This case study perfectly illustrates how a company can leverage digital transformation and relevant international optimization to modernize its business model, reduce costs, position itself in the global market… and maximize profits legally.

Toyco LLC is a young company that markets toys exclusively via the Internet in Europe, from its headquarters located in an offshore jurisdiction.

It is owned by two Canadian businessmen experienced in e-commerce and toy retail. They thus benefit from substantial tax and financial advantages linked to an offshore company in the State of Delaware, USA.

The company and its website are based in the USA. The State of Delaware has a well-established financial sector and efficient infrastructure to support e-commerce businesses. The website will be the only way to order merchandise, with marketing combining Internet advertising, emailing and affiliate programs.

The two owners plan to reside in Dubai and manage their offshore company from there. They will need visas, but these will be issued to them without reservation. They thus benefit from a very favorable personal tax status in this tax haven.

The local pool of qualified workers is sufficient, but it could, if necessary, hire one or two expatriate IT technicians based in Asia.

Toyco LLC plans to source worldwide; supplier purchases will be managed from Dubai, while wholesale deliveries will be made to warehouses in Belgium (EU).

Warehousing and delivery to customers in Europe will be outsourced to Interhouse, a Belgian logistics company with 40 years of experience in customs clearance, warehousing and order management and delivery of consumer goods.

Toyco LLC’s development program was as follows: it involves an international tax optimization consulting firm based in London, an Internet service provider in the USA (BVISP), an e-commerce platform designer from Toronto Canada (TECP) Interhouse, in Europe, for logistics and an American bank:

• Consulting, creation and management of Toyco LLC (Delaware – USA), opening bank accounts in the USA, visas and expatriation to Dubai by the consulting firm (London -UK).
• Website design, with interactive catalog, ordering functions, shopping cart and tax/customs duty calculation (TECP- Toronto – Canada).
• Multi-currency payment solutions and customer account management integrated into the site (TECP- Toronto – Canada).
• Negotiation of banking facilities and credit cards, including merchant identification and customs clearance procedures (Toyco LLC), within an American bank by the consulting firm (London -UK).
• Development of customized stock control, shipping and billing routines Interhouse/Toyco (Toyco, Interhouse, TECP).
• Website colocation at BVISP USA premises.

Interhouse will handle import formalities in Belgium and will handle payment of import duties and VAT in the EU. All customer payments will be processed in the USA and will include import duty and VAT/sales tax fees, where applicable.

Inter-company invoices addressed to Toyco LLC will include import duties, VAT and sales tax, as well as customs clearance, warehousing and shipping fees.

Toyco LLC USA is an American offshore company and is exempt from tax in the USA. This country has sophisticated financial infrastructure that will allow Toyco LLC to support its future expansion without any difficulty.

Toyco plans to launch soon into online sourcing and freight transport management in other retail sectors for individuals in Europe.