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Tax optimization and asset protection

Everyone should keep an eye on this, who wants to start the Amcrow business or optimize their existing structure. Dependency on Amcrow provides certain restrictions that classic dropshipers, such as Shopify, do not have. In particular, the country selection of possible company headquarters is limited and not consistent worldwide. Even when it comes to sales tax, when you sell to the EU, you have little potential for optimization.

Nevertheless, Amcrow also has many opportunities to improve its own tax and legal position. However, not only minimizing the tax burden is essential, but in particular minimizing the risk of having one’s own private fortune for faulty products, or cushioning a not unrealistic bankruptcy. Because trading is a fast-paced business and what brings millions today can plunge into the debt trap tomorrow.

Why residence and company headquarters are related

Probably the one who reads this article before entering the Amcrow business. If you’re already making money on Amcrow, you may start earning more seed money for the best set-up, but you’re limited in a critical area. So it makes Amcrow a risky venture to change an already registered seller account to another company construct. While this can easily go through, there were already in the past to account blockages. At least the sudden elimination of some hard-earned account features – like good seller feedback – can count.

If you want to take the risk or maybe even just open up new markets, it depends above all else on the personal life situation, ie your own residence. Depending on the country of destination, other laws apply to companies abroad . In most high-tax countries worldwide, these are known as effective management rules and are explicitly enshrined as an anti-abuse rule or implicitly as a judge’s right.

Thus, artificial designs that are purely for obtaining a tax advantage are not allowed. Pure letterbox companies abroad are consequently treated in the same way as domestic companies. If a German establishes a pure mailbox company in Malta, for example, sooner or later he will be taxed like a German. Simply putting up winnings without paying them off is not so easy even abroad.

However, as soon as the entrepreneur has more than one letterbox at the company headquarters, things may be different. Within the EU, the requirements for the so-called substance least in terms of freedom of establishment, moderately high in countries with double taxation agreements and least high in countries with double taxation agreements. It also matters whether the country is considered a tax haven or not. Substance means ultimately that the company headquarters was chosen because of real economic interests, office premises exist and the management is mainly carried out from the country. For example, the annual board meetings should be held there, essential contracts signed and employees present. Under no circumstances may the company be “remotely controlled” abroad.

The cost of building legally sound substance should not be underestimated by an entrepreneur. Many advertised designs with trustee directors for a few hundred euros a year may work for some time through some anonymity, but do not withstand scrutiny by the tax authorities. A managing director should only work for one company only and obtain a standard market salary. In typical tax havens, such as Malta can you do with yourself for five-figure costs.

Nevertheless, such a construct can of course be worthwhile. Finally, if you find the right person, you get a worker who can do most of the work for you. And if you go to more favorable countries, the costs are limited. So maybe you can set up a small office and hire a half-day force to inspect deliveries of goods before they can be sent on to Amcrow or perform other activities.

Of course, those Amcrowers are better off, who have moved their residence to a country without foreign tax laws, or even living in zero tax countries. Here is the full freedom of establishment of foreign companies, even if it should be letterbox companies. Only the profits and salaries received could be taxable depending on the country.

Structural risk minimization

However, before we come to the selection of tax-qualified countries for Amcrow for both situations, one should still consider structural aspects regarding asset protection at https://offshorecitizen.net/.

After all, Amcrow is a risky business model in which liability can quickly become expensive. It is therefore advisable not only to have as many companies as possible to spread the risk, but also to release them from their own possession. In the usual structure of a holding one belongs only to the parent company, which manages several Amcrow subsidiaries. A clever choice between the two countries can also be very beneficial for tax purposes thanks to the EU parent-subsidiary directive and double taxation agreements.

But it is even better if your own company does not belong anymore. It’s enough if you can control it. After all, as a Amcrow trader, he usually runs his business to cover his lifestyle and asset accumulation, but not the absolute desire to sell it as quickly as possible. That is why you sell it at the start to a foundation or an association or even better start it up.

