Luxembourg PE Rules, a good country for residency?

[cyprustoomuch]

Hello,

I was checking for the PE rules in Luxembourg and they seem to be‌ quite easy to manage:

• The place where meetings of the board of directors are held.‍
  
• The place where shareholders meetings are held.
  
• The place where the company’s officers make their⁠ decisions.
  
• The place where the company’s books and records are kept.
  
• The place where other,⁤ similar factors evidencing management control occur.
  

Would it be possible to live in Luxembourg, have⁣ an office in UAE with 2 employees working from there and just 2-3 times per⁢ year fly over to do some meetings there?

The last point indeed looks a bit︀ like trouble, so I am not sure if I would live in Lux. and have︁ a bank access may be the reason that I suddenly have a PE in Lux.︂

Does anyone know some detail about how the Lux. tax department is handling this?
And could you recommend any other high quality nothern european country where you could live, work︃ from home in your ecommerce business and have some employees in UAE?

I am specially︄ thinking about Netherlands, Belgium, Austria, Switzerland.

Thanks in advance!

 

[Martin Everson]

Yes

They handle according⁤ to their tax code.

You can do this from any Northern European︀ country.

Maybe if you were a bit more clear about what you are trying to︁ achieve here. Is it tax saving related or something else?

 

[cyprustoomuch]

What do‌ you mean by their tax code? What is that?
Germany will not allow you this⁠ when you still have control over the bank account and just 2 or 3 indians⁤ working there.
Yes sure, the main goal is to live in a high quality country⁢ and yet achieve a stress free 0% corporate tax.

I am in ecommerce and have︀ a lot of physical goods that cant be pulled off as company expenses directly when︁ they are purchased, it becomes an expense when the goods are sold. This leads to︂ the situation where you start the year with 100k€, purchase goods and sell them, then︃ you have 200k in the bank, buy new goods from it and have zero in︄ the bank again, but as your inventory increases you suddenly have to pay taxes on︅ the increased inventory. Even tho your company has 0€ in cash.

Very annoying and limits︆ the growth.

Having a 0% company would solve this.

But the main goal is really︇ to live (and work a bit) from a high class country and yet have a︈ 0% company recognized by your local tax department.

Question is how harsh luxembourg goes after︉ my "2 Indians in Dubai" solution.

 

[JimBeam]

I don't think‍ that's possible.

As long as you're the UBO they'll tax hell out of you in⁠ most European countries (with except maybe Cyprus or Malta).

Maybe I'm wrong so I'd really⁤ like Martins answer on your questions above.

 

[Konstanz]

Yes it's possible if you reside in Monaco or Andorra. Other case you still risk paying︅ high tax rates of those "northern" countries

 

[Dandyline]

You pay CIT for the profits after each year. In many EU countries this tax is︅ due maybe 12-15 months after the end of the year.

Regarding your question, there are︆ option. For example Sweden. UAE is included in Swedens white-list which means no CFC. You︇ still need substance to avoid PE.

 

[RealDude]

It goes much‍ better. If you move to Germany from abroad as a self-employed person without employees, in⁠ the best case you pay no taxes at all on your income/profit for 15 years,⁤ e.g. 100.000€ p.a.

 

[cyprustoomuch]

To what tax trick⁠ are you referring here? I know that germany allows tax detuctions when you bring in⁤ a company from abroad into germany and that way can write off the full company⁣ value (13.7x annual profit) over a period of 10 years I guess. Is it that⁢ what you mean?

CFC is in luxembourg not the issue, its only the question about the PE and︄ how to structure it so they assume that more substance and control is in UAE︅ (or take any other white list 0% CIT juristiction).

Would be interesting if somebody has︆ deeper knowledge on these topics and could clarify what the tie breakers are for them︇ and on which parts they are more relaxed. I am speciall referring to Luxembourg, Belgium,︈ Austria and Switzerland as they all have more or less "relaxed" conditions compared to Germany.︉

 

[RealDude]

Correct, up to⁤ 15 Years.

 

[cyprustoomuch]

The goal is to have‌ an offshore company structured in some way to not trigger a PE, question is just‍ what requirements Lux, BE, AU and CH have for this in detail.

 

[Houdini]

I know a guy who is doing exact what you try to do. Your list‌ is correct, but he also rent a small apartment in Luxembourg which just has enough‍ room for his bed, a very small kitchen and bath.

He isn't in any of⁠ the countries more than 6 months at a time.

 

[cyprustoomuch]

Okay but BE and Lux dont even consider you a tax resident when you are less⁤ than 6 months there and have another tax residency. So the PE can also easily⁣ be assumed in his other country of residence.

He could live in Bahamas or UAE⁢ for 6 months and have his office there, have enough substance for a PE to︀ be only considered there and spend the rest in BE or Lux.

This doesnt help︁ us have a main residency in these countries and just be the UBO of a︂ 0% CIT company.