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Offshore company / Tax advice

Discussion in 'Business & Tax Advice' started by wills1230, Sep 27, 2013.

  1. wills1230

    wills1230 Newbie

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    Could someone please advise me whether the below is legal.

    I currently live in the UK and I'm in the process of planning a new company. All of my main competitors are based in based in tax havens so im currently unable to compete.

    The products I will be sourcing will come from Poland, the prices are really good but when the UK import VAT is added to the prices im unable to make any profit. So here's my plan -

    I register a company and merchant in Belize, I register a bank account in Hong Kong.

    All of the money goes to the Hong Kong account. I will pay my supplier in poland from this bank account.

    I will pay myself a wage from this HK bank account to my Uk account by wire transfer. I have no problem paying the correct tax on this wage.

    Could someone please help me with my queries below-

    -The main thing I want to avoid is the import VAT and VAT. Is the above a legal way of avoiding this?
    -Do I have to keep all sale records etc for having a Hong Kong bank or do they only require this if my company is based in HK?
    -If I want to avoid tax on my salary is it legal if I debit cash sums from a UK ATM and make a trip to HK and bring under 10,000 euros back with me in cash?
    -Any better ways of avoiding import VAT?

    All help will be greatly appreciated.

    Thanks, Will
     
  2. Duffers5000

    Duffers5000 Elite Member

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    The only way to avoid paying Vat in the UK is to rob it......so to answer your question no.

    Doesnt matter where you base yourself Vat has to be paid in the final point of sale in the EU.

    You will have to pay vat at point of entry. If thats the UK then you pay 20% vat. If you are UK vat registered and are reselling the Items within the EU then you can sell them zero rated to the other company (if it provides a valid vat number) and they become liable for the vat in their country.

    Trust me.... Pay the Vat man. If the product is so unprofitable that you are relying on creaming the Vat then forget about it and find something that makes money.
     
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  3. wills1230

    wills1230 Newbie

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    Thanks for your reply.

    That's why I'm looking to setup a offshore company out of the EU to avoid the VAT.

    Does anyone else have any info on this?

    My competitors are registered in tax havens so they've obviously done this to avoid the VAT ans sell at a more competitive price worldwide.

    Thanks
     
  4. W9go

    W9go Jr. VIP Jr. VIP Premium Member

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    they are in tax havens to avoid paying tax for there profit...but when you sell in the eu a physical good you have to pay vat.
     
  5. Duffers5000

    Duffers5000 Elite Member

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    Im not sure if you grasp how Vat works. Its irrelevent where you are based. Vat has to be paid in the EU. If I import into Rotterdam then I can pay vat there or complete an Intrastat to move the goods zero rated on to the UK. Where I will pay the Vat. Being based in a tax haven is irrelevent whoever is taking the goods into the UK accepts the vat liability.

    What your competitors are doing is illegal. They may well be forming shelf companies running them for three months until they are due their vat quarterly return then going again with another shelf company. ie a churn and burn style system for vat avoidance. That may well suit them as they dont plan on visiting the UK. But as a UK resident whicb you are....you can go to jail for this stuff.

    Vat is serious business and has to be paid if you want to run a legitimate business in the UK.

    You can pm me for any import/export advise but if the only way you can compete in this market is through criminal activity then move on.
     
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  6. wills1230

    wills1230 Newbie

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    The goods are digital downloads so there will be no way at all of anyone knowing that they've entered the uk. This maybe is how my competitors are getting away with it?
     
  7. Duffers5000

    Duffers5000 Elite Member

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    I would have to know a lot more about the company and market details to give you a better answer. For the moment you need to be speaking to an accountant.

    An accountant that is familiar with what you are doing. Its not an accountants job to suggest ways for you to avoid tax but if you run through some scenarios with him he can give you some guidance.

    As regards making regular trips to HK to come in with 10K bundles. You will be spotted within 3 trips. The whole point of offshore is you are keeping the capital offshore for investment purposes. As soon as you decide to bring it back home you are liable for all the tax.

