4 ms·

If you are BASED in Italy and register in Ireland or Estonia I'm pretty much sure you are breaking the law, EU or not.

by Kurtz79 12y ago

nodata 12y ago
How?
- jarek-foksa 12y ago
  Keywords: tax residence, controlled foreign company. To be more specific, such structure would not be illegal, but you would have to deal with double the amount of bureaucracy and you would pay the same taxes.
- Kurtz79 12y ago
  You are working in country which as to pay for things like roads, military, firemen, police, health services, schools, pensions using taxes from companies and citizens living there and this country is not seeing a single euro from you (which are taking advantage of the infrastructure paid by those taxes). How would you expect this to be remotely legal ? Sure, there are plenty of people doing that, just as there are companies registered in the Cayman or Gibraltar, or people having secret Swiss bank accounts.
  - davidw 12y ago
    > How would you expect this to be remotely legal ? If you pay taxes (in Italy, say) on the income from your company, wherever it happens to be. I get the impression that it's all something of a legal gray area. It'd be a lot simpler if people could easily have companies in their own countries. I'm all for paying one's fair share of taxes on income in the country you live in. What I intensely dislike about the laws in Italy surrounding companies is that there are all kinds of expenses that have to be paid even if you are losing money.
    - mauricemir 12y ago
      Cross country working like this is tricky in the EU and its still a grey area legaly speaking Its mainly about which country's employment laws apply.
  - nodata 12y ago
    > How would you expect this to be remotely legal ? The company is a separate legal entity. The company pays corporation tax in the country where the company is registered, you pay income tax in the country you live, and then there is also vat.
  - rmc 12y ago
    IANAL but the EU is supposed to be a common market. One (slowely integrating) community.
    - pmontra 12y ago
      Common market but different fiscal regimes. It seems absurd but it makes sense when you think that each country is jealous of its fiscal incomes because they are what keep them running. In no way an Italy would let an Ireland grab its share of taxes only because Italian companies prefer to incorporate in Ireland because of lower taxation. Only a common EU fiscal regime will solve that, but think about the impacts on those countries that are spending too much and will have to change their speding patterns (from no more useless expenses to laying out public workers).
jkot 12y ago
Not really, company is separate entity, I think your are confusing it with self-employment.
- markvdb 12y ago
  I run a small company in Latvia (low tax, low income). I live in Belgium (tax world champion, high income). I am _extremely_ careful to play by the rules. That means things like: * no company bank account or phone number in Belgium * no meetings with my staff in Belgium * no (tax deduction for) office space in Belgium * fly to my company's country often * a Latvian phone number for myself * a _real_ _physical_ office in Latvia * ... On top of taking care of this, I also make sure I do not "awaken sleeping dogs": * every single bit of fiscal administration both here and there is perfectly in order * even if 100% legal and in order, I avoid creating visible links between myself and my company (bank accounts, ownership declaration, ...). (I make a small exception here, but I'm usually not very keen on it...) You will find a lot more information on this subject area in the double taxation treaties between individual EU member states. The general principle is very simple: the fiscal residence of your company is where your company's main and real activities are, as evidenced by facts. Unless you are a big multinational of course, in which case all these rules go overboard by using the tax avoidance loopholes and custom fiscal rulings.
  - jkot 12y ago
    Company in foreign country does not really mean lower taxes. You still tax your income in country of residence. But it often means lower administration.
    - markvdb 12y ago
      You write three things: 1) "Company in foreign country does not really mean lower taxes." It does in my case, and in plenty of others. 15% instead of 33.99% corporate income tax for example. Legally. 2) "You still tax your income in country of residence." One's personal income is indeed taxed in one's country of fiscal residence (except for the exotic regime US citizens are subject to). My company's income is taxed in its country of residence. 3) "But it often means lower administration." Not always. Luckily true in my case.

If you are BASED in Italy and register in Ireland or Estonia I'm pretty much sure you are breaking the law, EU or not.

by Kurtz79 12y ago

If you are BASED in Italy and register in Ireland or Estonia I'm pretty much sure you are breaking the law, EU or not.

nodata 12y ago

How?

jarek-foksa 12y ago
Keywords: tax residence, controlled foreign company. To be more specific, such structure would not be illegal, but you would have to deal with double the amount of bureaucracy and you would pay the same taxes.
Kurtz79 12y ago
You are working in country which as to pay for things like roads, military, firemen, police, health services, schools, pensions using taxes from companies and citizens living there and this country is not seeing a single euro from you (which are taking advantage of the infrastructure paid by those taxes). How would you expect this to be remotely legal ? Sure, there are plenty of people doing that, just as there are companies registered in the Cayman or Gibraltar, or people having secret Swiss bank accounts.
- davidw 12y ago
  > How would you expect this to be remotely legal ? If you pay taxes (in Italy, say) on the income from your company, wherever it happens to be. I get the impression that it's all something of a legal gray area. It'd be a lot simpler if people could easily have companies in their own countries. I'm all for paying one's fair share of taxes on income in the country you live in. What I intensely dislike about the laws in Italy surrounding companies is that there are all kinds of expenses that have to be paid even if you are losing money.
  - mauricemir 12y ago
    Cross country working like this is tricky in the EU and its still a grey area legaly speaking Its mainly about which country's employment laws apply.
- nodata 12y ago
  > How would you expect this to be remotely legal ? The company is a separate legal entity. The company pays corporation tax in the country where the company is registered, you pay income tax in the country you live, and then there is also vat.
- rmc 12y ago
  IANAL but the EU is supposed to be a common market. One (slowely integrating) community.
  - pmontra 12y ago
    Common market but different fiscal regimes. It seems absurd but it makes sense when you think that each country is jealous of its fiscal incomes because they are what keep them running. In no way an Italy would let an Ireland grab its share of taxes only because Italian companies prefer to incorporate in Ireland because of lower taxation. Only a common EU fiscal regime will solve that, but think about the impacts on those countries that are spending too much and will have to change their speding patterns (from no more useless expenses to laying out public workers).

jkot 12y ago

Not really, company is separate entity, I think your are confusing it with self-employment.

markvdb 12y ago
I run a small company in Latvia (low tax, low income). I live in Belgium (tax world champion, high income). I am _extremely_ careful to play by the rules. That means things like: * no company bank account or phone number in Belgium * no meetings with my staff in Belgium * no (tax deduction for) office space in Belgium * fly to my company's country often * a Latvian phone number for myself * a _real_ _physical_ office in Latvia * ... On top of taking care of this, I also make sure I do not "awaken sleeping dogs": * every single bit of fiscal administration both here and there is perfectly in order * even if 100% legal and in order, I avoid creating visible links between myself and my company (bank accounts, ownership declaration, ...). (I make a small exception here, but I'm usually not very keen on it...) You will find a lot more information on this subject area in the double taxation treaties between individual EU member states. The general principle is very simple: the fiscal residence of your company is where your company's main and real activities are, as evidenced by facts. Unless you are a big multinational of course, in which case all these rules go overboard by using the tax avoidance loopholes and custom fiscal rulings.
- jkot 12y ago
  Company in foreign country does not really mean lower taxes. You still tax your income in country of residence. But it often means lower administration.
  - markvdb 12y ago
    You write three things: 1) "Company in foreign country does not really mean lower taxes." It does in my case, and in plenty of others. 15% instead of 33.99% corporate income tax for example. Legally. 2) "You still tax your income in country of residence." One's personal income is indeed taxed in one's country of fiscal residence (except for the exotic regime US citizens are subject to). My company's income is taxed in its country of residence. 3) "But it often means lower administration." Not always. Luckily true in my case.