Did you know that offshore banks are among the safest in the world? Yet, “thanks” to the leaks (e.g. Panama Papers) the whole notion of having your wealth secured offshore is becoming the topic of debates worldwide.
It should be a no-brainer, really. Who don't want to secure his/her wealth on one of the world's safest bank, regardless of its location? No one, I presume. Unfortunately, things are not that simple - either on personal level (e.g. personal income and assets) or business level (e.g. company profits and assets.)
But how to go about with your plan of doing business in the EU, particularly Eurozone, in the midst of the offshore confusion? Should you just abandon your tax avoidance plan?
Well, if you – despite the negative publications on offshore banking and company formation these days – believe that setting up an offshore structure is the best route for you in doing business in the Eurozone, then read on.
Which Eurozone's offshore jurisdictions?
The following is a list of 5 offshore jurisdictions that you should consider when doing business in Eurozone – and doing tax planning at the same time.
Tax rate: 12.5 percent
Cyprus is attractive. No wonder it's a major tourist destination in the Mediterranean. For a business owner, it's even more attractive: The Cypriot government is working hard in attracting foreign direct investment, which is the reason why Cyprus are among the lowest in Eurozone when it comes to corporate taxes.
Indeed, at 12.5 percent tax rate, the jurisdiction is attractive to businesses, especially those that target the Eurozone market (learn more about company formation in Cyprus.)
Tax rate: 12.5 percent for trading income
Although Ireland is not known for its secrecy, the foreign-investment-friendly rules and regulations attracted half of the world's top 50 banks and half of the top 20 insurance companies to be headquartered in the country.
Along with the economic boom from the early 1990s, Ireland is an economically stable jurisdiction – the fact that is well-sought-after by the big companies like Google, Facebook, LinkedIn, Airbnb and many others to establish their headquarters for operations in the EU or worldwide.
Latvia – joined the Eurozone in 2014 – is considered as the Eurozone's new tax haven – or “the new Cyprus”. While it's mind boggling how a 15 percent tax rate is considered as “tax haven” (compare that to Belize's zero tax rate,) it's quite logical to consider it as one of the best jurisdiction for establishing a holding company due to the low-ish corporate taxes.
What may also interest foreign investors is the fact that the new tax law allows an exemption for dividends paid by Latvian residents to non-residents and the other way around.
Those two facts will raise Latvia's popularity in offshore business formation – for better or worse.
Tax rate: 15 percent on foreign income
Malta is among the top jurisdictions in the Financial Secrecy Index. Along with the 15 percent tax rate charged on foreign income, it's attractive for businesses that want to benefit from the low taxes, the secrecy and the ability to do business in the EU, especially Eurozone.
Not only those, but the Maltese government also doesn't charge taxes on inheritance, wealth or property, making it an attractive jurisdictions for entrepreneurs, workers, and retirees.
Tax rate: 15 percent
Most companies, including non-resident companies, are taxed at 15 percent. Taxes are even lower for small businesses: If your company is employing less than 10 employees and generating less than EUR 300,000 in revenue, then you're eligible for a 5 percent tax rate.
Lithuania, among the fastest growing countries in the EU, is a great launchpad for 'conquering' the Eurozone market, as well as the Russian market.
Please note that the five jurisdictions mentioned above are just a recommendation. As always, before you decide on anything, do your due diligence and consult with your trusted lawyer and consultant.
Choices are everywhere; what matters is your intention – do you have a hidden agenda with your offshore headquarters? If it's strictly business while doing tax planning properly and legally, then you'll be fine. Remember, in creating a presence offshore, the right question to ask is not “how” but “why.”
If you need to discover your “why” consult with us – free of charge. No gimmick, no nonsense.
Read also "Low Tax vs. No Tax: Why it Matters"