Tax Residency. How to prove it?

Bilbo Begins

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Hey guys,
As a newbie in this question, I wanted to ask you:
1) what can be a proof of tax residency for the company?
Will Nominee Director will be enough to proof that the effective management based for example in Singapore (or any other low tax country)? Even though its other directors (owners) are residents in Italy?
What are other documents needed to show that the company is managed in that country?
2)What can be a proof of tax residency to minimise source income? How it can be proved on paper to tax authorities? Proof of address? Utility bills?
And how to get a tax residency certificate in other case?

Thanks!
 

yherrliche

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Okay so first the corporate tax applies to the country where the business is registered (trade license). Nothing else. It doesn't matter if you're on the moon, corporate tax = in the country of registration.
For social charges, that's applied to the country where the employee/manager is living. Many european countries do not allow to receive a salary from abroad without having a registrered structure (even just PO box) in their country. That's on a case by case basis.

So if you have 3 "salaries" in italy and one in Dubai -> you'll pay social charges for the 3 in italy, and the dubai one wouldn't have to (it doesn't exist there). That's called social optimization.

For your social charges and personal income tax : I'm not sure about Italy, but I'm guessing in France would be similar.
To show you're living in Singapore and excempt of italian income tax, you'll probably need proof of address (utility bill, rental thing) and to show your VISA. I believe in Italy too you need to report you will be living outside of Italy more than 183days per year. So you'll have to report that to your government, then a proof of residence in Singapore. Also Singapore has income tax, so your tax return is also proof you're based there.

+ be careful, a factor of your income tax is where your financial core is. If all your money and investment is in Italy and you live in Singapore, you might still be eligible for Italian income tax. And if it's the same as France, wherever your income tax is = you have to pay your social charges there too.

I can probably give better insights with more information on the actual situation. :)
 

bryanon

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Okay so first the corporate tax applies to the country where the business is registered (trade license). Nothing else. It doesn't matter if you're on the moon, corporate tax = in the country of registration.

And utterly and completely flawed advice like what you see above is the very reason why you NEVER go to a public forum for something as important as tax advice.

Do yourself a favor and speak to a tax attorney, who knows the actual tax laws of both your country of residence, as well as the country or countries that you're planning to use for setting up your structure.

The above, by the way, is such flawed advice it's not even funny. A very large selection of countries in the world (and almost all developed countries) consider a corporate entity's tax residency to be that of its management and/or "place of business" (which, by the way, is most often defined as the place where actual work is performed, rather than a virtual address or a lawyer's office). This is a huge thing and a concept that many don't understand, getting themselves into a pile of trouble down the road.

To complicate matters further, many countries (such as the UK), have tax laws that looks lke this:

A company is generally treated as resident in the United Kingdom for tax purposes if it is incorporated in the United Kingdom or, if the company is not incorporated in the United Kingdom, if its central management and control are exercised in the United Kingdom. "Central management and control" refers to the highest level of oversight, usually as exercised by the board, rather than day-to-day management.

This can, in essence, lead to a situation whereby you have an entity registered in the UK but with its management exercised in, say the US. Now, assuming the US had similar laws, your entity would be considered a tax resident in BOTH countries .. with both countries wanting its corporate taxes. Similar situations can also happen on a personal level and are incredibly nasty, which is why it's important to make sure the countries that you're involving in your structure have double taxation treaties or that your structure is otherwise safe from double taxation.
 
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