EU company + Mauritius Foundation?

[John Andrews]

I have a company in the EU which is currently in my name and I am in the UBO register as well. Most of the double tax agreements my country has signed propose a 5 to 15% withholding tax on dividends. However, there is a DTAA with Mauritius and it says there is 0% withholding tax. Would it be possible to form a Mauritius Foundation so it owns my local company? CFC rules are not an issue in my country.

I also found the following post: What is required to form anonymous Swiss GmBH or AG ?

"Set up a structure like this: 1. Normal Company (with nominated directors) 2. The company is owned by a Foundation (Mauritius) which is considered a "person" with rights and privileges just like a natural person. It has a board of directors, no UBO, only beneficiaries and a Founder who are legally separated from the Foundation assets. In this structure, you will not appear on any public records, nor private records..."

Is this setup possible in the EU?

Last edited: Nov 5, 2019

 

[GrumpyMess]

mange38 said:
CFC rules are not an issue in my country
Click to expand...

CFC rules or an effective management rule are enforced in all of the EU

 

[John Andrews]

GrumpyMess said:
CFC rules or an effective management rule are enforced in all of the EU
Click to expand...

In my country, CFC only applies to subsidiaries in low tax jurisdictions. I don't want to sound rude but please stick to the topic 🙄

Also the whole point of this is to move out of the EU, preferably to Georgia or somewhere else so CFC definitely won't be a problem in regards to the Mauritius foundation.

 

[Martin Everson]

mange38 said:
Also the whole point of this is to move out of the EU, preferably to Georgia
Click to expand...

Move to Georgia and don't waste your time with what your looking into.

Toggle signature
Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[John Andrews]

Martin Everson said:
Move to Georgia and don't waste your time with what your looking into.
Click to expand...

I will but I want to keep my company in the EU since I already have employees here and I would pay more corporate tax in Georgia (I currently pay less than 15%).

I will also inherit one more company here so it's not that simple. If I 'just' move to Georgia I will have to pay withholding tax in my home country, which is what I want to avoid (& also protect my assets).

 

[Martin Everson]

mange38 said:
I will but I want to keep my company in the EU since I already have employees here and I would pay more corporate tax in Georgia (I currently pay less than 15%).
Click to expand...

Georgia has a free trade agreement with EU and Georgia companies have a zero tax rate on profits not distributed. If operations can't be moved then thats another issue and I get that.

mange38 said:
I will also inherit one more company here so it's not that simple. If I 'just' move to Georgia I will have to pay withholding tax in my home country, which is what I want to avoid (& also protect my assets).
Click to expand...

I guess you don't want to say your home country so I can't really help as I don't have a crystal ball or want to guess on what you are telling me about your home country conf/(%.

Toggle signature
Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[John Andrews]

Martin Everson said:
I guess you don't want to say your home country so I can't really help as I don't have a crystal ball or want to guess on what you are telling me about your home country conf/(%.
Click to expand...

I am from Croatia. 12% corporate tax up to 7 million HRK yearly revenue as of 2020 (so basically 1 million euro).

 

[Martin Everson]

mange38 said:
I am from Croatia. 12% corporate tax up to 7 million HRK yearly revenue as of 2020 (so basically 1 million euro).
Click to expand...

I see thats a a lot of revenue.

Withholding tax with Georgia for dividends paid to Georgia is only 5% under the DTA.

Toggle signature
Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[John Andrews]

On 100k EUR profit I would pay 12k of corporate tax (12%). Then on 88k I'd pay 5% withholding tax, which is 4400.

I would rather have a foundation (for asset protection as well, since it would also own apartments) than pay €4.5k to the government ns2

Not sure how much a Mauritius foundation would cost and how hard would it be to get a bank account for it though.

 

[Martin Everson]

mange38 said:
I would rather have a foundation (for asset protection as well, since it would also own apartments) than pay €4.5k to the government ns2

Not sure how much a Mauritius foundation would cost and how hard would it be to get a bank account for it though.
Click to expand...

A foundation will cost you much more than this to maintain I can tell you this firsthand.

Toggle signature
Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[John Andrews]

Thanks for the info, I wasn't aware of this. How much do they cost anyway? €10k/year? more?

 

[Martin Everson]

mange38 said:
Thanks for the info, I wasn't aware of this. How much do they cost anyway? €10k/year? more?
Click to expand...

Contact your chosen foundation provider and get a full costing of setup and running costs.

Toggle signature
Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.