the islands and is based on the corporate laws of the US state of Delaware.
Generally, companies registered in the Marshall Islands benefit from confidentiality protection with respect to international business partners, shareholders and corporate directors. The islands also provide businesses with tax advantages: tax-exemption for non-resident domestic corporations, limited liability for corporate directors and no statutory filing obligations. The Marshall Islands also ensures the protection of financial assets, with low share capital requirements and favourable asset management opportunities.
The international business company or international business corporation (IBC) is the company type most often used on the islands. IBCs operate and can be utilised as distinct legal entities, holding bank accounts and securities and participating in joint ventures, estate planning, asset protection, international trade, holding vessels and public offerings. There is no minimum authorised capital, no audit requirements and no exchange restrictions or residence requirements, and the jurisdiction also offers free domiciliation and flexibility with regard to the frequency of meetings.
The main benefit which IBCs provide is that they give business owners the ability to increase profitability and reduce liability at the same time. This is due to lower shareholders' liability in the event of a lawsuit or the loss of the business, which is limited to the total direct capital investment in the corporation by the individuals involved.
There are several requirements for IBC registration. At least one director, secretary and shareholder must be registered (they may be the same person); there must be a standard share capital of 500 shares without par value (with bearer shares permitted) or 50,000 shares with par value of USD 1.00 (about EUR 0.85); and the name of the company must end in Ltd, Corp, Inc or S.A. In general, establishing an IBC company makes it more convenient for the company owner(s) to:
preserve anonymity while conducting unlimited business transactions bypass embargoes and international sanctions while doing business in other countries operate as a special purpose business entity while carrying out business operations consolidate intellectual property while licensing and franchising business entities conduct international trade using the professional services and investment management options available in the country protect the assets owned by the company's members The Marshall Islands is a sound choice for modern international business, providing appealing business opportunities. There are several fields in which an IBC might operate which are considered to be particularly attractive for investment: international trade and finance, including banking, and the maritime industry. These sectors are good choices for international investors looking to set up a sustainable business offshore.
These areas offer both financial and legal benefits, such as nil taxation or lower tax rates, increased privacy with minimal risk of confidentiality issues, convenient access to deposits and shelter from financial, social and governmental unrest in the directors' home country.
Membership in International Unions Whether it is an alliance, incorporated union, federal union or supranational body here is the list of unions the country is a member of. Iceland is a member of several unions. They are International Monetary Fund, North Atlantic Treaty Organization, Organisation for Economic Co-operation and Development, Schengen Area, United Nations, World Bank, World Trade Organization.
International Monetary Fund Iceland is a member of International Monetary Fund. On 27 December 1945, it joined the IMF as a member. The IMF is an organization headquartered in Washington, D.C., of 189 countries working to foster global monetary cooperation, secure financial stability and facilitate international trade. The IMF now plays a central role in the management of balance of payments difficulties and international financial crises. The union is governed by and accountable to the all 189 member countries. As of 2010, the fund had SDR 476.8 billion (about US$ 755.7 billion).
North Atlantic Treaty Organization Iceland is a member of North Atlantic Treaty Organization. Iceland has been a part of NATO since 4 April 1949, and therefore has been a member of NATO for 74 years. The North Atlantic Treaty Organization (French: Organisation du Traité de l'Atlantique Nord; OTAN) is an intergovernmental military alliance based on the North Atlantic Treaty which. NATO's headquarters are located in Haren, Brussels, Belgium. NATO promotes democratic values and encourages cooperation on defence and security issues. The organization constitutes a system of collective defence whereby its member states agree to mutual defense in response to an attack by any external party. NATO is committed to the peaceful resolution of disputes.
Organisation for Economic Co-operation and Development Iceland is a member of Organisation for Economic Co-operation and Development. On 5 June 1961, it joined the OECD as a member. The Organisation for Economic Co-operation and Development (French: Organisation de coopération et de développement économiques, OCDE) is an international economic organisation of 34 countries, founded in 1961 to stimulate economic progress and world trade, and promote policies that will improve the economic and social well-being. It is a forum in which governments can work together to share experiences and seek solutions to common problems. OECD work with governments to understand what drives economic, social and environmental change. OECD measures productivity and global flows of trade and investment.
Schengen Area Iceland is a member of Schengen Area. On 25 March 2001, it was accepted into Schengen Area. The Schengen Agreement is a treaty which led to the creation of Europe's borderless Schengen Area. It entitles every EU citizen to travel, work and live in any EU country without special formalities. It was signed on 14 June 1985 by five of the ten member states of the then European Economic Community near the town of Schengen, Luxembourg. Schengen cooperation enhances free movement of persons by enabling more than 400 million EU citizens to cross internal borders without being subjected to border checks.
