Tax optimisation solution for business
Our offer represents an absolutely legal and relatively simple way for tax optimisation and dividend distribution. The structure described below is suitable for almost any type of activity and any country. The only type of tax that will need to be paid at the end of the fiscal year is the personal income tax in the country where you (the beneficiary of the business) are a tax resident. Also, depending on the type of activity and the type of transactions, there may be a need to account for VAT (Value Added Tax) and regularly submit the corresponding reports.
In the UK, there is a type of legal entity called a Limited Liability Partnership (LLP). It's a kind of hybrid registration form, standing between the Limited Partnership and the Private Limited Company. Both types of entities are described in detail on our website, as is the LLP itself. Before continuing to explore our offer, we suggest you study the aforementioned types of organisation by following the links.
The main appeal of an LLP lies in the fact that while maintaining limited liability and equality of all partnership members, there is no corporate income tax. This is due to the principle of "transparency" for tax purposes. It means that the tax authority looks through the legal entity at the partners themselves as tax subjects. In a situation where both partners, whether individuals or legal entities, are tax residents in the UK, the tax burden falls on their shoulders. This means that they file tax returns on their own behalf, taking into account the profit earned from the LLP as partners. This format is understandable and is not valuable in terms of optimising the tax consequences of activities. However, when the designated partners in the LLP are foreign legal entities from tax-free jurisdictions, the situation changes dramatically.
Certainly, all tax-free jurisdictions, commonly referred to as Tax Havens, are well-known to us but not from the best side, which is well-deserved. Acquiring companies in most of these countries is an absolutely senseless endeavor for businesses that aim to operate under modern conditions of transparency and the relentless fight against money laundering and the financing of terrorism. Others, such as Gibraltar, the Isle of Man, and Luxembourg, are considered "difficult to enter," where even the process of registering a legal entity is extremely demanding. On the other hand, it is precisely this distinctive filter at the entrance to these jurisdictions that makes them more respectable. Due to the complexity and, consequently, the impossibility of guaranteeing the result, we will not consider these jurisdictions.
Objectively, Hong Kong is the best jurisdiction for company registration with the aim of including it in a partnership and subsequent organisation of cashflow and reduction of tax burden. It is a special administrative region of China, which has been a huge financial and logistical hub for many years. From this experience has grown a flexible and accessible system for organizing economic activity and tax support. There are three factors that make Hong Kong an absolutely unique place:
1. Hong Kong is not an offshore jurisdiction in the conventional sense. In other words, it's not a country with a declining economy, lack of investment inflow, and integration into the correspondent banking system. Despite the warm climate, it is a high-tech and legal state with an educated population employed in various relevant sectors.
2. The territorial source principle, which implies the absence of tax burden on income earned outside the jurisdiction. Hong Kong is a tax haven without negative consequences for business reputation.
3. The ability to open payment and other financial accounts in other jurisdictions due to the high reputation of Hong KOng. Considering the first and second factors, the third becomes truly unique.
Next, we will describe the structure of our solution, based on the diagram provided below for clarity
In the UK, there is a type of legal entity called a Limited Liability Partnership (LLP). It's a kind of hybrid registration form, standing between the Limited Partnership and the Private Limited Company. Both types of entities are described in detail on our website, as is the LLP itself. Before continuing to explore our offer, we suggest you study the aforementioned types of organisation by following the links.
The main appeal of an LLP lies in the fact that while maintaining limited liability and equality of all partnership members, there is no corporate income tax. This is due to the principle of "transparency" for tax purposes. It means that the tax authority looks through the legal entity at the partners themselves as tax subjects. In a situation where both partners, whether individuals or legal entities, are tax residents in the UK, the tax burden falls on their shoulders. This means that they file tax returns on their own behalf, taking into account the profit earned from the LLP as partners. This format is understandable and is not valuable in terms of optimising the tax consequences of activities. However, when the designated partners in the LLP are foreign legal entities from tax-free jurisdictions, the situation changes dramatically.
Certainly, all tax-free jurisdictions, commonly referred to as Tax Havens, are well-known to us but not from the best side, which is well-deserved. Acquiring companies in most of these countries is an absolutely senseless endeavor for businesses that aim to operate under modern conditions of transparency and the relentless fight against money laundering and the financing of terrorism. Others, such as Gibraltar, the Isle of Man, and Luxembourg, are considered "difficult to enter," where even the process of registering a legal entity is extremely demanding. On the other hand, it is precisely this distinctive filter at the entrance to these jurisdictions that makes them more respectable. Due to the complexity and, consequently, the impossibility of guaranteeing the result, we will not consider these jurisdictions.
