Help Needed: Best Country to Establish a Company

[gap]

Hello!
I'm a Hungarian tax resident and the sole owner of a Hungarian KFT (Design & IT services). Due to some clients' preferences (GB, NL), I need to establish a company in a more "prestigious" country. My question is: which country would be the best for this purpose?

As of 2024, the Double Taxation Treaty (DTT) with the US has been terminated, so that option is off the table I guess. Here are the criteria that are important to me:

1. Low or close to 0 initial capital requirement
2. Better reputation
3. Easy management
4. Single ownership structure
5. Relatively low fees (my Annual Revenue is between 200k and 350k EUR)
6. Regular bank or EMI both fine (I deal with some crypto)

CIT paid abroad is tax-deductible in Hungary up to a certain amount, but it would be ideal if the company were a tax-transparent entity so that only the owners would have a tax liability. I understand that a Canadian LLP fits this description, but I would need a 2nd partner there.

Any help and tips are welcome, even a completely different approach. Thank you!

Spoiler: DTTs of Hungary
https://nav.gov.hu/en/taxation/double_taxation_treaties

 

[CyprusLawyer101]

You can set up a Cyprus company managed from and taxed in Hungary

 

[Martin Everson]

gap said:
Due to some clients' preferences (GB, NL), I need to establish a company in a more "prestigious" country.
Click to expand...

Ask them which countries they consider more "prestigious" firstly before bothering to do anything.

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

 

[Marzio]

UK LTD treaty non-resident in Hungary = UK facade with HU CIT

If you're smart you can even setup the LTD in an area without the 1-2% communal surcharge (like Budapest) to achieve 9% CIT which is awesome.

 

[gap]

Marzio said:
UK LTD treaty non-resident in Hungary = UK facade with HU CIT

If you're smart you can even setup the LTD in an area without the 1-2% communal surcharge (like Budapest) to achieve 9% CIT which is awesome.
Click to expand...

My KFT is currently based in Újlengyel instead of Budapest. 0% local business tax.
Many accountants have warned me, because these are usually small family houses where 200 companies are registered and called a "company cemetery". But you just have to choose a good provider.

UK LTD sounds good

Martin Everson said:
Ask them which countries they consider more "prestigious" firstly before bothering to do anything.
Click to expand...

Anything that is not Balkan or Central/Eastern Europe I guess.
I'm not sure about Cyprus, how is perceived.

Last edited: May 15, 2024

 

[Martin Everson]

gap said:
Anything that is not Balkan or Central/Eastern Europe I guess.
Click to expand...

I see.

gap said:
I'm not sure about Cyprus, how is perceived.
Click to expand...

Will be perceived same as Malta. They will look at you like...ca#"!

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

 

[CyprusLawyer101]

gap said:
I'm not sure about Cyprus, how is perceived.
Click to expand...

Depends on the eye of the beholder. A little bit of a tarnished reputation from past events but also one of surrvivorship and adaptation.

 

[Forester]

Marzio said:
UK LTD treaty non-resident in Hungary = UK facade with HU CIT
Click to expand...

Yes; but what about banking? A UK company with a non-resident director => a problem, especially when some crypto is involved, I am afraid... Or am I wrong?

CyprusLawyer101 said:
Depends on the eye of the beholder. A little bit of a tarnished reputation from past events but also one of surrvivorship and adaptation.
Click to expand...

Yes; yet I am afraid that @Martin Everson is pretty right here Help Needed: Best Country to Establish a Company ”“ for this particular case.

But what about US LLC? If properly incorporated, an one-member LLC is tax transparent, and if no US business (there is none, apparently) then no US taxing at all, hence non-existence of DTT is not an issue. Reputation is solid, especially if established in e.g. DE and not NM or WY and banking is doable (although not as easy-breezy as it was in the past). All other requirements are fulfilled. Or am I missing something?

Last edited: May 16, 2024
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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Marzio]

Forester said:
Yes; but what about banking? A UK company with a non-resident director => a problem, especially when some crypto is involved, I am afraid... Or am I wrong?
Click to expand...

It's not a UK company with non-resident HU director.

It's a UK LTD treaty non resident in Hungary so he is not limited to UK banks but any HU bank and EEA EMI

 

[saintjohnny]

Marzio said:
It's not a UK company with non-resident HU director.

It's a UK LTD treaty non resident in Hungary so he is not limited to UK banks but any HU bank and EEA EMI
Click to expand...

Serious question... Do people still consider the UK a reputable jurisdiction? All I needed was a little walk around London to completely change my mind.

