What is international tax planning?
Tax planning is the search and selection of the optimal scheme of the company’s activities, which allows to achieve a minimum tax burden by using legal means, techniques and methods to minimize the taxpayer’s tax obligations and achieve the greatest benefit for the company.
Tax planning is perhaps one of the most important factors in a company’s financial success.
In international tax planning, a special place is occupied by the registration of companies in other jurisdictions (states) in order to obtain tax benefits or, in general, to avoid taxation.
IMPORTANT! You should not use foreign companies and structures solely on the basis of tax considerations without a real economic reason. In this case, the business expects negative consequences.
What are the benefits of international tax planning?
Unlike optimization of taxation within one jurisdiction, international tax planning allows you to significantly expand the choice of possible options for doing business, consider the use of various taxation systems, obtaining benefits and preferences.
You can significantly minimize taxes or get tax incentives in exactly the type of activity that interests you most.
Many foreign jurisdictions offer easier registration and also have fewer audit and accounting requirements.
When choosing the jurisdiction that is best for you, you need to consider the following legislative hierarchy:
- National tax legislation that takes into account the taxation of international activities;
- Double taxation treaties (DTT) are bilateral agreements that govern relations between states in cases where a resident of one of the states receives income in another. The criteria for residency, permanent place of residence, center of vital and economic interests are taken into account. If it is impossible to determine residence by the methods provided for in the agreement, then the states parties to the agreement resolve the issue on an individual basis. Almost all DTTs can be found online;
- Multilateral agreements usually cover several topics for a group of participating countries. Examples are EU directives (Merger Directive, Parent-Subsidiary Directive, Interest and Royalty Directive or ATAD – Tax Avoidance Directive), BEPS or the Multilateral Instrument.
When developing a tax optimization scheme for the foreign part, our company carries out the following activities:
- Analysis and selection of the most profitable jurisdiction for the selected type of activity, search and selection of denominations, search for optimal solutions based on a specific situation;
- Choosing the most profitable financial structure for the company, taking into account the status of customers, partners and the general movement of finances;
- Evaluation of the timing of the selected scheme and miscalculation of the cost.
Contact us and we will help you develop the right tax strategy for your business, register a company, help you open a bank account, and we will assist you in running a company in a foreign jurisdiction.