how would you set this up in an business invoicing customers, how can them money be distributed into such a setup ?
Singapore and Estonia, a good or a bad mix, let's dive in.
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There is no need to do anything special; you operate just like a regular company, but you keep internally separate accounting records to divide the partnership's activities from the other activities.
So it can be a matter of, e.g., using different invoice numbering prefixes, e.g., INV-AWESOME-x1, for the partnership
So it can be a matter of, e.g., using different invoice numbering prefixes, e.g., INV-AWESOME-x1, for the partnership
I might be wrong, but I don't see how a partnership can solve the issue of reinvesting dividends tax-free here.
Even if you set up an LP that is 20% Singaporean company and 80% Estonian company.
The Estonian OU still belongs to you 100%.
In the eyes of an auditor, you still own 100% of the Singaporean company.
To avoid this, you would need a different person as a shareholder. Which can be fine, but then he would need the controlling rights?︀ Of at least 80% in the SG?
Even if you set up an LP that is 20% Singaporean company and 80% Estonian company.
The Estonian OU still belongs to you 100%.
In the eyes of an auditor, you still own 100% of the Singaporean company.
To avoid this, you would need a different person as a shareholder. Which can be fine, but then he would need the controlling rights?︀ Of at least 80% in the SG?
I think this was not even discussed here. Reinvesting dividends is a concept popular in the US. Dividends reinvested in tax-advantaged accounts like IRAs (Individual Retirement Accounts) or 401(k) plans are not taxed until withdrawals are made.
This is quite a complex setup from the perspective of tax implications, as it︃ could involve two companies from different jurisdictions, and the place of business could be in︄ a third location.
Please note I did not mention LP (limited partnership) but a partnership,︅ which is different.
This is quite a complex setup from the perspective of tax implications, as it︃ could involve two companies from different jurisdictions, and the place of business could be in︄ a third location.
Please note I did not mention LP (limited partnership) but a partnership,︅ which is different.
I already spoke to a Singaporean️ accountant and Tax advisor, two actually, they said any money remitted in a Singapore bank account is going to be taxed. So it's not tax free like you say. So you'll have to rely on a offshore bank account, and virtually no banks will open a Singapore bank account overseas for you unless you have physical presence in that foreign country.
I obviously made a typo, I was talking about *reinvesting profits tax-free into startup*, even made a quote on it.
Still happy to be proven wrong - the partnership setup would require that another *person* holds controlling stake in the SG entity. Otherwise, no matter how many different companies hold % in the SG company - it is still the same person behind︀ it. At least in the eyes of the auditor.
The tax-free aspect comes︃ not from Singaporean laws on remittance of income, but from the fact that SG company︄ has PE is in Estonia.
Still happy to be proven wrong - the partnership setup would require that another *person* holds controlling stake in the SG entity. Otherwise, no matter how many different companies hold % in the SG company - it is still the same person behind︀ it. At least in the eyes of the auditor.
The tax-free aspect comes︃ not from Singaporean laws on remittance of income, but from the fact that SG company︄ has PE is in Estonia.
thanks for clarifying
Yes, I believe what you are referring to here is a potential risk from transfer pricing, which can be relevant.︀
Foreign income refers to income derived from outside Singapore. You should be able to prove that︂ the income was earned from outside Singapore. If you can, it is exempt from tax︃ if not remitted to Singapore.
There are also tax reliefs available to Singapore tax residents︄ to alleviate the double taxation suffered (applicable assuming your company can get the tax residence︅ certificate), such as:
Yes, I believe what you are referring to here is a potential risk from transfer pricing, which can be relevant.︀
Foreign income refers to income derived from outside Singapore. You should be able to prove that︂ the income was earned from outside Singapore. If you can, it is exempt from tax︃ if not remitted to Singapore.
There are also tax reliefs available to Singapore tax residents︄ to alleviate the double taxation suffered (applicable assuming your company can get the tax residence︅ certificate), such as:
- Exemption or reduction in tax imposed on specified foreign income that is︆ derived in a jurisdiction that has an Avoidance of Double Taxation Agreement with Singapore
- Tax exemption on specified foreign-sourced income such as foreign-sourced dividends, foreign branch profits and foreign-sourced service︇ income under Section 13(8) of the Income Tax Act 1947
- Foreign tax credit for the︈ taxes paid in the foreign jurisdiction against the Singapore tax payable on the same income︉
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