3 ms·

And now there is a Brexit looming... Poor LTD owners :/

by Sujan 9y ago

Xylakant 9y ago
No pity from my side, but yes. Some folks will pay a hefty price for the shortcut.
- phillc73 9y ago
  Another shortcut, while still remaining in the EU is a Maltese Limited company. Very similar rules and structure to operating a UK based Limited company, but a much better corporate tax regime. I went this route, using an accountant recommended by a trusted friend. Bought an existing "off the shelf" company and have a Maltese business bank account, all without leaving the comfort of my desk.
  - charlesdm 9y ago
    Have you physically been to Malta? Do you pay non Maltese taxes? Do you understand tax law? If no then it is likely you are committing tax fraud (perhaps without even realising it). People need to understand this: there is no free lunch. If you think you can be classified as a Maltese company, sitting at a desk in <insert random European country here>, you are dead wrong in 99.9% of the cases. Get proper tax counsel (not an accountant, a lawyer -- accountants are generally sloppy with details, and details matter, e.g. a word in a contract can matter). Technology and internet based businesses have some unique opportunities to optimise taxes, but the line between fraud and optimization is quite thin.. get good counsel, or prepare for a dispute where you take your (local) tax authority to court. Source: a decent knowledge of corporate and tax law and plenty of tax disputes, which I've mostly won.
    - a-saleh 9y ago
      If I am thinking about something like this (my reason so far is fairly contrived, but I would really like to use Stripe, that is available i.e. in Ireland, while in mz country, it mostly seems to be paypal/braintree), where would I be able to read-up on gotchas, before I consult a proper lawyer?
      - charlesdm 9y ago
        You probably want to consult a (reputable) local tax lawyer. They tend to be expensive, but check legal500.com.
    - phillc73 9y ago
      Thanks for your concern, but I am very happy with the professional advice I have received and am entirely confident that no tax fraud is being committed.
      - charlesdm 9y ago
        Just make sure to have good legal counsel. Because something is "legal" for person X doesn't make it legal for person Y. A wealthy family with a company that employs 1000+ people will generally get away with more than a lone wolf with no political connections (not that I'm saying you're a lone wolf, just saying it's not always clear cut). Best of luck!
      - Keats 9y ago
        How do you get around corporate tax residence?
        markvdb 9y ago
        In most cases, you don't. You're just ignoring double taxation treaties.
      - graeme 9y ago
        I read your comment, and the feedback you’re replying to. I notice that you have not mentioned the word “lawyer”. Instead you said accountant and professional. I’m going to write the rest of this on the assumption you have not spoken to a tax lawyer. You’ve set up a structure for years, and are likely investing tens or hundreds of thousands in equity. A consultation with a good tax lawyer can be had for $100-$200 in most cases, or even free sometimes. Your situation might be 100% correct! In which case, you have spent very little. But if your situation is wrong? You risk the total destruction of your business, tens of thousands in penalties and legal fees, and possibly jail. Speak to a lawyer, if you haven’t. Incidentally, I had the same idea as you: Canadian business, international clients. Could I incorporate abroad and save? My tax’s lawyer’s answer was no, the local revenue authorities would not see it that way. You’re in another jurisdicion, so the plan may work. But, you will spare yourself the possibility of ruin by checking with a tax lawyer in the jurisdiction you live in.
    - Xylakant 9y ago
      You’d also have to obey the bookkeeping requirements of the companies country of origin. For example in germany the line between paying yourself a wage and “verdeckter Gewinnentnahme” is important (you can’t just take money out of an LtD) and it’s important to understand the host countries law. When things start to go haywire you’d need to hire an expert in Maltese law and that may just be very expensive from the comfort of your desk. You might also in addition require an expert in German tax law on top of that. I’d avoid that.
      - charlesdm 9y ago
        There are also differences between pure emoluments and traditional board meeting or director fees, etc. You'll have to check the DTA between your country and Malta. In addition, (Maltese) social security might be due on salaries received, or could be exempt.
- Sujan 9y ago
  "Funny" that the "bank" that is suggested in the article is one of them: https://www.getpenta.com/imprint.html https://www.getpenta.com/imprint.html
  - shapiro92 9y ago
    they were part of an accelerator in the UK probably due to that.

