Establishing an economic substance in registered jurisdiction may be essential during inspection of local tax authorities. However, the process of establishing substance must be diligently evaluated prior to doing so, as under certain conditions it may go against your initial goals and business structure. Substance needs to be addressed in order to avoid a higher tax burden on your enterprises and to prevent big tax-disputes arising with your tax authority.
Businesses have for many years relied upon 'offshore' or non-resident structures to reduce or defer taxes and improve returns for investors. This has been particularly popular with private equity and real estate structures. But, increasingly, and particularly within the EU, tax authorities are demanding more, if the case for tax non-residence and\or relief from local taxes is to be given. Usually ‘more’ is interpreted as having more substance and physical presence in the stated jurisdiction.
Nowadays, there are still many structures established in such a way that there is so-called double non-taxation, implying that in both countries there is no effective tax levied on the overall proceeds realised within the structure. The ultimate goal is to prevent the granting of treaty benefits in the case of international corporate structures which are only set up to enjoy the beneficial terms of the applicable double taxation treaties.
When having a substance is beneficial Having a substance is beneficial when you have planned on creating an offshore or onshore entity and want the highest protection possible in regards to it being recognized by international and regional tax authorities. In order to avoid problems, your international corporate structure must be set up as an actual and 'real' corporate structure.
Based on the actual role the company plays in your worldwide structure, there needs to be a relevant level of ‘real’ activity. In practice this means, for example, that the registered address of the company should not coincide with that of several hundred other companies and the director of the company should not be a director in hundreds of other companies simultaneously. In other words, your corporate address should at least be unique and the director should have a real function in the company.
Evaluation of company’s substance It is extremely relevant to organise a sufficient level of substance for your international structure. There are two levels of substance for you to consider. They could be referred to as objective economic substance and subjective economic substance.
Objective economic substance is the level of economic activity and the actual setup of a foreign corporate entity. Subjective substance is the specific activities of the foreign corporate entity in correlation with the legal framework in the countries involved. It depends on the specific situation of your company, the actual international corporate structure, the applicable anti-avoidance tax regulations in your country of origin, jurisprudence on this issue in the jurisdictions involved and the rules of the applicable treaty for the avoidance of double taxation.
Generally, it is accepted by many jurisdictions that the Company qualifies as resident company if:
Decisions are taken in the jurisdiction of the company (including signing agreements, board meetings, etc.); Directors of the company have major influence and control over company’s business (control bank accounts, control cash flow, conclude business contracts, etc.); Directors are tax residents of jurisdiction of the company. However, tax authorities normally would have more questions as they investigate presence of the company. The following FAQ (frequently asked questions by the tax offices) may help in planning your further steps of developing economic substance for your company:
Where do the Directors of the company reside? Who has control over the corporate bank account? Who actually signs contracts, resolutions, minutes, decisions and other company documents? Where do the sales and operations actually take place? How do your clients and suppliers communicate with your Company (by phone, e-mail)? How can potential clients find information about your Company? (Do you have web-site? Do you use advertisement?) How does your Company’s headquarters look like? Do you have a physical office? (Are there any employees?) It might look like your Company’s substance really needs enhancement. Adding substance and establishing a management office is usually a tailored-made exercise. Confidus will help you fully evaluate your current situation and will offer step-by-step solutions on creating a Management Office.
Thema von HarryMoore im Forum Ehrenamtliche Tätigkei...
Manufacturing is the largest business sector in the world which is also one of the most important one directly and indirectly accounting for a great part of all economic activity and all employment worldwide. It processes items and indulges in either creation of new commodities or in value addition by creating finished goods for sale to customers or intermediate goods used in the production process. After the industrial revolution which began in Britain a few centuries ago, the labor intensive textile production was successfully replaced with mechanization and use of fuels. Today manufacturing industry generates employment, technology development and an increase of international investment.
For this reason some jurisdictions utilize manufacturing output and value-added exports in order boost their operations, business performance and sales as well as to face the challenges and opportunities manufacturers see every day while running their businesses.
According to Deloitte 2016 Global Manufacturing Competitiveness Index, world's Top 5 most competitive manufacturing jurisdictions are considered to be China, United States, Germany, Japan and South Korea. These countries create about 60 % of world's manufacturing GDP.
