More Offshore Company Incorporations Expected as EU Looks Unfavourable

As European Union members continue to argue amongst themselves about common taxation policies, offshore company incorporation numbers will rise

The European Union (EU) which was established back in 1992 is one of the largest economic entities in the world and was established to create a single market with a common trade policy so that there was fair competition and opportunity for all member states.

But even since before its inception, arguments have abounded throughout Europe relating to how fair competition can actually be – and nowhere is this argument now more vociferously heard than in the discussions relating to the common taxation of business profits in the EU.  In our opinion, the raging of the argument means that more offshore company incorporations can be expected as the EU looks increasingly unfavourable for increasing numbers of businesses.

In the latest flair up of the argument about whether there should be common EU policy on the taxation of business profits across all member states, Germany has issued a controversial draft paper which has won the unequivocal opposition of the likes of Denmark, Sweden, Netherlands, UK and the Czech Republic.  The paper suggests in a section about economic goals that the EU will do better and improve “through measures at the European level on business taxation.”

All nations opposing this particular suggestion such as the UK state that taxation competition is actually healthy and can allow a nation’s economy the chance to prosper – but while the argument rages, nations well and truly outside the scope to the EU and its extended reach in matters relating to directives such as the EU Savings Tax Directive for example are rubbing their hands with glee.

There are many countries in the world that are considered secure, politically stable, economically prosperous and which are well regulated and which comply with OECD rules relating to anti-money laundering.  And in many of these nations - which are also referred to as tax havens or jurisdictions - it is possible to establish an offshore company and to trade through the entity in such a way that the taxation of business profits is kept to a minimum or negated, and that the personal privacy and confidentiality rights of the individual company owners are protected.

Because of these unarguable facts, in our opinion more offshore company incorporations can be expected while the EU continues arguing about common taxation policy. 

Finally, it’s worth mentioning that the argument is unlikely to subside in the near future if ever.  The EU’s finance minister is pushing ahead with his own agenda, he is about to release papers relating to the harmonization of corporate taxation throughout the EU and is expected to produce a complete and comprehensive bid for common taxation next year…so be honest, if you’re thinking of starting a business or you’re actively concerned about mitigating your personal or company’s taxation liability, are you going to look to EU member states for a solution or are you going to look at an international, offshore solution?

If you’re seeking the latter our recommended partners may be able to advise and assist you with the creation of a legal and tax efficient solution.