Swedish company relocation - To where? (12M € turnover, 3M € yearly profits)

[AFG]

You don't need︁ to move to use a Holding company setup or putting another company between the supplier︂ and Swedish company with a lower corporation tax rate. As long as the funds remain︃ in the corporate structure you do not need to pay capital gains tax of 30%.︄ You can use the funds you have built up to invest into a property in︅ Spain via a UK company with the Swedish company holding preference shares to match the︆ investment amount.

 

[AFG]

It looks like you have two seperate issues to solve, the corporate structure to️ make the future potential sale more appealing to investors by using a holding company setup‌ with the swedish company being used for the EU side and a UK company for‍ the UK (non-EU). You would also include a 3rd entitiy to import from China and⁠ resell on to the Swedish & UK entities with your management cost being covered in⁤ this new entitiy. All three under the holding company. You can even invest the funds⁣ accumulated via investment companies to buy property which you can use and/or rent out to⁢ try out a few different countries before changing your residency. Your personal tax residency is︀ the 2nd issue but it's only an issue if you personally want to take a︁ salary and dividend to 'personally' own poperties. You have a lot of flexibility inside a︂ multi-jurisdiction corporate structure to buy properties, boats, cars etc. Instead of holidays you have business︃ trips, it's a different mindset but the last thing you want to own things in︄ your personal name. You want to control things not own them, on paper this means︅ you don't have to pay income and captial gains tax etc. Change a family holiday︆ into a business trip with a board meeting with all expenses paid by one of︇ the companies and you'll have the lifestyle you want without the massive personal tax bills.︈ You can still pay yourself the same salary you are now to continue contributing and︉ pay off any debts you personally have plus cover the personal expenses you can not︊ deduct from your group of companies. As you learn how to use different setups and︋ become more comfortable using different jurisdictions, you'll also naturally expand the business into other areas.︌

Feel free to contact me if you would like to discuss some of your options,︍ my team can walk you through some easy adjustments to your corporate structure to start︎ exploring new markets and regions.

 

[JustAnotherNomad]

Crazy talk. Any company you own as a Swedish resident is under major risk of‌ being taxed in Sweden.

To give an example, Estonia has no tax if you keep‍ money in the company. So many people falsely believe they can register a company in⁠ Estonia and then only pay tax if they pay out something.
That's NOT how it⁤ works. This is absolute crazy talk because he's trying to sell you something. That's what⁣ I meant when I said it's important to check everything with licensed professionals.

Yes, in⁢ theory, you could own a holding company in Cyprus while living in Sweden. But I︀ really, really, really doubt that the Swedish tax authorities would accept not taxing it without︁ significant substance in Cyprus.
And for the Chinese company, you'd have the same issue -︂ who manages it? "Oh, but they won't find out..." - have fun in jail.

 

[AFG]

You may be correct if the companies are setup with one︄ shareholder and one director, as this can be considered just an 'alter ego'.

However, when︅ you have 3 directors/officers, with 3+ shareholders then the structure is correctly formed as seperate︆ from the individuals estate by every jurisdiction/nation globally.

There are rules you have to comply︇ to but no tax authority has unlimited jurisdiction to seize assets and funds from every︈ corporate structure, especially if you do not own it completely/100%. If they did, this would︉ be considered slavery.

Do you have any case law on the Estonia companies being taxed︊ by a different jurisdiction, you mentioned the Swedish Tax Authority gaining some sort of jurisdiction/control︋ of funds held in an Estonia company. It would be interesting to read how the︌ corporate veil was pierced.

 

[JustAnotherNomad]

Ok, then you don't have management and control in Sweden, but you'd most likely still‌ have permanent establishment.
Sweden also has strict CFC laws which would allow Sweden to tax‍ the companies if they don't pay enough tax.
Also for obvious reasons, he wants to⁠ keep 80% in the company or what its was and not reduce his ownership to⁤ 10-30% or something like that.

There is no need︁ to pierce any corporate veil. It's called permanent establishment, look it up.

https://www2.deloitte.com/se/sv/pag...e-office-driven-permanent-establishments.html
https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2016/11/fa16-129.pdf

 

[Carl Thomas]

I'm interested⁢ to know how turning on a laptop and replying to a load of emails etc︀ creates 'Permanent Establishment'?

The KPMG pdf referenced a German company turning up in Sweden annually︁ with employees, equipment and cars etc to conduct research and development. This is totally different︂ from an individual managing different business relationships in different jurisdictions via a computer, especially if︃ that individual doesn't draw a salary from these activities.

You also mention CFC (Control of︄ Foreign Company) would allow 'Sweden' to tax companies IF they don't pay enough tax. How︅ would you classify 'enough tax'?

You are again reinforcing what my associate has said, the︆ weakest link is you personally owning these corporate structures.

There is a very good article︇ on this very forum explaining this concept. Own Nothing, but Control Everything – A Concept︈ That Can Change Your Life

 

[JustAnotherNomad]

Read the link from‍ Deloitte.

Yes, for a couple weeks. No Swedish customers. No permanent office. Just a few weeks⁣ in some village in the far north, doing tests in cold conditions.

https://www.sovereigngroup.com/news...-offer-cfc-sidestep-for-swedish-shareholders/

Yes, you can put everything︂ into a Liechtenstein foundation or whatever - but at the end of the day, if︃ you are anything but a passive investor in a business while living in Sweden, there︄ is always a risk.
There is no way to run his business legally from Sweden︅ without paying Swedish tax. Period.