 

[Marzio]

saintjohnny said:
Do people still consider the UK a reputable jurisdiction?
Click to expand...

Perception ≠ Reality

 

[Forester]

Marzio said:
It's not a UK company with non-resident HU director.

It's a UK LTD treaty non resident in Hungary so he is not limited to UK banks but any HU bank and EEA EMI
Click to expand...

Well, maybe I am misunderstanding the case but in my perception, UK LTD treaty non resident is not tax resident in the UK, nevertheless legally it is still a subject incorporated in the UK, or not?
Could you please clarify, @Marzio ?
(BTW, if were not, that in this particular case it would not help OP as he wants to avoid HU resident company.)
And if it is so, then banking with EEA subjects become not much easy, many (not all, of course) EEA subjects onboard only EEA registered companies (or even more ”“ but unfortunately not UK, as e.g. Zen since 31.12.2023...)
I agree that such a company can be probably quite easily (with a proper explanation) onboarded with HU bank, yet if the customers consider HU untrustworthy (I do not share this perception but this is not the topic), they probably will not like to pay to HU bank...

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Marzio]

Forester said:
it is still a subject incorporated in the UK, or not?
Click to expand...

Correct.

Forester said:
if the customers consider HU untrustworthy (I do not share this perception but this is not the topic), they probably will not like to pay to HU bank...
Click to expand...

He can open with any of the EEA available EMIs

 

[Forester]

Marzio said:
He can open with any of the EEA available EMIs
Click to expand...

For sure, there exist some. Even maybe some of ~300 UK EMIs can onboard such company, of course.

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[GPT]

CyprusLawyer101 said:
Depends on the eye of the beholder. A little bit of a tarnished reputation from past events but also one of surrvivorship and adaptation.
Click to expand...

The reputation of Cyprus is bad you look through the eyes of Dutch government.

The main reason for this is Toine Manders who got arrested in Cyprus in (if I remember correctly) 2014, extradited and prosecuted by the Dutch.
Ever since Cyprus is frowned upon.

 

[CyprusLawyer101]

GPT said:
The reputation of Cyprus is bad you look through the eyes of Dutch government.

The main reason for this is Toine Manders who got arrested in Cyprus in (if I remember correctly) 2014, extradited and prosecuted by the Dutch.
Ever since Cyprus is frowned upon.
Click to expand...

I checked a few news articles on the internet. Apparently he was a lawyer and politician who adviced on tax structuring through Cyprus trusts and Seychelles cos. He was investigated and was to be tried, bur haven't found any references to the verdict of whether his advice stood the test of the court. Any references you could provide?

Last edited: May 21, 2024

 

[GPT]

CyprusLawyer101 said:
I checked a few news articles on the internet. Apparently he was a lawyer and politician who adviced on tax structuring through Cyprus trusts and Seychelles cos. He was investigated and was to be tried, bur haven't found any references to the verdict of whether his advice stood the test of the court. Any references you could provide?
Click to expand...

In sofar I know it never got to a trial.

A quick search does tell me that info has been scrubbed. I can barely find anything anymore about that case.
He was for quite some time in prison. It's true that he tempted faith. Since then doing business with Cyprus receives a lot of attention in The Netherlands. Hence why I say that Cyprus is -in my opinion- not the best option for "gap".

 

[uplana]

gap said:
My KFT is currently based in Újlengyel instead of Budapest. 0% local business tax.
Many accountants have warned me, because these are usually small family houses where 200 companies are registered and called a "company cemetery". But you just have to choose a good provider.

UK LTD sounds good


Anything that is not Balkan or Central/Eastern Europe I guess.
I'm not sure about Cyprus, how is perceived.
Click to expand...

You may tell us where this landet? it's the least you could do with all this help you got from here, other users may be in an equal situation as you and like to learn.

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[JohnLocke]

saintjohnny said:
Serious question... Do people still consider the UK a reputable jurisdiction? All I needed was a little walk around London to completely change my mind.
Click to expand...

Depends on what it is you want to setup there. If you just want a company you don't need to consider how the country is if you do business outside it and only need the company as a kind of pass through for instant.

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[GPT]

JohnLocke said:
Depends on what it is you want to setup there. If you just want a company you don't need to consider how the country is if you do business outside it and only need the company as a kind of pass through for instant.
Click to expand...

I would then add to the above to find a country where it is relatively easy and cheap to register and file. UK in that sense isn't the worst as you can do a lot yourself and because of that pricing is very competitive when you outsource it.