Foundations such as clubs have the advantage of belonging to themselves. Company and private assets are therefore decoupled. Although you can no longer distribute profits, but the own assets are very safe from disputes. At this point, the possibilities of foundations and associations should not be deepened. However, your positive design options in a Amcrow set-up should be mentioned. Particularly flexible and cost-effective are Swiss associations and private interest foundations from Panama and the Bahamas.

The best countries for Amcrow

Before we come to the choice of the operational headquarters, we have to look at what opportunities actually exist. Finally, Amcrow already limits the possible countries when registering for the Amcrow program. Depending on the target market, there are also other options. Very good opportunities for all markets together are few in number. However, as described, a fragmentation of companies may already be more recommendable for risk minimization reasons.

The list of accepted offices for Amcrow USA can be found here . The list published on Amcrow UK is synonymous with the European market . Often you also need local telephone numbers, which are easy to obtain via VOIP services. Also on restriction of accounts, for Europe as only US, UK and Eurozone, you should pay attention.

As you can see, there are some overlaps between both lists. Really good overlaps, however, are relatively few. Possible tax-exempt corporate offices include:

  • Hong Kong
  • Singapore
  • United Arab Emirates
  • Mauritius

Of course, despite some taxes, the US, Canada and many European countries can be interesting.

Already at Amcrow Europe, however, a problem arises with most of these companies. They do not get a sales tax number in the countries of sale or only if they establish a permanent establishment, which in turn would make them subject to tax. But if you depend on Amcrow for a VAT number, so this can be problematic. Since German speakers also tend to be better able to assess the market situation in their home countries, the following remarks are limited to Europe, also because the choice of company elsewhere can be much less complicated.

Luckily, there is an interesting country in Europe that is accepted only by Amcrow Europe. This is the British crown colony Isle of Man between England and Ireland. This tax haven not only has the peculiarity of not having corporation tax, but also having trouble getting a British VAT number. But without the obligation to pay them off. No wonder that large purchases made by the rich in this world – such as ships and planes – are preferably handled via this island. Not paying sales taxes on millions of dollars but claiming input tax is a key competitive advantage. With the British Brexit is unfortunately only unclear to what extent the model has a future.

If you look at the classic EU companies, not only sales taxes, but also corporate taxes are incurred. Nevertheless, there are numerous design options, including within the European Union. In the Amcrow context, reference is made in particular to the small business regulations and delivery thresholds.

Exploitation of small business regulation and delivery thresholds

Small business means, as it were, taking advantage of the Isle of Man. VAT does not have to be paid. Long small business owners – especially in high-turnover Amcrow business – but you are not. In Germany, the border with a turnover of € 17,500, in many other EU countries even lower. However, there are also three outliers. In the UK, the threshold is 83,000 pounds (about 106,000 €), in Ireland 75,000 € and in Romania 45,000 €.

While Brexit’s situation in Britain is subject to some legal uncertainty (note the exception: within the UK, trade turnover is taxed from the first euro onwards), Ireland and Romania are very interesting, also because of their profit taxation. Ultimately, 75,000 € sales in the Amcrow business are achieved very quickly, but a saving of sales tax at least at the beginning can make a difference.

However, the small business regulation must always be seen in combination with the so-called delivery thresholds. In most cases, these are pried out because the delivery thresholds are very low. If one exceeds the delivery threshold of a country, then sales taxes are automatically transferred there to the local rate. Even if not, you can opt for it voluntarily. For example, as a prominent exception Germany has a delivery threshold of € 100,000, but a comparatively low VAT rate of 19%. Although theoretically the sales tax applies at the company headquarters, most of the entrepreneurs decide to deduct a tax that is a few percentage points lower in Germany.

With well-performing Amcrow business, both points play little role. You will probably pay sales taxes in the countries where you sell. Therefore, countries with high paper tax should not be put off. The 27% of Hungary actually only apply when selling to Hungary. In all other countries you can opt for the lower, local sales tax. With only 9% corporate taxes and relatively low costs for substance development, Hungary can be a real alternative.

Why Eastern Europe is superior to typical tax havens

In general, the Eastern European countries are preferable, if one needs to recognize a permanent establishment with substance. These can be set up much more cost-effectively here, while the countries are hardly scorned as tax havens despite low taxes. In addition to Hungary, companies in Bulgaria, Romania and Estonia are mainly founded by Amcrows.