And now there is a Brexit looming... Poor LTD owners :/

by Sujan 9y ago

And now there is a Brexit looming... Poor LTD owners :/

Xylakant 9y ago

No pity from my side, but yes. Some folks will pay a hefty price for the shortcut.

phillc73 9y ago
Another shortcut, while still remaining in the EU is a Maltese Limited company. Very similar rules and structure to operating a UK based Limited company, but a much better corporate tax regime. I went this route, using an accountant recommended by a trusted friend. Bought an existing "off the shelf" company and have a Maltese business bank account, all without leaving the comfort of my desk.
- charlesdm 9y ago
  Have you physically been to Malta? Do you pay non Maltese taxes? Do you understand tax law? If no then it is likely you are committing tax fraud (perhaps without even realising it). People need to understand this: there is no free lunch. If you think you can be classified as a Maltese company, sitting at a desk in <insert random European country here>, you are dead wrong in 99.9% of the cases. Get proper tax counsel (not an accountant, a lawyer -- accountants are generally sloppy with details, and details matter, e.g. a word in a contract can matter). Technology and internet based businesses have some unique opportunities to optimise taxes, but the line between fraud and optimization is quite thin.. get good counsel, or prepare for a dispute where you take your (local) tax authority to court. Source: a decent knowledge of corporate and tax law and plenty of tax disputes, which I've mostly won.
  - a-saleh 9y ago
    If I am thinking about something like this (my reason so far is fairly contrived, but I would really like to use Stripe, that is available i.e. in Ireland, while in mz country, it mostly seems to be paypal/braintree), where would I be able to read-up on gotchas, before I consult a proper lawyer?
    - charlesdm 9y ago
      You probably want to consult a (reputable) local tax lawyer. They tend to be expensive, but check legal500.com.
  - phillc73 9y ago
    Thanks for your concern, but I am very happy with the professional advice I have received and am entirely confident that no tax fraud is being committed.
    - charlesdm 9y ago
      Just make sure to have good legal counsel. Because something is "legal" for person X doesn't make it legal for person Y. A wealthy family with a company that employs 1000+ people will generally get away with more than a lone wolf with no political connections (not that I'm saying you're a lone wolf, just saying it's not always clear cut). Best of luck!
    - Keats 9y ago
      How do you get around corporate tax residence?
      - markvdb 9y ago
        In most cases, you don't. You're just ignoring double taxation treaties.
    - graeme 9y ago
      I read your comment, and the feedback you’re replying to. I notice that you have not mentioned the word “lawyer”. Instead you said accountant and professional. I’m going to write the rest of this on the assumption you have not spoken to a tax lawyer. You’ve set up a structure for years, and are likely investing tens or hundreds of thousands in equity. A consultation with a good tax lawyer can be had for $100-$200 in most cases, or even free sometimes. Your situation might be 100% correct! In which case, you have spent very little. But if your situation is wrong? You risk the total destruction of your business, tens of thousands in penalties and legal fees, and possibly jail. Speak to a lawyer, if you haven’t. Incidentally, I had the same idea as you: Canadian business, international clients. Could I incorporate abroad and save? My tax’s lawyer’s answer was no, the local revenue authorities would not see it that way. You’re in another jurisdicion, so the plan may work. But, you will spare yourself the possibility of ruin by checking with a tax lawyer in the jurisdiction you live in.
  - Xylakant 9y ago
    You’d also have to obey the bookkeeping requirements of the companies country of origin. For example in germany the line between paying yourself a wage and “verdeckter Gewinnentnahme” is important (you can’t just take money out of an LtD) and it’s important to understand the host countries law. When things start to go haywire you’d need to hire an expert in Maltese law and that may just be very expensive from the comfort of your desk. You might also in addition require an expert in German tax law on top of that. I’d avoid that.
    - charlesdm 9y ago
      There are also differences between pure emoluments and traditional board meeting or director fees, etc. You'll have to check the DTA between your country and Malta. In addition, (Maltese) social security might be due on salaries received, or could be exempt.
Sujan 9y ago
"Funny" that the "bank" that is suggested in the article is one of them: https://www.getpenta.com/imprint.html https://www.getpenta.com/imprint.html
- shapiro92 9y ago
  they were part of an accelerator in the UK probably due to that.