How to plan a foreign company without encountering a tax inversion?

Published On - 26. October, 2020

Martina Srnovršnik Uncategorized

What is tax inversion and how to avoid it

 

People are encouraged to open a business abroad due to the presence of a leaner and more efficient bureaucracy in foreign countries and above all for a more favorable tax regime.

 

Opening a company abroad without good planning could lead to the so-called tax inversion. But what is the tax inversion?

 

Widespread practice, the news often speaks to us of tax fraud in this sense, the foreign investment – “dressing” a company as if it were foreign – is the fictitious location of the tax residence of a company abroad, in particular in a country with treatment more advantageous tax than the national one, in order to escape the heavier national regime.

 

If you want to open a LTD click on the page: 

 

https://www.societaallestero.com/en/establishment-of-an-llc/

 

To correctly establish the corporate foreign investment, it is necessary to consider above all the concept of the company’s tax residence. If a company is resident in Italy, the following alternative factors will be evaluated:

  • Registered office.
  • Administrative headquarters.
  • The corporate purpose.

If only one of these factors materializes, the tax authorities will consider that the company is not foreign.

We can therefore say that if the foreign Deed of Incorporation establishes the registered office of a company abroad, it will be considered resident in the territory of the original State of the company if its administration takes place in reality not abroad. Conversely, given the foreign office and the administration, it will be necessary to verify the performance of the corporate purpose.

 

If you want to open a virtual office click on the page: 

Virtual Office

 

The entrepreneur must better plan his plan for moving the company.  The key points to keep in mind in planning are the following:

  • ADMINISTRATION
  • FINANCIAL MANAGEMENT
  • ADMINISTRATOR AND MANAGER RESIDENCE
  • POWERS OF DECISION
  • USINESS FLOW AND CONDUCT
  • FOREIGN LOCAL AUTHORIZATIONS

Therefore, in order not to run into the tax inversion, it is necessary to plan precisely the process of constitution, the move and the future procedure. Having a foreign office is not enough to be a foreign company.

 

For more information send an e-mail to info@taxofia.com.

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