Estonia has the unique system of downstream taxation. This means that the 20% corporation tax is payable to the shareholders only when profits are distributed. Although this is relatively high, it provides a liquidity advantage that should not be underestimated and enables tax-free investment and reinvestment. For those who already earn their money from other sources or with little money – a small salary remains tax-free – get by, Estonia is highly interesting. The simple online start-up and management via the e-residency program along with good account opportunities do the rest to contribute to the popularity of Estonian companies. 

More opportunities for Amcrow companies

There are plenty of other interesting countries in Europe. Classic tax havens such as Malta with 5% or Cyprus and Ireland with 12.5% corporation tax attract as well as lesser-known exceptions. 

For entrepreneurs who are able to lead letterbox companies legally due to their residence situation, certain partnerships such as the Limited Partnerships in English are also very interesting. These pay only income tax on income within the country, outside the income tax of the country of residence. In a country with tax-free foreign income such as Panama, an Irish LP would be tax-free, as long as it did not earn anything in Ireland. Unfortunately, sales in the same country as the company headquarters is absolutely necessary in order to obtain a sales tax number. Nevertheless, properly designed, despite relatively low taxes in the country, a partnership make a lot of sense.

Basically, as Amcrowler so sales taxes can hardly be avoided, but the corporate taxes on profits significantly lower. It should also be noted that there are also numerous company law differences depending on the country, such as the liquidation of companies or the liability law. For these reasons alone one should think about a relocation of the company headquarters. Of course, most options exist if you combine this with a relocation.

Examples of Tax Optimization at Amcrow Companies

What would be the examples of successful Amcrow entrepreneurs in this case? Imagine, Gustav already operates Amcrow very successfully with his German , but complains about the oppressive tax burden and strict regulations. He is ready to relocate his center of gravity, but must pay attention to the typical peculiarities of German tax law. For example, exit taxation is threatened in the amount of the withholding tax on the estimated goodwill of its enterprise, in the context of a fictitious sale. As a result, Gustav decides to move within the European Union, as exit taxation is unlawful and will therefore not be recovered.

In Cyprus he establishes the non-cathedral status by founding a business and renting an apartment. There is no minimum stay. He can merge his German tax-free with the Cyprus Limited by means of the complicated procedure of shareholder debt financing with the Cyprus Limited.

Although it pays 12.5% corporation tax on the profit, but enjoys generous deduction options. He is also glad that he is rid of the constant audits, which cost him time and nerves. There is just one state tax inspector in Cyprus . Privately, he is a non-DOM, which means that he claims a special program from Cyprus, guaranteeing him tax exemption on domestic and foreign dividend income. He only has to pay social security contributions within the framework of a managing director’s salary, which is still stated in the generous tax-free allowance of € 19,500.

Fortified by the new free space, he decided to sell his product on the American market. He finally manages to do business without any taxes through a Hong Kong company – he eventually sources his products from China. Because he pays neither sales tax in the US, nor corporation tax in Hong Kong, nor withholding taxes on his profit distributions to Cyprus.

Alternatively, imagine a Swiss entrepreneur who, after many other projects, has fancied Amcrow. Thanks to non-existent departure tax in Switzerland, he dares equal to the jump to Dubai. United Arab Emirates offer complete tax exemption at company and private level.

In order to obtain a residence visa, he must establish an internationally recognized free trade zone firm, such as the Dubai South Zone (DWC). This will cost him about 12,000 € in the first year with administrative costs of about 8,000 € from the second year. However, he can also operate his business completely tax-free. He only has to travel to the Emirates every 183 days in order not to lose his residence visa. If he avoids a food spot in other states, he enjoys the complete tax exemption of the desert state.

Let us take to completeness an Austrian who wants to stay in Austria. Due to the high cost, he decides against the model of the Cyprus community  that the income tax-free distribution of profits of a Cyprus Limited to a private person in Austria by a special feature in the double taxation agreement allows. He prefers to set up a corporation tax of 9% in Hungary, a few kilometers away, and rent a cheap office space. Because of the proximity to the border, he can largely refrain from substance by commuting daily across the nearby border and conducts his business from Hungary. Since he does not sell to Hungary, he is not affected by the 27% Hungarian sales tax.

