Nominee director from Germany or Mexico? / Tax residency

[Hermana]

Business will be in an interesting European country.
Income will come from this country and from another European country (not Germany).

Directorship I have narrowed down to either a person who lives in Germany, or a person who lives in Mexico.

For the country of the business, both are fine. This country will continue to consider the business a tax resident, even if the director is from abroad. This is very important to me.

When I will have a director from Germany or Mexico, will one of these countries give me a hard time, claiming tax residency over the business? Do I have to worry about this with either/both countries?

- Business will probably register on the accountants address. Will this cause a problem?
- Director would prefer to work from home instead of the business country. Will this cause a problem?
- Will I solve this problem by hiring them both? So 2 directors, 1 from Germany, 1 from Mexico?

 

[bizniz]

Why on earth Mexico? I can understand Germany, due to the European base, but what advantage can Mexico offer?

 

[Hermana]

I've selected two persons that I trust.
One lives in Germany, one in Mexico.
The company will remain in it's country of registration, so it will have a European base.

Why would the country of residence of the director matter, besides the problem I stated in my post?

 

[Don]

Hermana said:
I've selected two persons that I trust.
One lives in Germany, one in Mexico.
The company will remain in it's country of registration, so it will have a European base.

Why would the country of residence of the director matter, besides the problem I stated in my post?
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Check German and Mexico tax laws.
Best would be to have at least one local director.

 

[Hermana]

Ask a tax lawyer if the company would become tax resident according to the tax laws of the country?
I do not want to work with a local director when possible.

 

[Hermana]

How will Germany or Mexico konw that there will be a director of their country at my business? If I decide not to pay them wages?

 

[JustAnotherNomad]

Hermana said:
When I will have a director from Germany or Mexico, will one of these countries give me a hard time, claiming tax residency over the business? Do I have to worry about this with either/both countries?
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Germany will when they find out, unless you can prove the director is not working from Germany. I.e. you could prove a daily commute to the company office. Talk to a German accountant to know the exact rules.
All Western countries are like this, it's not specific for Germany. No idea about Mexico, but they probably wouldn't even know about to company in the first place.

Hermana said:
- Business will probably register on the accountants address. Will this cause a problem?
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Probably not.

Hermana said:
- Director would prefer to work from home instead of the business country. Will this cause a problem?
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Yes, see above. You may be able to mitigate this risk if there's a ton of substance in the country where the company is incorporated (local director, office, customers) and having next to no substance in Germany (no office, no customers, just a guy working from home sometimes).
But you should definitely pay for a good lawyer.

Hermana said:
- Will I solve this problem by hiring them both? So 2 directors, 1 from Germany, 1 from Mexico?
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I doubt it. The best case scenario would be that there would be little less tax to pay in Germany.

And you can replace Germany with any other Western country basically, the outcome would probably be the same.

Last edited: Aug 22, 2021