How does double tax treaty works with my country?
- Thread starter alain
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Actually cclogic has some great information that helped me for some years while I needed it about the DTA / Double Tax Treaty invalid1c/cypruscompany/avoidance-of-double-taxation.html it is worth reading.
I agree, the publication on our website that can be found here: Avoidance of Double Taxation about the avoidance of double taxation explains it well. You will need to look at if your country has signed any DTA with the offshore company in order to make use of it.
It depends on where you live (tax residence) and how laws are applied there.
However, Cyprus, for example, has an interesting amount of DTAs (called DTCs there). Looking at how much it costs to run a company, even though there are countries with more DTAs, Cyprus is a good jurisdiction for those seeking tax efficient solutions.
The closest competitor I know of in Europe would be Malta. A bit more expensive, but more tax treaties and some very interesting tax refunds if structured correctly.
However, Cyprus, for example, has an interesting amount of DTAs (called DTCs there). Looking at how much it costs to run a company, even though there are countries with more DTAs, Cyprus is a good jurisdiction for those seeking tax efficient solutions.
The closest competitor I know of in Europe would be Malta. A bit more expensive, but more tax treaties and some very interesting tax refunds if structured correctly.
How to best utilize DTAs depends a lot on where you live and you should speak to a lawyer or accountant in your country to ensure that you get 100% accurate advice.
However, the most important note is that Seychelles, Belize, and BVI have signed relatively few DTAs. Seychelles: 23, Belize: 12, and BVI: 1. Compare this to some of the low-tax jurisdictions in Europe: Malta (67), Cyprus (45), Luxembourg (73), and Switzerland (96).
While DTAs are normally used to ensure that if you pay tax in country A you only pay the remaining difference in country B, there are cases where paying tax in country A is enough, depending on what type of income it is (salary, dividends, profits︀ from sale, et cetera).
What's quite unique about Malta is that the corporate tax is︁ among the highest in the world: 35%, but you can get a refund of up︂ to 100%, though normally just 88%. I have seen people get away with declaring this︃ 35% tax rate to their home country and thus be free from tax, and then︄ afterwards getting the 88% refund or shifting the refund to another legal entity, which then︅ re-invests into the Maltese company. These things vary a lot between countries and if you︆ want a legal, low-tax structure, you need professional advice.
However, the most important note is that Seychelles, Belize, and BVI have signed relatively few DTAs. Seychelles: 23, Belize: 12, and BVI: 1. Compare this to some of the low-tax jurisdictions in Europe: Malta (67), Cyprus (45), Luxembourg (73), and Switzerland (96).
While DTAs are normally used to ensure that if you pay tax in country A you only pay the remaining difference in country B, there are cases where paying tax in country A is enough, depending on what type of income it is (salary, dividends, profits︀ from sale, et cetera).
What's quite unique about Malta is that the corporate tax is︁ among the highest in the world: 35%, but you can get a refund of up︂ to 100%, though normally just 88%. I have seen people get away with declaring this︃ 35% tax rate to their home country and thus be free from tax, and then︄ afterwards getting the 88% refund or shifting the refund to another legal entity, which then︅ re-invests into the Maltese company. These things vary a lot between countries and if you︆ want a legal, low-tax structure, you need professional advice.
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