These 3 options are just a grain of sand in the desert. Despite some limitations, Amcrowers can control their tax situation extremely well. It is essential, however, that in the context of corporate tax only comparatively small savings, also because of the cost of the substance, are to be expected. The much greater leverage lies in the change in his personal residence situation, which allows any tax-free letterbox companies with tax-free distribution.

The tax-free ideal type

The tax-free ideal type

Our ideal type as an Amcrow entrepreneur lives in Thailand, where foreign profits brought into the country only in the same year are taxed. He’s structurally well-protected by running his corporate empire through a Bahamas foundation that keeps him from potential liability issues in his companies. It is fully involved in its parent company in Holland, which manages its numerous subsidiary companies.

While the Netherlands are rather unfavorable for operations due to high corporate taxes of 25%, they are optimally suited as a holding location due to the lack of withholding taxes and a large number of double taxation agreements. Thanks to the EU Parent-Subsidiary Directive, he can transfer all profits from his Austrian tax-free to the Dutch parent company and from there continue to distribute them tax-free to the Bahamas Foundation, while a direct distribution from Austria results in a high withholding tax in the amount of capital gains tax would. It also has many other companies inside and outside the EU.

As a full beneficiary and protector of his foundation, he controls everything but has nothing on paper. This saves him from the resentment of his competitors, who in addition to an almost hopeless procedure for apparent violations anyway have nothing to gain.

As fictive as this example may sound, it sums it up nicely, something that not only every Amcrow entrepreneur should take note of. The first mantra of the flag theory  is: “Go where you are best treated”. The second mantra of the property protection reads: “possess nothing, but control everything!”.

Entrepreneurs who follow these two wisdoms can enjoy new projects and bring added value to their customers. Tax-free, risk-free and above all stress-free. Because at least it is about the amount of taxes, but the extreme time and nerve effort to manage them.

Grab the tax benefits when they are there!

Many believe that the tax on income and wealth is completely fixed. They are therefore missing out on the tax benefits that are regularly shown.

The rules for tax, deduction, and subsidies from the state have great political attention and are therefore often changed. This means that almost every year there are different temporary rules that can give you tax benefits. It just requires you to be awake and ready to make a quick decision.

Opportunities for tax benefits

You may remember the tax-free early retirement pension or the favorable tax rules for PV systems. There were also tax-free capital gains on small stock holdings that could only be used for 14 days up to the turn of the year 2005. All good examples are that you can gain significant gains in your finances by paying attention to changes in the tax rules.

It is not because you have to speculate on gaps in the tax rules, they are just questions of timely care. If you are aware, you can get hundreds of thousands extra for your assets or for consumption. The money you make from lowering the tax is part of your overall economy and becomes even more with interest rates.

Tax benefits in 2014

This year, you can utilize the housing job scheme ( artisan deduction/service allowance), and then remember to collect the gain by reshaping your capital pension to an age saving.

Together, the two schemes can give you a gain of approx. DKK 37,000 If you can advantageously convert a capital pension of DKK 1 million into an old-age pension, then the first 27,000 are at home. And if you are married, and can you fully utilize the artisan deduction for tasks that still have to be carried out at home, then you can add approx. ISK 10,000. DKK 37,000 is an amount that can be felt in the economy of most people.

And this is noticeable just this year. If you are aware, you can use these opportunities every year throughout your life. It is the few years that you cannot reduce your tax. And the saved tax is usually again that can be taken home without increasing the risk in your finances.

More benefits going forward

There has been a trend over the past approx. 15 years that there have been more of this kind of opportunity than before. This is because there have been many changes in tax and pension legislation and that transitional arrangements are often made that create these opportunities. Other possibilities have arisen because the state wants to promote a certain behavior, eg that you save energy.

Some may argue that development means some taxpayers get benefits at the expense of others. But the fact is that you can improve your finances by taking advantage of the opportunities. It simply requires that you keep a little in mind in the development of schemes in the tax area.