China Canada and its provinces are competing on a global scale to attract investment that leads to low production costs, low factory workers' wages and globally popular product mandates incorporation. As a result, there are some significant trends in Chinese manufacturing which can easily be highlighted. These trends include creating a globally-competitive, expansive manufacturing business model which helps to grow a competitive manufacturing business environment in China and expand sales in domestic and foreign markets. This fact can encourage business startups to grow, invest and compete with other successful manufacturing companies.
United States The United States successfully attract investment to many of world's most active industrial sectors such as aerospace , auto assembly pharmaceuticals to name a few. US signed an agreement with Germany on implementing a dual-track vocational program for the advanced manufacturing sector. US business policies are centered mainly technology transfer, sustainability, monetary control as well as science and innovation, providing a competitive advantage for manufacturing businesses (Detroit's automotive sector and high tech in Silicon Valley).
Japan Japan has a technology-intensive production sector which dominates the global manufacturing landscape in most advanced economies. The country sustains manufacturing competitiveness as there is a close tie, existing between manufacturing competiveness and innovation. Japan has a strong potential to become world's most up-to-date manufacturing jurisdictions. Robot Revolution Realization Council was established in the country in 2014 within the framework of Japan Revitalization Plan, introducing infrastructure and energy resources for next generation vehicles. Japanese companies gather 50 % of the global market for factory robots.
Germany Germany maintains a relatively high share of manufacturing exports. The country offer long term support in government sponsored science labs and national programs which were created in order to encourage manufacturing innovation for example in such fields as solar and wind power and renewable energy (in 2014 renewable power sources accounted for 28% of the country's electricity generation). While making an energy revolution in manufacturing industry, the country aims to phase out nuclear energy.
South Korea Being the global market share leader in the manufacturing of Liquid Crystal Display (LCD), smartphones and memory chips, automobiles as well as having fame of world's largest shipbuilder, South Korea actively pursues growth in Free Trade Agreements with more than 50 countries. The country invests heavily in education generating a great amount of researchers each year. It is also known that a support for innovation in manufacturing in South Korea is identified as a strategic priority with investment in venture capital to sponsor high-tech startups.
Many jurisdictions, e.g., Singapore, especially those that provide special tax planning benefits, require foreign companies to recruit local staff in order to receive above-mentioned benefits. Besides that, jurisdictions like Latvian list the low-cost skilled labor force as one of the main advantages of registering a company there, making hiring local staff an inherent part of the incorporation strategy. These are the primary reasons why local staff recruitment services are essential for any business planning in order to relocate to a foreign jurisdiction.
Recruitment of highly-skilled managers Sometimes local directors and shareholders are required by the law in order to establish companies with additional tax benefits, or just to register a business in a jurisdiction with a favorable tax regime. Usually, to qualify as a local resident for the purposes of becoming a senior manager in a newly-incorporated company, a person must be either a citizen of that jurisdiction or hold a residence permit: temporary, permanent or a special one, like the Singapore EntrePass. Additionally, the person in question might not be eligible to hold the position of a director if he/she has a criminal record or is bankrupt at the time of registering a company.
Appointment of a company secretary Another management employee, who is often required to establish a business and needs to be a local resident, is a company secretary. There are two most widespread situations in this regard: the secretary can or cannot be the sole director of the company. If he/she can, then business needs only one local manager, which will act as both the director and the secretary. If he/she cannot act in this way, then the company has the possibility of either hiring two local employees or hiring one local employee to act as a director and the secretary and then hiring another director (resident or non-resident).
The requirements for the managing officers of a newly incorporated business can be vastly different between jurisdictions, and at the same time a company cannot be registered without them. We highly advice to contact Confidus Solutions for local staff recruitment services and consultation, as our international network of partners allows meeting the requirements of the most popular jurisdictions.
Employees Local staff recruitment is relevant not only for hiring managers as prescribed by law, but also for employing local labor force. Depending on the jurisdiction, local employees may bring the following advantages:
better knowledge of the local market and business culture better average education level compared to the company's original jurisdiction lower human resource management costs
Canada's Logistics Performance Index is 3.86. This indicates good performance - the logistics system is well prepared and organized, shipments mostly arrive on time and do not suffer damage, and the infrastructure is ready to handle even unpredictably large volumes of traffic as long as they are not overwhelming.
The customs performance is rated at 3.61. This indicates satisfactory performance - the customs clearance process is generally effective, although long periods can occasionally be a problem; The customs system certainly does not hinder international business. Required documents and fees are generally publicly available.