Objectively, Hong Kong is the best jurisdiction for company registration with the aim of including it in a partnership and subsequent organisation of cashflow and reduction of tax burden. It is a special administrative region of China, which has been a huge financial and logistical hub for many years. From this experience has grown a flexible and accessible system for organizing economic activity and tax support. There are three factors that make Hong Kong an absolutely unique place:
1. Hong Kong is not an offshore jurisdiction in the conventional sense. In other words, it's not a country with a declining economy, lack of investment inflow, and integration into the correspondent banking system. Despite the warm climate, it is a high-tech and legal state with an educated population employed in various relevant sectors.
2. The territorial source principle, which implies the absence of tax burden on income earned outside the jurisdiction. Hong Kong is a tax haven without negative consequences for business reputation.
3. The ability to open payment and other financial accounts in other jurisdictions due to the high reputation of Hong KOng. Considering the first and second factors, the third becomes truly unique.
Next, we will describe the structure of our solution, based on the diagram provided below for clarity
Let’s breakdown the process into steps:
1. Registration of one or two companies to be appointed as partners in the LLP. There can be several configurations. It can be one company and an individual. It can be one company in Hong Kong and some operating company in another jurisdiction. It all depends on the circumstances you are in and the tasks you set for yourself.
2. Registration of the LLP partnership with the previously registered company/companies in Hong Kong.
3. Opening payment accounts for the partners and the partnership itself.
4. Then the company's activities begin, which always have differences and subjective specifics that need to be discussed separately.
5. The main stage is the distribution of dividends from the partnership's activities. Bridges will prepare a financial and tax report for you to submit to the tax authority and the companies registry. If the company did not conduct activities in the UK, then the tax reports are filed with zero values. The same reports can be provided to banks and payment systems as a basis for the distribution of dividends.
Then, payments are made to the accounts of the companies in Hong Kong. No tax on the activity of the LLP arises. All reports have been filed. All payments have been made.
6. In Hong Kong itself, we submit annual audited financial statements. Bridges assists in appointing an auditor, based on whose conclusion it will be evident that the company has not generated a taxable base and all funds received by it can be at the disposal of the company's beneficiaries. If the company did not conduct any activities, i.e., did not incur expenses, then in fact it performs a holding function and can make payments in favor of the owner. There is also no dividend distribution tax in Hong Kong, so at all stages, up to the receipt of funds by the beneficiary, no tax arises.
Thus, the tax burden arises for the client only at the stage of declaring personal income in the country of their residence.
Please contact us to place an order.
1. Registration of one or two companies to be appointed as partners in the LLP. There can be several configurations. It can be one company and an individual. It can be one company in Hong Kong and some operating company in another jurisdiction. It all depends on the circumstances you are in and the tasks you set for yourself.
2. Registration of the LLP partnership with the previously registered company/companies in Hong Kong.
3. Opening payment accounts for the partners and the partnership itself.
4. Then the company's activities begin, which always have differences and subjective specifics that need to be discussed separately.
5. The main stage is the distribution of dividends from the partnership's activities. Bridges will prepare a financial and tax report for you to submit to the tax authority and the companies registry. If the company did not conduct activities in the UK, then the tax reports are filed with zero values. The same reports can be provided to banks and payment systems as a basis for the distribution of dividends.
Then, payments are made to the accounts of the companies in Hong Kong. No tax on the activity of the LLP arises. All reports have been filed. All payments have been made.
6. In Hong Kong itself, we submit annual audited financial statements. Bridges assists in appointing an auditor, based on whose conclusion it will be evident that the company has not generated a taxable base and all funds received by it can be at the disposal of the company's beneficiaries. If the company did not conduct any activities, i.e., did not incur expenses, then in fact it performs a holding function and can make payments in favor of the owner. There is also no dividend distribution tax in Hong Kong, so at all stages, up to the receipt of funds by the beneficiary, no tax arises.
Thus, the tax burden arises for the client only at the stage of declaring personal income in the country of their residence.
Please contact us to place an order.
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info@bridgescsp.com
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