"But how would they know... how would they catch him..."︆
He's bringing in significant tax revenue.
"Oh, btw, I will still be living in Sweden,︇ but I'm a passive investor now, I don't work at all for my companies anymore.︈ I only own some companies abroad that are involved in e-commerce, but I really nothing︉ to do with them. Pinky promise."
Of course the Swedish tax authorities would just accept︊ his word for that. No way they would actually investigate if it's true. They have︋ never dealt with a case like that before, they wouldn't even know where to begin︌ to prove he has a tax obligation in Sweden, it's impossible. Give me a break...︍

 

[EliasIT]

That is why we are all here... it's what makes us smarter every‌ day.

 

[Dandyline]

You should look up CFC,⁢ BEPS and Permanent Establishment.

 

[Mike Forman]

As I have posted today, almost all authorities under OECD agreement of tax exchange information‌ will exchange tax information when requested to another country.

This goes as far as obtaining‍ profit loss, ubo, nominee shareholders, rental contracts, invoices, employee names etc.

They just have to⁠ send a letter to the tax authorities of the other jurisdiction making claims that they⁤ believe there is serious tax avoidance (they will inflate things and put whatever they want),⁣ and they will get all information they want. We have had it from several jurisdictions⁢ and were surprised everything is given.

Also who are the top 10 customers and there︀ revenue etc was requested as well who are all the decision makers.

Creating a veil︁ with nominee shareholders and directors is quickly pierces this way unless they agree to claim︂ they make the decisions, which they won't do and definitely not when there is a︃ tax investigation.

Cut all ties with Sweden, assets, bank accounts and business for two years︄ and you should be ok to setup any other construction, just make sure you asses︅ the risk with your new residence in case you decide to establish corporations outside your︆ new country of residence.

In any of the other circumstance risk is substantial you get︇ a tax inspection and for the amounts you mention they go all in and will︈ want to have double of what was reported before (fines, interest etc.). Their funding is︉ unlimited ( paid by tax payers) and they will go to court and even when︊ they lose in court will further appeal.

 

[JustAnotherNomad]

I actually just remembered something else. I've heard that there are two tax exemptions in‌ Sweden called the 6-month and the 1-year rule.

https://www4.skatteverket.se/rattsligvagledning/edition/2023.8/323993.html
I don't remember the details, but‍ if you work abroad and you have to be abroad to work and you don't⁠ work from Sweden and you only spend up to 70 days per year or so⁤ in Sweden - then you don't have to pay tax on that employment income in⁣ Sweden. This in the domestic law, so it doesn't require a tax treaty, so it⁢ should work even with the UAE.
This is explicitly intended for cases where you are︀ otherwise tax resident in Sweden, e.g. because you have a home in Sweden.
Might be︁ worth checking out.

 

[Cloudbanck]

These exemptions apply if you are an︂ employee of a Swedish company and are sent out to work abroad. The 6-month rule︃ is only applicable if you are taxed in the country you are sent to, so︄ this doesn't work for the UAE as it has zero income tax.

The 1-year rule︅ is applicable even if the country you are sent to doesn't tax you, i.e. it︆ works for the UAE. But I dont think it works for business owners, just for︇ employees. Or maybe if a business owner is technically also an employee of his/her own︈ company, Im not sure.

 

[JustAnotherNomad]

Thanks for the clarification. I would think it can work if you hire yourself as‌ an employee. Anyway, it was just a suggestion for further research, I don't know much‍ about those rules.

 

[factual]

In an Aktiebolag/limited company we are already⁠ employees of the company so that point is checked.

However this will not work at⁤ all. See google translate of below.
https://www4.skatteverket.se/rattsligvagledning/390590.html?date=2021-03-16It was linked further from the first url⁣ posted.

This has also been going to trial once where Tax agency won and taxed⁢ it in Sweden.

Google translate below of the reason it fails.

 

[JustAnotherNomad]

Damn. Anyway, please keep us posted! Excited to hear how you solved this.

 

[JustAnotherNomad]

@factual How did it go?

 

[factual]

I should have more news‌ in a month from now as things are going slow and I am busy with‍ the daily operation of continue running the business. Also we are into holiday periods and⁠ I have a family to take care off and require time spending as well.. 🙁

I think I might have found the right persons to speak more into details with though⁤ which is a very good thing as that was my biggest hurdle. So once I⁣ gather all possible options it will need a good and long consideration as well as⁢ decisions being accepted by the family members. And once that has been done, I have︀ learned that I need to seek local advise in the decided jurisdiction to double-confirm any︁ possible setup if it's going to be offshore.

But in short (and also mentioned by︂ some forum members here) if anyone reads and is in same seat:
To continue to︃ run your business with very low profit tax = move from Sweden ASAP.
To continue︄ to run your business with slightly reduced effective profit taxes = can still stay in︅ Sweden and continue operation just need re-structure it a bit. This involves opening multiple companies︆ on family members name and so on. Depending on amounts it can be worth it.︇
To make an exit there are many solutions and depending on tax-hit willing to take︈ some options involves stay in Sweden but the most lucrative is to move out for︉ 4 years, (short irregular visits can still be done) and then come back and bring︊ all back as well. Some countries more popular than others, Cyprus being one of them.︋

Also I learned that tax treaty is very important here when selecting country so that︌ it falls within those 4 years and your back is clear.
Extremely important is also︍ to have a good and reputable banking partner and contact on your side accepting the︎ new structure setup.

Within all this there can also come new regulations and legislations which️ can change things. Some are already on topic in EU while others has been postponed.‌

 

[EliasIT]

Cyprus and Switzerland I would look into. Pay some good tax attorneys in both countries‌ and ask them for the best solution. I believe they have both what you are‍ looking for.