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Tax Optimization Using Offshore Company

One of the main reasons for using tax havens is tax optimization. Entrepreneurs use offshore and onshore centers for their international tax planning. Motivating this is often the disproportionate level of taxation in developed countries.

Tax Optimization

Tax Optimization

Tax optimization is an activity that leads to the organization of tax matters in such a way that the taxpayer legally derives the lowest possible tax. Offshore and onshore companies are then the main tool to achieve this.

Accounting optional

Accounting optional

When doing business in the Czech Republic, there is often a significant paradox where some profit-making items are not considered as tax-deductible costs. With offshore business, this problem is avoided. Companies from tax havens are not required to keep accounts and file tax returns or are only formal.

The laws above all

When using international tax planning, it is necessary to ensure that all operations are carried out within the framework of the law and are not tax evasion. It is essential that all transactions comply with the laws of all countries involved in the optimization process.

Onshore companies

For international tax planning, besides offshore companies, it is also appropriate to engage so-called onshore companies (eg United Arab Emirates, Great Britain, Hong Kong or the United States of America ). Unlike traditional tax havens, they have a better international image.

Payment with the Czech Republic

It also serves well for transactional purposes and direct payments with Czech companies. For those, traditional tax havens are not suitable because, in most advanced countries, outgoing payments to typical offshore jurisdictions are subject to withholding tax.

Stable legal background

Onshore jurisdictions are further used for their high-quality and stable legal background, a wide network of double taxation treaties, the benefits of a single market within the EU, and tax incentives, concessions or holidays. Moving businesses abroad often also preclude the obligation to apply for VAT.

Low taxes

Onshore companies are taxed at a rate of income tax, which is lower than the tax burden in developed countries. These procedures are used to optimize income tax, dividend profits, and license and interest earnings.

Corporate structures

Corporate structures

Linking companies can create international business structures that meet multiple requirements. A good combination of offshore and onshore companies can thus create a corporate structure with zero tax and good reputation.

Tax Paradise United Arab Emirates

The United Arab Emirates boasts the fastest growing economy in the world. Business in Ras Al Khaimah (RAK) – the largest of the seven emirates – is at the top level that links east to west. Life costs are significantly lower than in other emirates. A cheaper environment is positively reflected in the cost of running the company.

Bookkeeping is formally required but there is no requirement to submit or audit it. UAE has one crucial advantage over all other tax neutral jurisdictions – are not listed on the blacklist (ie. “Blacklist”) OECD – Organization for Economic Co-operation and Development.

Tax Paradise USA

The United States itself, the world’s largest anti-tax haven, can become a tax haven for non-residents. An example might be the establishment of an offshore company in Seychelles holding 100% shares of LLC company in the state of Delaware.

If US LLC employees and its own shareholders are not US citizens and the company as such will not have business activities in the United States, business profits will be taxed at the shareholder level – that is, Seychelles at a 0% rate.

Business environment

Business environment

The purpose of tax optimization is not just to reduce the tax burden. An important factor is also the fact that we get back from the paid tax. What other benefits can we gain as taxpayers or if it is not desirable to move the business into a much more favorable business environment?

Taxation is a cost like any other, so entrepreneurs try to limit their costs as part of maximizing profits, which logically involves the amount of taxation. Companies are therefore forced to tax at least part of their revenues by using well-designed international structures using offshore and onshore centers.

Tax optimization of large multinationals

The biggest multinationals are the champions of tax evaporation. We can cite Apple, Microsoft, Google, Amazon, Starbucks … The greater the profits, the more the means implemented to avoid paying taxes are huge, according to Jean-Michel Quatrepoint, a journalist-essayist.

In general, and especially in France and Western countries, it is not possible to accept to see part of their tax matter disappear gradually, thanks to tax optimization. But this process has been implemented for a decade. Tax havens have proliferated, and within the European Union, there are exorbitant tax disparities.

How does the tax optimization of large multinationals work?

The success of large multinationals such as Microsoft, Google, Apple, Amazon, and many others are not only due to the genius of their founders, not just the talents of their researchers and marketing departments. Their financial successes would be directly related to the imagination of their legal services and their tax professionals. By minimizing taxes, they maximized their profits. The trick of these large multinationals lies in the disconnection between the supply of goods and services, the location of the bill, and the charging of various fees from tax havens, a practice facilitated by the Internet. If a European consumer buys a book from Amazon, for example, he pays for it through a Luxembourg company rather than through local subsidiaries, while the customer places his order on the Amazon website of his country. For Google, most of its international revenue is located in Ireland where the IT rate is only 12.5%.

Google’s advertising contracts are for the most part signed by the Irish subsidiary while they are aimed at consumers in all countries. Google told the US SEC that it had garnered $ 4 billion in sales in 2011 in England, while its official British records were only $ 629 million. As for Amazon, it has reported more than 9 billion sales in Europe, with a small profit of 20 million and only 8 million euros in taxes!

This is also the case for Apple and other major players in tax optimization.