The infrastructure quality in Canada is rated at 4.05. This indicates good quality - roads, railways, ports and other facilities are adapted and regularly maintained to cope with high traffic volumes at any time. Most likely there are also special facilities for dealing with high traffic densities and/or special traffic or vehicles (e.g. motorways, also called motorways and deep sea ports).
International shipping quality is 3.46. It indicates satisfactory performance - the services are adequate and the prices are not too high and usually correspond exactly to the quality, although there is still room for improvement.
The competence of the logistics service providers is rated at 3.94. The providers are very competent, ensure high quality shipments and traffic processing at all times and work quickly and reliably; Any errors that may occur will of course be compensated for.
The tracking options for shipments are rated at 3.97. This indicates good performance - the tracking systems provide detailed and up-to-date information on most parameters of shipments, often overcome national barriers (both political and linguistic) and can be qualified as international shipment tracking systems.
The tracking options for shipments are rated at 4.18. This indicates good performance – shipments almost always arrive within the scheduled timeframe and often faster than expected.
In Canada, 100% of the population has access to electricity. Canada has 1,467 airports nationwide. There are 8,743,000 Internet hosts in Canada. The number of road vehicles per 1,000 people in Canada is 113.
Road network The total length of roads in Canada is 1,042,300 km (647,794 miles). Of these, 6,350 km (3,947 mi) of roads are classified as highways, dual carriageways or dual carriageways.
Gas price On average, you would pay $1.17 for a liter of gasoline in Canada. A liter of diesel would cost 0.81 USD.
The monthly minimum wage in Ireland is USD 1253. In relation to consumer prices, the inflation rate in Ireland is 0.6%. The currency of Ireland is the euro. There are several plural forms of the name "euro". These are euros, euros. The symbol used for this currency is € and is abbreviated as EUR. The euro is divided into cents; There are 100 in one euro. Every year, consumers spend around 112,466 million US dollars. The ratio of consumer spending to GDP in Ireland is 0.05% and the ratio of consumer spending to world consumer market is 34%. Corporation tax in Ireland is 12.5%. Personal income tax ranges from 20% to 40% depending on your specific situation and income level. VAT in Ireland is 23%.
Gross domestic product Total Gross Domestic Product (GDP) calculated as Purchasing Power Parity (PPP) in Ireland is US$236,398 billion. The gross domestic product (GDP), calculated as purchasing power parity (PPP) per capita, was in Ireland at 49,211,158 US dollars. The PPP in Ireland is considered very good compared to other countries. A very good PPP indicates that citizens of this country find it easy to buy local goods. Local goods can include food, shelter, clothing, healthcare, personal hygiene, essential furnishings, transportation and communications, laundry, and various types of insurance. Countries with very good purchasing power parities are safe locations for investments. The total gross domestic product (GDP) in Ireland is 232,077 billion. Based on this statistic, Ireland is considered as one large economy. Countries with large economies support a variety of industries and businesses and offer numerous investment opportunities. Large economies have an extensive financial sector that facilitates the organization of investments and financial transactions. It should be very easy to find good investment opportunities in Ireland. The gross domestic product (GDP) per capita in Ireland was last at 48,311,652 US dollars. The average citizen in Ireland is very wealthy. Countries with very high per capita wealth have a longer life expectancy and a very high standard of living. There are highly skilled workers in many industries and labor is very expensive in these countries. Very wealthy countries offer safe investment opportunities as they are often backed by a diverse and thriving financial sector. The annual GDP growth rate in Ireland averaged 3.6% in 2014. Based on this percentage, Ireland is currently experiencing modest growth. Modest growth countries offer safe investment opportunities; Their expanding economy suggests that businesses, jobs and incomes will grow accordingly.
The logistics performance index of Belgium is 4.04. It indicates good performance - the logistics system is well prepared and organized, shipments mostly arrive on time and are not damaged, and the infrastructure is ready to handle even unpredictably large volumes of traffic as long as they are not overwhelming.
Customs performance is rated at 3.8. This indicates good performance - customs clearance is fast and effective, in some cases it may not exist at all (e.g. at the borders of the Schengen area), which encourages international business activity; The required documents and fees are predictable and publicly available and in some cases (mainly related to visas) can be arranged at the customs office.
