INTERNATIONAL TAX LAW
INTERNATIONAL TAX PLANNING - CORPORATIONS
In your daily Business practice, you may have wondered about the Tax consequences of your Corporate Structure decisions and your Cross Border Transactions, such as:
- Is it legal to set up a Company in a country other than the one where I live?
- Is it better that I personally hold my shares of the Company or through a Holding Company?
- Will the Profits of my Business be Taxed in my country or in the other country under the Permanent Establishment (PE) principle?
- How can I optimize the final amount of my Business Taxation without incurring in sanctions for Tax avoidance?
In an ever more globalized world, it is perfectly normal to ask such questions when you run your own Business.
Any global Business is confronted with the complexity of understanding the International Tax Rules that govern the Taxation of its Business Profits as well as the Taxation of its International Business Transactions.
Indeed, Corporate Profits may be subject to Double Taxation if one does not know exactly how and where these Profits are generated.
Therefore, knowing the basic Principles of Corporate and International Taxation is key in order to carry out your Business in a safe and efficient way.
Despite the complexity of International Taxation, it is still possible to create an optimal Corporate Structure under a Corporate and Personal Taxation perspective.
We love to make acquaintance with our prospective clients over a free-of-charge call in order get a first understanding of their matter.
So do not hesitate to get in touch via email or phone!
We are proud to put to the service of our clients our decade-long experience, with hundreds of successful projects and happy clients.
That is why we have focused on providing our clients with Cross Border Tax Advice and Tax Planning Advice about International Company Taxation in order for them to avoid any Cross Border Double Taxation of their Corporate Profits and optimize their overall Tax burden.
Also, thanks to our World-Wide Network of Trusted Professionals in Europe, US, Canada, China and Middle-East countries, we provide International Tax Compliance Services in order for our clients to avoid issues with the Tax administrations of the countries where they have a Business presence.
INTERNATIONAL TAX PLANNING - INDIVIDUAL BUSINESSES
Once your Business is up and running, you may wonder how you can “take the money out of your Company” in order to pay yourself a Compensation (i.e. a remuneration).
You may pay yourself the Compensation of your efforts in several ways and at different times, such as paying yourself :
- a Salary as an Employee or Director of your own Company
- Dividends on an annual basis
- a Mix of a monthly Salary and an annual Dividends distribution
If you do not need any monthly or annual Compensation, you may may think of reinvesting your Corporate Profits into your Company and get a final Compensation from the Profits arising from the sales of your Company shares.
Most of our clients ask themselves what is the best Compensation Structure from a Tax perspective.
We provide InternationalTax Advice for Individuals in understanding and Planning the Taxation of the Compensation they receive from their Company, such as:
How to avoid Double Taxation of your Salary
Double Taxation Treaties based on the OECD Model normally say that Taxes on a Salary are paid only in the country where the work activity is carried out.
However, if this activity is carried out in the other country, Taxes may be payable in that country and a Tax credit will be granted in the country of RESIDENCY of the worker in order to avoid Double Taxation.
How to avoid Double Taxation of your Corporate Dividends
In most cases Double Taxation occurs when Corporations make Cross Border Dividend Payments to their Stockholders.
This is because Double Taxation Treaties based on the OECD Model normally grant Shared Taxing Rights to both the country of the “source” of the Dividends and the country of “residency” of the recipient of the Dividends.
In this context, we make sure that you do not incur Double Taxation on your Dividends by carefully analyzing the relevant clauses of the applicable Double Taxation Treaty as well as the domestic legislation applicable to that income in each country.
How to avoid Double Taxation on your Capital Gain when you sell your Company shares
When sell the shares of your Company, a Capital Gain Tax may be payable if there is a positive difference between the sale price and the creation/acquisition value of your Company.
For example, if you created your Company
- by contributing a Share Capital of 1 000 USD and incurred 1 000 USD as Company formation expenses and
- you sell the Company for 10 000 USD, you may have to pay Capital Gain Tax on the 8 000 USD which corresponds to the difference between 10 000 (sale price) minus 2 000 (creation expenses).
For Capital Gain arising from shares, Double Taxation Treaties usually provide for the exclusive Taxation in the country of Residency of the seller.
