Europe - PDtax

Company registration abroad

Conducting business activities on the territory of Poland involves many obligations. Tax policy, time-consuming and complicated accounting procedures, lack of harmonized interpretations of tax law create difficult conditions for a business activity, which is why there is a need for its optimization. In such conditions, establishing offshore companies is the most justified, logical and reliable tool to make entrepreneurs’ activities easier. These activities help to eliminate obstacles to maximize the benefits of running a business activity. Importantly, an offshore company is a guarantee of data confidentiality. This solution allows transferring capital to economically and politically safe tax havens – in accordance with applicable laws – in a safe manner.

Tax law that is in force in the offshore zone is considered stable and reliable, and companies are notified of any legislative changes well in advance. This allows adapting to new regulations and legal requirements in a safe way. It is a completely legal way to optimize financial costs and protect the company’s assets.

Advantages of doing business in Germany:

Lower Corporate Income Tax (Körperschaftssteuer) – collected from companies with legal personality, i.e. Limited liability and joint-stock companies (Gmbh and AG) – the tax rate has been reduced from 25% to 15% (§ 23 KStR 2015) and is the same for everyone. What is more, these entities pay a solidarity contribution to the New Federal States (former GDR) in the amount of 5.5 percent, which is calculated on the basis of the income tax. In addition, they are subject to business tax (Gewerbesteuer), which is a municipal tax and its rate depends on the region in which the company is registered.
Lower VAT (Mehrwertsteuer) – we distinguish two rates of this tax (§ 12 UStG 2005):
basic 19% – on all goods and services,
reduced 7% – on food, excluding drinks and restaurant products, medical equipment, passenger transport, medical services.
VAT is settled annually, not as it is in Poland monthly or quarterly. What is more, entrepreneurs are required to submit the so-called initial tax returns. In Germany, all tax returns are submitted electronically. Periodic tax reports are submitted quarterly within 10 days of the end of the last month of the quarter. If the amount of VAT paid during the year is more than EUR 7,500, then there is an obligation to submit monthly tax returns.
There is a possibility of including 100% of the value of purchased cars, equipment and production machinery. In addition, small businesses with an annual turnover of less than EUR 17.5 thousand are exempt from charging VAT. The most important non-income expenses are:
- gifts worth more than 35 euros per year per person;
- 30% of the so-called Bewirtungskosten (expenses for meals, accommodation for contractors, similar to Polish representation costs);
- expenditure on accommodation and meals (Gästehäuser);
- fines and tickets, interest on unpaid taxes;
- funds allocated for bribes;
- business tax (Gewerbesteuer)

Advantages of doing business in the Czech Republic:

A company in the Czech Republic run as a limited company (společnost s ručením omezeným – s.r.o.) does not require payment or even declaration of share capital,
Lower VAT – indirect tax charged to consumers – an entity subject to VAT with a registered office in the Czech Republic becomes a payer of VAT, whose turnover over the next 12 calendar months has exceeded CZK 1,000,000 (EUR 39,215). Such a person becomes a VAT payer from the first day of the month that follows the month in which the person exceeded the turnover specified above. Three rates of VAT apply in the Czech Republic (§ 47 Zákon č. 235/2004 Sb., o dani z přidané hodnoty)

- 1) 21% – basic
- 2) 15% – first reduced
- 3) 10% – second reduced
Flat rate of corporate income tax – 19% (§ 21 Zákon č. 586/1992 Sb., O daních z příjmů) – the tax base is the difference by which revenues, except for revenues which are not subject to tax (§ 18) and revenues exempt from tax (§ 19), exceed expenses (costs), taking into account their factual and temporal inclusion in a given accounting period (§ 23).
The following tax base can be deducted from:
tax loss for a period of at most 5 consecutive years following the year in which it was reported;
100% of expenses incurred by the taxpayer in a given tax period or in the period for which the tax return is filed, including 100% of the value of purchased cars, equipment and production machinery
entrepreneurs’ contributions and pensions depend on income,
electronic communication with offices at all levels,
principle of the presumption of innocence in tax matters, limited fines,
high tolerance for minor delays in paying premiums, taxes and advances,
simplified forms of records for sole entrepreneurs,
no obligation of cash registers,
A company’s director is not responsible for the company’s debts but for tax liabilities – only when it is proved that the company has not intentionally paid the tax.