The infrastructure quality in Belgium is rated at 4.1. It indicates good quality - roads, railways, ports and other facilities are adapted and regularly maintained to handle high levels of traffic at all times, and most likely there are special facilities to deal with high-intensity and/or special traffic or vehicles ( e.g. highways a.k.a. freeways and deep-water ports).
International broadcast quality is 3.8. This indicates good performance - the prices and quality of international shipping services are quite good, attracting foreign customers as the first choice for international transfers.
The competence of logistics service providers is rated at 4.11. Providers are very competent – they ensure high quality of shipments and traffic management at all times, work quickly and reliably; Any errors that may occur are readily compensated.
Tracking options are rated 4.11. This indicates good performance – the tracking systems provide detailed and up-to-date information on most shipment parameters, often crossing national (both political and linguistic) barriers and can be qualified as international tracking systems.
Tracking options for shipments are rated 4.39. This indicates good performance - shipments almost always arrive within scheduled time frames and often faster than expected.
In Belgium, 100% of the population has access to electricity. Belgium has 41 airports nationwide. There are 5,192,000 internet hosts in Belgium. The number of road motor vehicles per 1000 inhabitants in Belgium is 174.
Road network The total length of roads in Belgium is 154,012 km (95,719 miles). Of these, 1,756 km (1,091 miles) of roads are classified as freeways, dual carriageways, or freeways.
Gas price On average, a liter of petrol costs USD 1.9 in Belgium. A liter of diesel would cost $1.19.
Confidus Solutions list of banks in Liechtenstein contains 15 banks.
You have several options for bank account opening in each one of the banks listed below.
Select a bank Bank Alpinum Bank Frick & Co. Bank of Vontobel Havilland Bank EFG Bank of Ernst Kaiser Partner Bank LGT Bank Liechtenstein State Bank New Bank Raiffeisen Privatbank SIGMA Credit Bank Union Bank VP Bank Bendura Bank Volksbank
The development of telecommunications and economic globalization have made it possible for interested investors to set up companies all over the world. With proper research, financial investment and legal backing, business ventures can be safely incorporated in almost any country in the world. Building an international business used to be a complicated entrepreneurial venture, but today it is commonplace with the help of experienced legal and business advisors.
The advantages of founding a company abroad are as numerous as they are obvious. Many countries offer specific locational advantages, ranging from natural resources and well-established infrastructure to beneficial laws and regulations that encourage growth in a particular industry. Likewise, it can be difficult to start a business or an acquisition in your own country due to adverse situations: political or regulatory environment, lack of resources and more. In this situation, it makes sense to consider an overseas option that offers greater opportunities for growth, development, and success.
Company registration in Haiti When starting a business in Haiti, an interested investor must conduct due diligence regarding legal procedures, international regulations, and sufficient investment for success. It is crucial to understand cultural, social and political factors that influence starting and growing one's business. Failure to do so may result in unintended consequences. Poorly researched and toneless international launches often end in disaster as time, money and energy is wasted due to poor planning.
Legal Documents Every country in the world presents its own intricate challenges when it comes to starting, developing and maintaining a business. Owners, financiers and investors must make these commitments with the support of a knowledgeable and experienced legal team. Only someone with in-depth knowledge of local and international corporate law will be able to set up an overseas business while avoiding the pitfalls that plague many new businesses.
Additionally, smart business people can consider ways to invest in foreign companies without actually starting their own businesses. In these situations, it is still beneficial for the investor to partner with a knowledgeable global economics and litigation advisor. International investments create a truly diverse portfolio that offers growth opportunities that were unthinkable decades ago.
Potential investors, venture capitalists and entrepreneurs should consider the existing infrastructure in Haiti when planning to start a new business. While extensive infrastructure and systems can help make the process of starting a business a smooth one, it could also represent market saturation and reduced growth potential. On the other hand, a lack of infrastructure is often a major obstacle to growth; However, the lack of infrastructure points to a clear market opening for a creative and efficient new business.
Buy, register or acquire a new or finished company with the help of Confidus Solutions. We provide full business and legal support when starting a new business or purchasing a finished business. Our areas of expertise include commercial law, mergers and acquisitions, contract law, tort law, intellectual property law, tax law, accounting and other business-related services. For more than 10 years, Confidus Solutions has brought together business and legal experts dealing with acquisitions and company registration in more than 150 countries.
25.10.2024 09:02
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