Company in Switzerland, owner in the States - tax inversion ?

[sriracha]

I am seeing a ton of companies in the crypto space opening up in Zug, which has favorable taxation.

The setup is such that the company is incorporated in Zug, the owners are in US/EU, the employees are scattered around the world working remotely and the customers are from anywhere.

Problem is, the owners invariably reside and work from the US or EU, nobody obviously lives in Zug, which by the way seems to be so small as to not being able to physically contain these people.

Is it not tax inversion for the owners?

 

[Sols]

It depends on how the company is structured, what tax treaties are applicable, and where‌ exactly the owners and directors are based.

If the company has a director and one‍ or two employees in Switzerland, that might be enough for the company to be considered⁠ Swiss under many tax treaties.

Switzerland isn't usually considered a corporate tax haven. It doesn't⁤ raise any flags for corporate tax evasion, the same way for example Seychelles and Belize⁣ do. Many tax authorities probably wouldn't question a structure involving a Swiss company and tax⁢ relief being claimed under a tax treaty.

The owners would of course have to pay︀ tax (if applicable) on any dividends/income they receive from the company. But that's different from︁ corporate tax residence.

 

[sriracha]

Thanks, fantastic answer.

What would be jurisdictions that would be problematic about that setup (director‌ + employee)? I am imagining places with super aggressive tax offices like Greece.

 

[Sols]

There are literally millions of combinations of jurisdictions of company, holding company/companies, directors, employees, owners,⁠ and operations to be or take place in. We could sit here until the heat⁤ death of the universe going through them all.

 

[clemens]

Best would be to talk to an professional since providing more details on the public‌ forum wouldn't be in your interest.

 

[uplana]

You need some money to setup such a company and some of it you spend‌ on building minimum substance for your company. There are agent's specialized in setting up such‍ structures in Zug - I don't know about the legal part and how they respond⁠ to people from US !

 

[sriracha]

Being from the US would⁤ make it harder?

 

[CyprusLawyer101]

An added bonus for having a crypto company in Zug is that due to Zug‌ being considered the crypto valley you have better chances satisfying motive tests and other anti‍ avoidance provisions by claiming your primary purpose for incorporating in Zug as being other than⁠ reduced taxes.

 

[uplana]

yeah with‌ the banking, you may know that already.

@CyprusLawyer101 is Cyprus still not open for any‍ Crypto ventures?

 

[CyprusLawyer101]

Yes it definitely is!

 

[clemens]

It is or it is not‌ ? As far as I read in many of the other threads it is not‍ yet and it will take years before they get that far?

 

[CyprusLawyer101]

What is not codified is the taxation of⁠ crypto for which we have a fairly good ideq from the tax office. But you⁤ could certainly register a VASP or CASP as they are referred to in Cyprus. Banks⁣ are a bit hesistant still but you do get some which are accepting crypto related⁢ funds.

 

[daniels27]

Maybe also look at other cantons with a 15% tax rate, it may raise less‌ questions. Also, I would recommend you to have a resident director to satisfy the rules.‍ Many cantons won't issue advance rulings if you do not have at least a resident⁠ director capable of handling the main business (i.e. he would be able to run the⁤ business).

 

[JohnLocke]

If you can setup something similar in Cyprus as you can in Zug as a‌ US citizen I would check out my options in Cyprus first and also the ongoing‍ costs, they may be much cheaper in Cyprus compared to Switzerland.

 

[clemens]

OP did you end up with your company in Zug? as a Us citizens you‌ need lot's of money to satisfy the banks to take you as a business customer.‍