Advantages of doing business in the Republic of Slovakia:

The corporate income tax is: 15% for a taxpayer who earned income for a tax period not exceeding EUR 100,000 and 21% for other taxpayers (§ 15 595/2003 Zákon o dani z príjmov)
possibility of exemption from VAT up to a turnover of EUR 49700 (§ 4 222/2004 Zákon o dani z pridanej hodnoty),
no need to own a cash register when trading online,
lower VAT rate of 20% (§ 27 222/2004 Zákon o dani z pridanej hodnoty),
liberal approach to entrepreneurs,
no tax on means of transport,
less formalities, easier procedures,
a wider catalogue of tax deductible costs and VAT deductions than in Poland,
no tax on means of transport,
A company’s director is not responsible for the company’s debts but for tax liabilities – only when it is proved that the company has not intentionally paid the tax.

Advantages of doing business in Romania:

Uniform income tax rate – 16% – regardless of organizational form, except for micro enterprises,
Income tax on micro enterprises is 3% and is calculated on turnover; if one employee is employed – the applicable income tax is 2%.
Taxation of employees that are employed based on an employment contract, conducting business activity, also in the form of a partnership, is calculated from the net value of income, i.e. after deducting costs.
The basic VAT rate in Romania is 20%, reduced 9% and 5%,
The obligation to pay VAT is not imposed on companies with revenues below ROL 50 million per year.
Simple and quick administrative procedures related to company registration,
No obligation of split payment,
With voluntary split payment, there is a 5% income tax discount,
There is a possibility of including 100% of the value of purchased cars, equipment and production machinery in tax deductible costs.
Friendly approach to entrepreneurs.

Advantages of doing business in Cyprus:

The corporate tax (CIT) rate in Cyprus is 12.5% – the tax is payable after the end of the tax year together with submission of the company’s financial statements and tax declaration. During the year, CIT payers are required to submit a temporary tax assessment in which they declare their estimates of revenues and taxes for a given year, and on this basis pay 4 temporary advances in a given year.
The basic VAT rate is 19% – VAT returns are submitted quarterly.
Key exemptions:

- Capital income (from the sale of securities or financial instruments is exempt from tax in Cyprus),
- Personal income of persons who accept a Cyprus residence tax is covered by a 50% exemption,
- Income from immovable property is exempt from tax in Cyprus.
To register an Ltd. company, no share capital is needed, and only one week is enough for formalities,
No capital income tax.

Advantages of doing business in Madeira:

Value Added Tax (Imposto sobre Valor Acrescentado- IVA) – there are three types of VAT rates:

- basic 22% – on all goods and services,
- reduced rate – 5%
- intermediate rate – 12%
CIT taxation at the rate of 5% (until the end of 2020),
no tax on dividends and interest withholding tax for foreign companies;
exemption of remuneration paid to employees from PIT tax and social security contributions;
European Union corporation status,
possibility of issuing bearer shares for greater privacy,
compared to other corporations in the European Union, Madeira offers employees low wages and low operating costs;
very low energy, telecommunications and rental costs,
exemptions from withholding tax (in relation to interest paid and royalties),
capital income from the sale of shares in companies is exempt from income tax (not applicable to companies located in “tax havens”),
exemption from customs duties, local taxes, notary fees and registration fees (however, this is only related to economic activity in Madeira).

Advantages of doing business in Malta:

basic CIT rate is 35% – at the same time there are many possibilities to reduce or even eliminate this tax. Thanks to the tax refund system in relation to foreign companies, the amount of refund is offered in such an amount (6/7) that the final level of taxation can be 5% only,
possibility of reducing the income tax to 0% without moving the business outside of Poland,
No tax on dividends due to their payment,
basic VAT rate is 18%, and reduced 7%, 5% and 0%,
no income tax on services outside of Malta, provided that it was not received in Malta,
tax exemption for interest, discounts, bonuses or royalties derived from or obtained by a person who is not a resident in Malta;
low tax rates for permanent residence permit holders;
no exit taxes for funds transferred outside Malta;
no provisions on transfer pricing;
no rules for thin market capitalization or equity ratios;
procedure for re-registering companies to and from Malta is made without the need to liquidate them.