United Nations Iceland is a member of United Nations. On 19 November 1946, it joined the UN at its inception date as a full member state. Founded in 1945, the United Nations is an intergovernmental organization to promote international co-operation. The work of the United Nations are guided by the principles contained in its founding Charter. It is currently made up of 193 Member States. The headquarters of the United Nations is in Manhattan, New York City, further main offices are situated in Geneva, Nairobi and Vienna. Its objectives include maintaining international peace and security, promoting human rights, fostering social and economic development, protecting the environment, and providing aid.
World Bank Iceland is a member of World Bank. On 27 December 1945, it became a member of the World Bank Group. The World Bank is international financial institution that provides loans to developing countries. It's like a cooperative, made up of 189 member countries. These member countries are represented by a ministers of finance who are the ultimate policymakers at the World Bank. The World Bank's official goal is the reduction of poverty.
World Trade Organization Iceland is a member of World Trade Organization. On 1 January 1995, it joined the WTO as a member. The World Trade Organization is an intergovernmental organization which regulates international trade. At its core are the WTO agreements ratified in national parliaments. It is the only global international organization dealing with the rules of trade between nations. The goal is to help producers of goods and services, exporters, and importers conduct their business. The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence.
One of the most flexible business structures that Poland has to offer is a Sp. z. O. O. (Limited Liability Company) as it offers limited liability of its shareholders. The business structure of a limited liability company is the most widespread in Poland. To successfully integrate an SP. e.g. o .o you need a minimum share capital of 5000 PLN (~1180 EUR), divided into several shares. In order to complete the incorporation process with the commercial register, a director, a shareholder and the legal address of a company are required. The liability of the partners is strictly limited by the amount of their contribution to the company capital.
Brief overview of the Polish economy The economy in Poland is quite thriving, mainly due to the private corporate sector. The Polish government encourages foreign investment in Poland by signing double tax treaties with a large number of countries and offering a wide range of incentives to entrepreneurs who decide to come from abroad and start a business in Poland.
Company incorporation procedure The formation process of the Polish LLC may vary slightly depending on the circumstances. However, there is a general pattern of steps that need to be taken to successfully start a fully functioning business:
Signing of the constitutional deed of incorporation and the articles of association. Both documents should be notarized; Conclusion of a document (often lease agreement) for renting premises where the legal address and official office of the company will be located; Submission of all incorporation documents to the National Commercial Register of Poland; Notifying the local tax authority of a new company with operations. obtaining a local taxpayer number; registration of the company in the register in the Official Gazette; Registration of the enterprise with the local branch of the statistical office; Opening a corporate bank account at the local (or foreign) bank; Notification of labor and health services in accordance with the legal requirements of labor law; If staff are hired, they must be reported to the local Social Security Administration office. business needs At least one director must be present on the board of directors to form an LLC in Poland. In Poland, only a natural person can be the manager of a company: another company or legal entity cannot hold this position. There are no legal requirements as to the citizenship and/or residency of directors, but to speed things up with banks and the tax authorities it is strongly recommended that a resident director be appointed. An official commercial register of the company must be kept at the legal address of the company in Poland.
At least one registered shareholder is required to register a company. There are no citizenship or residency requirements for the shareholder, therefore 100% equity ownership by a foreigner is possible. An official share register of the company must be kept at the company's legal address in Poland.
The required minimum share capital is 5000 PLN (approx. 1180 EUR), with the lowest possible share value being 50 PLN (~ 12 EUR).
When looking for a suitable jurisdiction to set up a company within the European Union (EU), many clients experience certain difficulties in making a final decision in favor of one country or another. Of course, every European country offers numerous advantages, but also potential disadvantages. That is why we always recommend our customers to carefully evaluate and clarify their goals and requirements.
We have more than ten years of experience in establishing and maintaining companies worldwide. If you wish to incorporate a company, it is important to consider a number of factors in order to determine the jurisdiction that is most suitable for you. The Confidus team accompanies you every step of the way in founding your company and provides you with comprehensive support. We will set up a company remotely within the EU (with nominee services to protect your confidentiality), streamline your corporate taxes (including VAT) and achieve 0% dividend tax to save you money.
The EU is an intergovernmental economic union that aims to promote free trade and achieve economic stability, as well as a common European internal market stretching across the territory of the 28 EU member states. Establishing a company within the EU can therefore be a great opportunity for your business, not only in terms of access to this single market, but also as a means of minimizing taxes and other financial risks.
