Company formation in UAE for business in EU

[Frank Lucas]

Assume that I have a company in Belgium or the Netherlands. Would it be possible to create a setup in the UAE that invoices the company in BE / NL? With the directors of the UAE company being a resident in the UAE and the shareholders resident in the EU.
Note, the directors are not a shareholder in the holding.

Is it maybe required that the company in the UAE is the holding?

Would like to get some feedback on this, thanks.

 

[Sols]

It likely wouldn't have any tax advantages in the end. You'll run into CFC, corporate tax residence, BEPS regulations, transfer pricing regulations, and probably more things if it's ever put into question where the true management, operation, and control of the UAE company lies. If your directors in UAE are just sock puppets, it won't impress or convince Belgian or Dutch tax authorities. If you are still calling the shots, then the company will likely end up tax resident wherever you are based.


Keep in mind that UAE is now on FATF grey list, so there is a risk extra scrutiny.

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This is the probably the answer to your question.

 

[Frank Lucas]

Would there be any alternative, as we have trusted parties (relatives) in UAE?

 

[Sols]

What's the goal? To erode the taxable base and shift profits to UAE?

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This is the probably the answer to your question.

 

[Frank Lucas]

Sorry we forgot to mension serveral things, we already know how to erode the taxable base in the EU. The reasoning for the forum post is trying to look for a option to receive the money back in the EU, for instance a loan. Would you know of such a thing?

 

[Sols]

Timtheyoung said:
Sorry we forgot to mension serveral things, we already know how to erode the taxable base in the EU.
Click to expand...

Have you consulted a lawyer regarding BEPS?

Timtheyoung said:
The reasoning for the forum post is trying to look for a option to receive the money back in the EU, for instance a loan. Would you know of such a thing?
Click to expand...

I don't want to put words in your mouth but it sounds like you're trying to do some Beginner's Guide Tax Evasion stuff here: invoicing funds out UAE and then repatriating through other channels. That can land in you jail, or at the very least back taxes and penalties. It's becoming easier and easier for tax authorities to figure out these kinds of structures.

But assuming that isn't the case, you should be able to receive dividends from a foreign company and simply declare it as income, capital gains, or whatever type of income it's qualified as in your home jurisdiction. This is usually better than receiving the funds as a salary.

Loans are tricky. If you lend too much or if the loans are forgiven, they can be considered taxable income after the fact.

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This is the probably the answer to your question.