    A well run company should be investing in stock and overheads at the right time and not actually be liable for large amounts of tax anyway. Again speak to an accountant, it sounds like you could possibly run this 100% from the UK instead of going cloak and dagger to known dodgy tax avoidance places(the second you register a company in Belize you are highlighting that you are possibly a bit dodgy, so you are not making it easy for yourself with the authorities)
     
  8. jazzc

    jazzc Moderator Staff Member Moderator Jr. VIP

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    If it 's digital, there 's no legal problem. Set up a company outside of EU, sell your stuff, no VAT required. Your problem is getting the money in your country legally. Hiring yourself/wife/dog is the obvious thing and then there are other things your offshore advisor will probably suggest to you.
     
  9. kaylanewett

    kaylanewett Power Member

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    Just ask the supplier in Poland to mark the item as a "gift" when sending it to you. That's what all the sellers in China do so you don't have to pay any import tax which imposing it is ridiculous in the first place.
     
  10. larrydetuvi

    larrydetuvi Regular Member

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    I'm a little confused. If "whoever is taking the goods into the UK accepts the vat liability." wouldn't that be the buyer? And if that's the case, why should the offshore company be liable for the VAT if it's out of jurisdiction? Isn't it responsability of the buyer to pay VAT along with the custom duties? Maybe I'm missing something...
     
  11. GiorgioB

    GiorgioB Supreme Member

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    It depends if the buyer is an importer.. in that case you quote him FOB or EXW and you don't need to worry about import duties or VAT. However, it is your customer who will pay that. It all depends on the incoterms defined during the purchase (same as insurance, shipping costs, etc..)

    If you are importing over 100-200 GBP worth of merchandising, the only way to avoid VAT is to load the merch on a speedboat from Poland and speed over to the UK and unload it illegally. Tax havens have only avoid paying taxes on profits. It seems you are confused about some critical stuff , I highly recommend you do more research before taking any concrete action. Also, I believe you can incorporate in Jersey which is less far than Belize... :)
     
    Last edited: Sep 29, 2013
  12. GiorgioB

    GiorgioB Supreme Member

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    This works if you are buying a t shirt or some pants, but you cannot mark a 12" container as a gift.
     
  13. W9go

    W9go Jr. VIP Jr. VIP Premium Member

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    digital goods are different .. this you can sell without tax. its not legal but really hard to catch i guess.
     
  14. kroyal

    kroyal Newbie

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    the best reply could be that you can go to them (ASG Slogold offshore serivces) and they are in this offshore business for a long time.
     
  15. ArmoredMedia

    ArmoredMedia Junior Member

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    Unsure if this helps, but I know you can get a form of tax haven in Africa. A buddy of mine who some of you may know (keeping name private) doesn't have to pay taxes on any of his profit.
     
  16. SEOHULK

    SEOHULK BANNED BANNED

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    To OP: if you're incorporated offshore you don't have to charge VAT to anyone. The customer simply pays the amount without VAT and you can write VAT = 0% on the invoice (if you're doing bookkeeping too).

    As far as bringing the money from a foreign bank account to you ... you'll need to pay the proper taxes there but that has nothing to do with VAT.

    Speak to your accountant like people above suggested.
     
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  17. duimstra

    duimstra Regular Member

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    @seohulk: Can you explain this a bit more?

    Example:
    1) I'm incorporated in Ireland.
    2) I've got customers from all around the world.

    How do I deal with VAT?
     
  18. seocrab

    seocrab Senior Member

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    Digital downloads sourced from Poland? I am very confused!

    I have a business registered in the UK...if it's not profitable when you pay tax and VAT, it's not a viable business.
     
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  19. seocrab

    seocrab Senior Member

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    You will need to abide by Irish VAT laws and charge all customers the same VAT rate regardless of where they come from.
     
  20. Duffers5000

    Duffers5000 Elite Member

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    You would have to register for vat once you reach a payments threshold. Last time I checked it was about 80000 euro.

    You better pm me a bit of your company info for what you are doing. Are you dealing in a physical product ? Are you manufacturing in Ireland Or importing from outside the EU ?