Understand EU companies In terms of incorporation, each country in the EU has certain specific advantages, not to mention particularities in terms of the legal procedures for setting up a business, which may differ between jurisdictions. Some jurisdictions offer relatively quick and accessible remote company formation and maintenance, while others do not have blacklisted offshore jurisdictions or offer a great opportunity to minimize taxation (sometimes even to 0%).
Benefits of establishing an EU company The EU is currently one of the most significant and reputable trading unions on the planet. Because of common European trade standards and legislation relating to finance and commerce, EU companies have a lot to offer in terms of accessability to the western market.
Key benefits:
Friendly tax authorities Understandable and predictable taxation system Opportunity to incorporate and maintain your company remotely Protection of confidentiality and nominee services 0% dividends taxation VAT status acquisition and tax optimisation There are other benefits of an EU-incorporated company as well:
Opportunity to make use of the European common internal market and apply tax and custom duty exemptions Free movement of labour within the EU presents the opportunity of finding highly skilled international specialists Application of European bookkeeping and auditing standards Numerous tax planning solutions Most of the EU jurisdictions are not on the offshore blacklist The EU has a long history, ensuring a good reputation and political stability
Given that within the European Union there are no withholding taxes on IP royalties between member states, we can suggest a number of countries where royalties are particularly advantageous.
CYPRUS The intellectual property royalties tax regime in Cyprus has changed as a result of the recommendations of the Organization for Economic Co-operation and Development (OECD) Action Report 5 and the Ecofin Council conclusions published on 8 December 2015. Legislation has been changed to limit the companies that can benefit from research and development (R&D) exemptions, but the tax rate in Cyprus is still one of the most favorable in the EU for foreign companies using Cyprus intellectual property want to license -resident companies (intermediaries), where this right is then sub-licensed to the end user. Overall, the effective tax on IP royalty income should be less than 2.5%.
IRELAND In 2015 Ireland introduced an effective corporation tax rate of 6.25% on intellectual property income based on an allowance for research and development costs borne by the company. By linking the two components in this way, Irish law encourages companies to conduct R&D directly within the EU - leading to the creation of intellectual property - while discouraging them from acquiring licenses without directly committing to R&D.
BELGIUM Belgium has introduced a tax system that favors those with income from acquired copyrights. This tax regime can have many different applications and can be used to protect artworks as well as a useful tax break for IT developers. Income from IP rights royalties is taxed at 15%. This income is not taken into account when calculating social security contributions. In addition, these taxes are reduced by 50% for imports due to the application of standard import costs. The first €15,000 that a copyright owner earns in a year is therefore taxed at 7.5%, and the next €15,000 at 11.25%. This tax system applies to people with a total annual income of up to 56,450 euros.
LUXEMBOURG In general, corporate tax in Luxembourg is 29.22%, but for IP licensing income it can be as low as 5.8%. This is due to an 80% corporate income tax exemption. Interestingly, this exemption also applies to companies that have registered a patent for use in connection with their own business, which then calculate a notional net income as if they had received the licensing income.
ITALY Italy is a larger market compared to the other countries discussed and can be a very attractive place for a company to invest in R&D since 2015 companies have been able to deduct intellectual property income from their taxable income base. The tax deduction was set at 30% in 2015, 40% in 2016 and 50% from 2017. Businesses will therefore enjoy a significant tax rebate by reducing their taxable income.
THE NETHERLANDS Since 2010, IP income has been taxed at only 5% in the Netherlands. Except for patents, there is no income limit. Patent holders can actually have access to this tax regime if their share of the expected revenue is between 30% and 70%, taking into account the total combined revenue from patents and other sources. These rates also apply to foreign companies owning intangible assets or companies that have received research and development accreditation from the Dutch Ministry of Economic Affairs if they are owners of software IP or trade secrets. The only other caveat to this favorable tax regime is that it doesn't apply to marketing and branding-related assets.
Before registering a company, make sure you are fully aware of the pros and cons of each option in the Middle East and nearby islands like Bahrain and Socotra (Yemen). Bahrain is currently thriving as one of the most prosperous countries in the Middle East, offering an open-minded environment for international entrepreneurs and investors to set up a business. It is possible for a foreign company in Bahrain to incorporate a limited liability company (LLC), partnership or branch of a foreign company. Qatar has many foreign companies operating within its borders, mainly in the oil, mining and engineering industries. However, Qatar supports all foreign companies willing to invest and operate in its territory.
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12.12.2024 15:29
