best company structure to reduce Tax for Trading companies .

[ms42]

A company buying goods from Asian countries and selling to European countries .

which is the best jurisdiction to form a company , to pay minimal tax for above business .
- The jurisdiction should have access to good banks , who are fast in sending and receiving money.

 

[CyprusLawyer101]

Check out Cyprus, with a 12.5% corporate tax and 0% tax on dividend distributions. Easy‌ access to VAT within Europran markets which allows for 0% vat when selling to EU‍ companies.

 

[Forester]

Yes; but banking I see as a problem. The⁠ access to non-Cypriot banks is problematic and banks at Cyprus are IMO all but good⁤ and fast 😉 (With all due respect, @CyprusLawyer101 🙂 ) If you can be satisfied with some⁣ good EMI, then it is a possible way to go, IMO; otherwise think about another⁢ jurisdiction (I do not dare to advise... maybe @Don?).

 

[Don]

Possibly some freezones could be best⁣ that are logistically in great locations near highways, railways and ports.
Goods brought to the⁢ free zone for later re-export are not subject to VAT, excise nor customs duties.

Otherwise, there is quite little information from OP to provide a meaningful recommendation.

Cyprus is indeed︀ quite low tax, especially if you decide to move there too(non-dom), which will certainly change︁ your local banking experience.
Amazon runs from Luxembourg instead of Cyprus for some reason though.︂ Even my Cypriot friend asked me to order something for him because couldn't order to︃ Cyprus. Apparently many suppliers don't like to deliver there.

 

[CyprusLawyer101]

It is possible to open an⁣ account with a Cyprus bank. The banks here are extra careful and maintain a high⁢ compliance standard for known reason emanating from past experiences. This is not necessarily a bad︀ thing; one could claim that this is indicative of the bank's seriousness in continuing doing︁ business with all the good things that this may entail. Obviously parachuters wont be happy︂ or even be on-boarded with Cyprus banks, but if you have a good and well︃ run business there is nothing that stops you from opening an account with a bank︄ in Cyprus and maintaining a good lifelong relationship.

 

[Forester]

I do not object. If someone has a real running business and a proper‍ substance then definitely yes.
Fully understandable.⁤
Yes, I agree. The dark side of this is,︀ FMPOV, that these high compliance demands may result in asking for a bunch of papers,︁ or at least for one paper, for all and every transaction, including the routine payments︂ between a long-time foreign business partners, and making e.g. such a task as getting a︃ letter of credit a two weeks procedure. As an example, one of my friends, running︄ a foreign trade business for >25 years, left Cyprus ~3 years ago exactly because of︅ this; and this is not the one and only such case that I heard of.︆
Or, from your perspective as an insider, is it, under some circumstances, possible to avoid︇ all of this?

To avoid misunderstanding: I do not object the apparent advantages of Cyprus︈ as of the tax regime (especially but not only non-dom), friendly environment, skilled business people︉ etc. But I really doubt whether is an optimal haven for a foreign trade business︊ that needs fast operations and understanding that e.g. some transactions simply represent some business risk,︋ even when absolutely legal...

 

[CyprusLawyer101]

There is a basis to what you︇ are saying. Unecessary compliance does at times get in the way of fluid business.

 

[Don]

People tend to hope‍ there exists some kind of place where people don't face such issues, but Im afraid⁠ thats just the way international banking works in 2024 - there is no getting around⁤ of what I like to call "compliance BS"

 

[CyprusLawyer101]

Word.

 

[Forester]

Well, yes – but don't you think that the compliance BS really varies⁠ across the countries and across the financial institutions? (In my perception, yes. My experiences from⁤ CY differs from the experiences from HK or SK and similarly, SoGe /FR/ and FIO⁣ /CZ/ represent the different worlds, in my perception...)
Naturally
– everything has its pros and⁢ cons;
– and a company running foreign trade in the automotive with just-in-time deliveries has︀ different needs than a family heritage trust...

 

[Don]

Certainly, it can make a⁢ difference.

Say you are transacting in USD. There is a big difference if you transact︀ using US bank, or some small European bank which is scared of losing correspondence relationships.︁
I recall some firsthand experience from years ago when I discussed this matter internally in︂ one bank. Management admitted that its a big risk for the bank to have just︃ one USD correspondence relationship, yet its so difficult to get more, so the result is︄ to approach this matter with "de-risking" portfolio.

Lets face it - banking in small jurisdictions︅ sucks more (in certain cases, to a certain extent)

Another dimension is geography, politics and︆ the currency. I guess in certain countries the banking experience differs depending on whether your︇ clients/suppliers/operations are from Germany, North Korea, Iran, Russia, Panama, or Marshall Islands.

 

[ilke]

Is there some similarity between HK and SK that they are used as a⁠ comparison together against CY?

What experiences do you refer to with Societe Generale and Fio⁤ banka?

I'm just curious as to what you've seen with them as I also have⁣ some long-term experiences with those.
If we use Fio from above as an︅ example, you avoid those risks because they have multiple correspondents for each currency (and some︆ of the largest - Citi, Raiffeisen, Erste, etc.). The USD is really worry-less when working︇ with them.
Depends on what you consider a︉ small jurisdiction, I guess (and even that will always have exceptions).

 

[Houdini]

Switzerland, Dubai, Cyprus and Ireland

 

[Forester]

Well, I admit that there definitely are‍ better examples; but I see such a similarity that in both regions bankers are able⁠ to accept the perspective that someone simply wants to run his business smoothly and hence⁤ it is necessary to get something done. (I missed this at CY, regrettably; maybe I⁣ just had a bad luck.) Otherwise, the business culture and environment of HK and SK⁢ seem really different to me.

SoGe was/is a bureaucratic︂ hell. FIO – although reportedly it is going worse there, too – burdened clients with︃ forms only when they really were forced to; and generally they were flexible and using︄ the common sense.
(OT: I would't park a remarkable money neither there nor there, though.)︅

A really good point.︋

For sure.

Well, I think both of you‌ are correct 🙂

Getting back to the original question:

After going through the discussion here, I‍ think that really more info from @ms42 would be needed to give a well-founded advice,⁠ despite his description of the situation is not just general...

 

[bubbledouble]

You could bring this topic inside⁤ mentor group and get some new input which won't come here. I feel you're not⁣ the compliance guy!