Creating substance using nominees in tax-free countries

[JustAnotherNomad]

One substance criterion is that there is a local director who gets paid a regular salary, not $200 a year.
I prefer to do things the legal way and sleep at night, but what would stop one from hiring a nominee director in a tax-free country like Qatar for $150k a year, who would then return $148k from their private bank account? Since there is no tax anyway, that shouldn't really be a problem?
Am I missing something?

 

[khinkali]

I'd say that blackmail is a risk. If you fall out with your nominee in Qatar, or with a client or supplier who realises your business isn't where you say it it.

I knew someone who hired a cheap accountant who was keen to move to UAE. He did the billing, payments, record keeping etc. and it became the centre of the business. That was purely online though, no stock to hold or shift.

 

[JustAnotherNomad]

I think you would usually have a pre-signed letter of resignation. And with monthly salary payments, the risk should be low.
But maybe they just don't look so much at director salaries?

 

[khinkali]

I was thinking more about your country of residence or business activity. The nominee has a lot of power over you, along with anyone else who is aware of the scheme. If you were in Germany or similar then the tax authorities might even give them a reward.

 

[JustAnotherNomad]

Yes, that makes sense. But I guess that's a general risk with nominees.
They would possibly also be incriminating themselves.

 

[heaven]

Interesting. However, how would you declare the income coming from the nominee?

 

[JustAnotherNomad]

It would obviously be illegal, so you would have to make sure it doesn't get reported.
But like I said, it was just a thought experiment. There are so many legal ways to save taxes if you can move to a different country that I would never consider something like that.

 

[heaven]

I like these experiments. In my case it would be almost impossible to proof I live elsewhere. So I'm stuck on finding a good structure that is tax and cost efficient.

 

[heaven]

npukuk said:
try consider Mauritius GBC1 stucture with nominee directors and a well accepted local substancing
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EDIT: whoops I thought you were replying on my thread.

Why would Mauritius be that interesting? I see Belgium has a 5% tax on dividends. That's great however Mauritius does make it difficult to have a story other than tax because there is no real economic reason to be there.

Mauritius 100 profit - 3% CIT - 5% Dividend = 7,85% total tax.

Compared to
Georgia: 100 profit - 0% (CIT) - 5% Dividend = 5% total tax
Romania: 100 revenue - 1% CIT - 0% Dividend = 1% total tax on revenue

Romania still seems to be the most interesting option. Last two options will also be easier to have local substance and easy access to cheap labour.

 

[JustAnotherNomad]

It's interesting for him because he is trying to sell a service. ;-)

 

[Davis123]

khinkali said:
I'd say that blackmail is a risk. If you fall out with your nominee in Qatar, or with a client or supplier who realises your business isn't where you say it it.

I knew someone who hired a cheap accountant who was keen to move to UAE. He did the billing, payments, record keeping etc. and it became the centre of the business. That was purely online though, no stock to hold or shift.
Click to expand...

It's a big risk. They will sell you for a big reward from your govt. Unless you are gangster who has gangs all over the world don't do these types of things. Move away from wherever you are living at. Soon these gulf countries will also start having corporate taxes as economies are getting bad due to Covid 19.

 

[fortunespeculator]

Davis123 said:
It's a big risk. They will sell you for a big reward from your govt. Unless you are gangster who has gangs all over the world don't do these types of things. Move away from wherever you are living at. Soon these gulf countries will also start having corporate taxes as economies are getting bad due to Covid 19.
Click to expand...

That aint happening as they make huge amount from other sourcws they wont kill the golden goose so easily