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Case Study 4: Best Use of an Offshore Trading Company in European Union

Let’s take the example of B. Pasternak, a resident of Moscow. He is involved in trading business in the domain of footwear. His products are bought in Italy and sold to the stores in France, Germany and Spain. His trading company is currently under the tax system of Russia.

Mr. Pasternak is interested to know if he can reduce his taxes using an offshore company for his trading business within the European Union. In this particular case, we have to focus on the problems concerning corporate tax and intra-Community VAT system.

Case study 5_ENG

International trading companies

Solution to implement:

The formation of a company in an offshore jurisdiction would allow Mr. Pasternak to reduce significantly the taxes for his international business. All companies based in the member states of the European Union have to register for a VAT number.

In the case of Mr. Pasternak, the Isle of Man is an ideal choice for the registration of an offshore company. Thanks to the intra-community VAT number, the legal entity registered in this island will be a fully functional company in the European market.

Benefits of having an offshore company:

Thus, a company based in the Isle of Man, will be able to place purchase and resale orders of merchandise. Moreover, it will benefit from favorable tax conditions.

When it comes to the corporate form of this offshore company, Mr. Pasternak has two options: an LLC (Limited Liability Company) or a Tax Exempt Company. With these two types of companies, the dividends paid to non-residents will still be exempt from all taxes.

See also:

Forming an offshore company

Best use of an offshore holding company

Using an offshore company for online music sales

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