Foreign PE - which laws apply?

[inector]

Say I have a holding company in Singapore.

I decide to put management in Malta and declare SG as Maltese tax resident.

Reason I did that - I want Maltese taxation and Singaporean asset protection.

Now, my Singaporean company is getting sued.

Do SG company laws (like the asset protection ones) apply? Or is it now the Maltese company laws that apply?

 

[Sols]

There is no easy answer to this. It depends on the circumstances and on factors that you haven't mentioned here, such as the nature of assets, reason for law suit, laws cited, and choice of venue by the suing party.

The suing party can sue you in Malta and then it's up to the Maltese court to determine if it has jurisdiction. If they say they do, whatever the outcome is, the losing party if the law suit can appeal it to a higher court. That higher court might make a different decision and throw the case out, citing it should be raised in Singapore instead.

The suing party might sue you in Singapore and the courts there might rule that they have no jurisdiction since the connection to Singapore is insufficient, or they might agree to take it on.

You mentioned PE in the thread title. While that's something that could be taken into account, PE is primarily a function of tax law. It does not necessarily matter for the purposes of a law suit.

If you want Maltese tax but Singaporean asset protection, consider having two companies and segregate the business and the assets in such a way that revenue is earned by the Maltese company and assets are held by the Singapore company.

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This is the probably the answer to your question.

 

[KDX]

Like Sols said, PE is pretty much about taxation, Maltese courts won't have automatic jurisdiction just because they decide, so it won't automatically be like the Singaporean courts will throw their hands up and say "Oh, this Singaporean company is actually Maltese, sorry!" Doesn't really make sense, does it?

Either way, this is something you should be asking from a lawyer IMO. If you're implementing asset protection strategies, why aren't you consulting an asset protection lawyer who will know the relevant case law and interpretations of the relevant courts?

 

[CyprusLawyer101]

SG laws should apply for anything else other than taxes. Unless you have undertook any statutory changes in the company other than as to where its management and control is situated.

Btw, your title and the content of your message are contradictive. Where you have tax residency you cannot have PE. If what you have is a fully fledged branch in Malta ( which I doubt to be the case) wherefrom certain business has been conducted then other Maltese laws may come into play when being sued.
If what you have is management and control in Malta with no local business, then look only into SG laws coming into play.

Last edited: Jun 19, 2024

 

[inector]

Sols said:
If you want Maltese tax but Singaporean asset protection, consider having two companies and segregate the business and the assets in such a way that revenue is earned by the Maltese company and assets are held by the Singapore company.
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That does makes sense.

What about CFC rules once the company starts to grow?

Let's say the non-dom SG company (taxed at 5%) opens a branch in France (taxed at 25%). Both have established management in respective countries.

Do the French CFC rules apply to the SG company? The difference in taxation is quite large.

CyprusLawyer101 said:
If what you have is management and control in Malta with no local business
Click to expand...

Exactly this, just PE and management are quite similar, so I put it as one.

 

[CyprusLawyer101]

Exactly this, just PE and management are quite similar, so I put it as one.
[/QUOTE]
Its not. Its fundamentally different and it should not be equated. The only thing same is that both create a tax effect where they respectively arise.

 

[Forester]

CyprusLawyer101 said:
SG laws should apply for anything else other than taxes. Unless you have undertook any statutory changes in the company other than as to where its management and control is situated.

Btw, your title and the content of your message are contradictive. Where you have tax residency you cannot have PE. If what you have is a fully fledged branch in Malta ( which I doubt to be the case) wherefrom certain business has been conducted then other Maltese laws may come into play when being sued.
If what you have is management and control in Malta with no local business, then look only into SG laws coming into play.
Click to expand...

However I agree with you for a simple case, or perhaps for a majority of cases, I think that this description by @Sols

Sols said:
There is no easy answer to this. It depends on the circumstances and on factors that you haven't mentioned here, such as the nature of assets, reason for law suit, laws cited, and choice of venue by the suing party.

The suing party can sue you in Malta and then it's up to the Maltese court to determine if it has jurisdiction. If they say they do, whatever the outcome is, the losing party if the law suit can appeal it to a higher court. That higher court might make a different decision and throw the case out, citing it should be raised in Singapore instead.

The suing party might sue you in Singapore and the courts there might rule that they have no jurisdiction since the connection to Singapore is insufficient, or they might agree to take it on.

You mentioned PE in the thread title. While that's something that could be taken into account, PE is primarily a function of tax law. It does not necessarily matter for the purposes of a law suit.
Click to expand...

is pretty adequate,

Sols said:
If you want Maltese tax but Singaporean asset protection, consider having two companies and segregate the business and the assets in such a way that revenue is earned by the Maltese company and assets are held by the Singapore company.
Click to expand...

and this solution pretty reasonable...

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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...

 

[CyprusLawyer101]

Forester said:
However I agree with you for a simple case, or perhaps for a majority of cases, I think that this description by @Sols

is pretty adequate,

and this solution pretty reasonable...
Click to expand...

I have replied based on the information provided and without further assumptions. I do not disagree with Sols proposal for seggregation of the assets and business.