However, each Double Taxation Treaty deserves separate analysis and particular attention is required for US citizens who need to declare those Profits to the US Tax administration, even if they are not Tax residents of the US and the sale transaction occurred outside of the US borders.
Instead of using a Company subject to Corporate Tax, you may use an Individual Business (i.e. Sole-Proprietorship) in order to carry out your Business activity in order to minimize Business costs.
Unlike Companies that pay Corporate Tax in the country where the Business Profits are generated, Individual Businesses or Partnerships generally pay Taxes in the country where the Entrepreneur or Partner reside.
However, things may get complicated when:
- you perform your Service or sell your Goods in the country of your client without having a Permanent Establishment there and there is no Double Taxation Treaty between the country where your clients reside and the country of residency of your Business. Indeed, in these cases, only domestic Tax legislation applies and the payments made by your clients who are resident in the other country may be subject to a withholding Tax.
- you get your income from a Partnership based in another country. In most cases, complex Double Taxation Treaty Rules apply to determine which country the partnership is a resident of and where the income shall be Taxed based on the residency of the partner.
In those cases, we provide InternationalTax Advice on Individual Business Profits Taxation for InternationalIndividual Businesses and Independent Service Providers (Freelance).
We help understand how and where any Cross Border Business Profits should be declared and in which country Taxes should be paid, Eliminating Double Taxation.
It is very common these days that people work in different places throughout the year thanks to the possibility of working remotely.
Many freelancers have chosen this way of working and they often wonder how to pay Taxes as a Digital Nomad
As you may already know, the main Tax issue that arises with being a Digital Nomad is that your Tax residency is not defined since either you do not spend more than 183 days per year in any given country and/or you do not have a permanent abode in any country.
We recommend a “case-by-case” study of a Digital Nomad Tax aspects since more than one Tax administration may claim Taxing rights on your income.
We work closely with many Law Firms and Accountants around the globe.
Through our Partners, we are able to provide assistance with the following matters:
US Tax and Accounting
US and Canada Immigration Law
Business Setup in the US, Canada and UAE/Dubai
Trademark Registration in the US and Europe
INTERNATIONAL VAT CONSULTANCY
We are VAT Experts and provide VAT Consulting services in order for you to understand your VAT obligations on the sale of goods and services the European Union.
We specialize in E-Commerce VAT and we make sure that you apply correctly the law in force and namely the Council Directive (EU) 2017/2455, the Council Directive (EU) 2019/1995 and Council Implementing Regulation (EU) 2019/2026, which have deeply changed the shape of VAT law in the EU.
In force since July 1st 2021, these new legislation has in particular brought about the following, main changes in the EU VAT framework:
- The generalization of the OSS (One-Stop-Shop) already in force for the Telecommunication, Broadcasting and Electronically supplied (TBE) services providers to certain other B2C distance services, B2C distance sales of goods as well as to certain domestic supplies of goods.
The OSS allows Businesses to collect and pay all VAT due in the EU in their country of residency.
- The replacement of the per-country different distance sale thresholds with the unique, EU-wide 10.000 € distance sales turnover threshold.
- Online Electronic Interfaces and Platforms that facilitates the online sale of goods (e.g. Amazon) are deemed as they have received and sold the goods themselves for VAT purposes (“deemed supplier” concept).
- The 22 EUR VAT exemption for imported goods is repealed and an Import One Stop Shop (IOSS) scheme is introduced for imported consumer goods with value under 150 EUR.
- New record-keeping requirements are introduced for Online Electronic Interfaces facilitating the distant sale of goods, even if they are not regarded as “deemed suppliers”.
INTERNATIONAL TAX AUDIT
When you think about InternationalTax and Corporate Structure, you think about complexity and often you also wonder what risks you are taking with regard to legal and Tax compliance.
We take a pragmatical approach to legal and Tax matters. We counsel our clients on “the pros and cons” of their Corporate and Business Structure by analyzing the possible outcomes of their Business decisions.
That is why we provide assistance in assessing your Business Structure Tax Risk by checking your current or planned Corporate Structure as well as the legal and Tax implications of your Cross Border Business Transactions.
Our analysis is based on our longstanding International Tax and Legal knowledge and experience.
The result of our analysis is made up of theory and pragmatical points in order for you to understand the formal basis of our understanding and the practicality of our conclusions.