Legal tax advice examples
Read the examples and check if they are also applicable on you!
There is nothing wrong with tax advice as long as you stay within the (legal) boundaries. Nowadays everything is put in the same basket. But it is still your right to pay fewer taxes if you play it fair. We try to explain this by a couple of examples.
Example 1: Double tax treaty between Hong Kong and Belgium
Mr Yung Toy is a major importer of toys from Hong Kong who lives in Brussels. He set up a sales office in Hong Kong. Via this office in Hong Kong, orders are placed in China and Vietnam. The toys are also prepared on site in order to be distributed worldwide to several customers. He has a Hong Kong LTD which is a daughter company of a Belgian company. He can use interesting double tax treaty between Belgium and Hong Kong. He will reduce taxes in this way!
Example 2: Establish a company in one of the freezones
Mr Renaud is French and a business consultant; he doesn’t have a wife or children in France. He’s stricken off the French civil register and he is permanently going to live in Dubai. He starts a practice there as a business consultant. In order to reside without any problems in Dubai, he is planning to set up a company in one of the freezones. Furthermore, he doesn’t pay any tax in Dubai. This is possible and legal as soon as Mr Renaud leaves France permanently and sets up his life in Dubai.
Example 3: 10% corporation tax in Bulgaria
Robert the IT nerd wants to expand his business but he doesn’t see any opportunities because of the high wage costs in Italy. Therefore, Roberto establishes a Bulgarian company and hires several local IT experts. They operate locally for him and the Bulgarian company operates for him through subcontracting. The company can even be a subsidiary which that pays locally 10% corporation tax locally. The dividends can be paid to the Italian parent company without any further taxation. There is nothing wrong with that.
Example 4: Luxembourg or Hungarian IP company will be taxed at mere 6%
Smart Johnny is a brilliant Canadian entrepreneur who developed a new cosmetic line. His products are very popular and sell like hot cakes in several beauty farms. He licenses his “cosmetics line” worldwide. On this licensing income Smart Johnny will be taxed at a mere 6%. Because the intellectual rights are owned by a Hungarian (or Luxembourg) company. And those companies have substance. Clever Johnny!
Example 5: Produce luxurious aquariums in Thailand
Mitch and Susan are British citizens and real business people, who live in Malaysia. They decide to produce luxurious aquariums for the Japanese and South-Korean market in Thailand. The production is situated entirely in Thailand and a local management is present. For the time being they don’t take any revenue out of the company. They get only travel costs paid. Actually they live on the profits of a former project. The aquariums are sold successfully in Japan and South-Korea. The Thai company stacks the liquidities. For the moment they do not pay taxes in Malaysia. Even if they get dividends from the Thai company, they do not pay taxes. Because income received in Malaysia from outside Malaysia is exempt from tax.
Example 6: Digital nomad is heaven
Nabilah is a digital nomad. She likes to travel and the only thing she needs is her laptop, smartphone and credit card. She does not pay taxes at all. Is this legal? Yes it is. If you are a non-American you are taxed where you are a resident. This roughly means that you pay taxes based on where you live and where your economic life takes place. Rules determining when you are considered a resident differ from country to country. So when you only live everywhere a few weeks or months, it is possible to avoid any taxes. Good job!
Example 7: Immigrates permanently to Panama
Davy Croquette has built an entire empire on meat croquettes and meat balls. After thirty years of hard work he immigrates permanently to Panama. He keeps his house near Stockholm to stay there when he visits his children. The rest of the time he enjoys smoking a big Havana cigar under the palm trees. After his death his heirs won’t have to pay any inheritance taxes, except on the house he has kept in Sweden! This is all possible. Good Luck, Davy!
Example 8: Try to tax me if you can…
Tatiana is a very beautiful woman. She travels to Dubai. There she lived for five years and she made her fortune. The way she did it, we won’t tell you. However, the money has been earned in Dubai and she effectively lived there all the time. After her return in Czech Republic she decides to set up an exquisite restaurant in Prague. Can the tax authorities try to tax the Dubai money? No, they can’t since she didn’t earn it in the Czech Republic and she was not a taxpayer in the Czech Republic during the time she lived in Dubai. Cheers!
Example 9: Bill and his four spouses
Bill has lived in four countries during his professional live, was married four times and was divorced four times. He has kids in 7 countries, houses in 4 countries, bank accounts in 5 countries etc. Now he lives with his Polish girlfriend who is half his age and yes, he became a father for the 8th time. When Bill passes away, it will all be a mess that will definitely lead to a big fight. Maybe a trust or a foundation is a solution. Bill will need some good tax planning and maybe we can also save on future inheritance tax. Nothing wrong with this, Bill!