Moving profits out of a EEA-company to offshore

[D0naldDuck]

Hi guys, I need an EEA-company to accept payments from EU B2C customers and would like to move the profits from the EEA-company to an offershore company.
What EEA country can you suggest that can be (as easy as possible) invoiced from an offshore company like UAE, Panama without the Inland Revenue doubts the invoices?

Best regards

 

[Sols]

All territories in the EEA have transfer pricing and BEPS regulations, so you can't just freely invoice an EEA company from offshore and use that as a way to transfer funds offshore.

But as usual, Cyprus and Malta have some of most relaxed transpositions of the EU directives and are commonly used in these types of setups.

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This is the probably the answer to your question.

 

[Helkins]

Sols said:
All territories in the EEA have transfer pricing and BEPS regulations, so you can't just freely invoice an EEA company from offshore and use that as a way to transfer funds offshore.

But as usual, Cyprus and Malta have some of most relaxed transpositions of the EU directives and are commonly used in these types of setups.
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I agree with Sols, generally speaking you can't just be making transfers without any supporting documents.
Your best bet is to incorporate in so onshore low tax jurisdiction which isn't look down upon by the EU and then move the money. Alternatively you need to be prepared to actually present some finished work/consultation/research or whatever on paper to the authorities of an EEA country you wish to operate from when there is (and there surely will be) doubt about your transactions.

 

[D0naldDuck]

Thanks for your responses! I have two other setups in mind.

1) What do you guys think of moving profits that way: EEA company collecting payments --> Invoiced by US LLC --> US LLC invoiced by Offshore Company?
The EEA authorities should have less problems with US companies than with old-fashioned offshore ones and US authorities are not that strict with offshore companies, right?

2) Using a UK LLP with two offshore companies as partners. Depends a little bit how the EU treats UK after Brexit, maybe they even join the EEA.

What do you think of that setups?

 

[Sols]

D0naldDuck said:
1) What do you guys think of moving profits that way: EEA company collecting payments --> Invoiced by US LLC --> US LLC invoiced by Offshore Company?
The EEA authorities should have less problems with US companies than with old-fashioned offshore ones and US authorities are not that strict with offshore companies, right?
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Transfer pricing is transfer pricing. It doesn't really make any difference where the companies are incorporated. What matters is that the transactions comply with the TP and BEPS regulations.

D0naldDuck said:
2) Using a UK LLP with two offshore companies as partners. Depends a little bit how the EU treats UK after Brexit, maybe they even join the EEA.
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A transfer of profits, whether as dividends or as in this case a profit payment to partners, would not be subject to transfer pricing regulations.

Aside from Brexit, the setup may encounter issues with banking as UK LLP (and Scottish LP) is increasingly considered a high-risk entity for its frequent use in tax evasion and money laundering structures. Finding banking or payment processing can be slightly more difficult than for most other EU/EEA entities, but by no means impossible.

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This is the probably the answer to your question.

 

[D0naldDuck]

A transfer of profits, whether as dividends or as in this case a profit payment to partners, would not be subject to transfer pricing regulations.

Aside from Brexit, the setup may encounter issues with banking as UK LLP (and Scottish LP) is increasingly considered a high-risk entity for its frequent use in tax evasion and money laundering structures. Finding banking or payment processing can be slightly more difficult than for most other EU/EEA entities, but by no means impossible.
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Do Ireland Limited Partnerships can also be founded with two offshore limited companies like Seychelles companies? I found contradicting info about that. Some say one of the partners needs to be an Irish resident, other say both companies can be Outside-EEA limited companies.

Ireland LP could be the perfect match. EEA country, relatively cost-effective, taxation in the country of the LP members. If its possible to found and operate it with offshore limited companies and tax the revenue there, that would be interesting.

 

[Helkins]

D0naldDuck said:
US authorities are not that strict with offshore companies, right?
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I'm not really sure about that, any transfer I tried to send abroad from US has been subject to additional checks. Maybe I was just being unlucky.

D0naldDuck said:
Using a UK LLP with two offshore companies as partners. Depends a little bit how the EU treats UK after Brexit, maybe they even join the EEA.
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That'd work better, although look into balkan and smaller Eastern European countries for your incorporation. They are less likely to do a control check and as long as you leave some money there you should be good.

D0naldDuck said:
Do Ireland Limited Partnerships can also be founded with two offshore limited companies like Seychelles companies? I found contradicting info about that. Some say one of the partners needs to be an Irish resident, other say both companies can be Outside-EEA limited companies.
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As far as my knowledge goes you won't have trouble with that but you'll face issues with bank account opening. I had one set up like this and it's been literal hell trying to open any account. After close to a year of trying one bank agreed to open the balance but only if I notarised and attested the corporate documents personally in Seychelles, that wouldn't be a problem to make some sweet holiday trip if it wasn't for Covid.