New Ltd. How I would pay taxes and the best way to pay less

[Deleted member 47305]

I live in Germany and I just formed a company in the UK. This company in the UK will be the owner of part of another company in the Netherlands.

The company in the UK would not sell anything directly or would have any activity but I would receive part of my salaries through this UK company.So this company would issue once a month an invoice to the Dutch company; which will send the money to the UK

My questions are :

-What is the best way for me to do this, to minimize the taxes I have to pay and get this money into Germany?

-Do I have to change something in this company, maybe register myself as an employee of the UK company or receive the money as dividends

Can someone help please?

 

[Zeno]

There have been similar posts on this topic before. My view is that I cannot imagine that the German govenment is at all happy about people circumventing the German rules for incorporation by using foriegn companies. I am entirely unaware of the consequences of this however.

As it stands, you may be liable to German taxes and UK taxes.

You will need local advice in Germany regarding the best way to get it into the country.

 

[elaine@cheapaccounting]

Me confused again - if the UK company does not sell anything then where is the profit coming coming from to pay dividends.

Can someone explain to simple old me what the point of this is?

My advice would be that if you want to avoid paying tax in Germany then do one of two things:

- speak to an accountant in Germany
- move

 

[Zeno]

Me confused again - if the UK company does not sell anything then where is the profit coming coming from to pay dividends.

Can someone explain to simple old me what the point of this is?

My advice would be that if you want to avoid paying tax in Germany then do one of two things:

- speak to an accountant in Germany
- move

The incorporation rules in Germany are very strict and to set up a limited liability company is very expensive. Compare to the UK where anyone with around £150 can set up a company in less than 3 hours.

The OP is doing what many in Germany seem to do by using a UK limited company instead hence his company being registered here but trading over there.

Not convinced the German Federal Government will be happy about this but perhaps they don't mind so much if they get their cut of tax.

 

[elaine@cheapaccounting]

OK - get that but what a hassle on double tax plus the accounting fees in both countries.

 

[Zeno]

OK - get that but what a hassle on double tax plus the accounting fees in both countries.

Yep. What language does he prepare the accounts in even?

 

[Ivanovitch]

Right, I'm not a Steuerberater but this is my understanding of it (I've just moved to Germany as well) -

If the company is run by you in Germany and operates in Germany, selling to clients in Germany then you are liable to pay Gewerbesteuer and Kapitalertragsteuer in Germany. As there is a Dutch element I'm not clear where you will actually operate. You can say the company is UK operated and pay UK tax is you can prove that it is (e.g. offices and employees actually doing the work in the UK).

As a German resident you will have to pay German personal taxes, no matter where the money is paid, in what currency. To get your UK wages into your German account you do a bank transfer or go to a cash machine and draw it out.

 

[Chris Ashdown]

Would the relevant governments and banks consider this as possible money laundering

 

[Ivanovitch]

Would the relevant governments and banks consider this as possible money laundering

What are you referring to Chris? My post or the original set-up?

verdefolha really needs to find a good accountant with international experience for the UK company, another for the Dutch company and a really, really good Steuerberater in Germany as this is where I believe tax will be liable.

 

[elaine@cheapaccounting]

Steuerberater
Gewerbesteuer
Kapitalertragsteuer

Wow - what fantastic words. It makes accountants in Germany sound interesting

 

[Chris Ashdown]

What are you referring to Chris? My post or the original set-up?

verdefolha really needs to find a good accountant with international experience for the UK company, another for the Dutch company and a really, really good Steuerberater in Germany as this is where I believe tax will be liable.

The money going around with no work being done by the middle company i.e. UK

 

[Ivanovitch]

Without a reason why it does seem an odd scheme.

 

[Zeno]

The reason is simply to cirumvent the German incorporation requirements, possibly with the expectation that they can lower tax liabilities somehow.

 

[Ivanovitch]

The reason is simply to cirumvent the German incorporation requirements, possibly with the expectation that they can lower tax liabilities somehow.

I also thought about using my UK company to operate in Germany and I agree that it is easier to set up a Ltd than a UG or Gmbh. (Even though the minimum investment in UG is €1 the paperwork costs are high and 25% of profits are expected to be saved until you reach proper Gmbh status at €25000.)

What I don't get is the Dutch bit, is this the one that is actually going to be doing work and billing customers? I can't help with Dutch taxes as I worked for someone else when I was there.

Again my understanding is that the company is taxed where it operates and you are taxed where you live.

 

[Zeno]

I understood that the UK company being operated in Germany but trading in parts unknown would invoice the Dutch company for payment.

There is not enough information given but it would seem like there could be liabilities for UK, German & Dutch corporation taxes and German personal tax for when the earnings are remitted to Germany.

However, I am not sure why the profits are leaving Germany in the first place.

 

[DickM]

Wow - what fantastic words. It makes accountants in Germany sound interesting

English translations per Altavista Babel fish:-

Steuerberater - Tax counsel
Gewerbesteuer - Trade tax
Kapitalertragsteuer - Capital return-expensively

In "our" language: Tax Accountant/Advisor
Off-shore Tax Accountant/Advisor
CGT Tax Accountant/Advisor

Elaine, Life was so less complicated in Cuba

 

[elaine@cheapaccounting]

English translations per Altavista Babel fish:-

Steuerberater - Tax counsel
Gewerbesteuer - Trade tax
Kapitalertragsteuer - Capital return-expensively

In "our" language: Tax Accountant/Advisor
Off-shore Tax Accountant/Advisor
CGT Tax Accountant/Advisor

Elaine, Life was so less complicated in Cuba

Oh yes I agree