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| Home » Trade Leads » The Hong Kong Limited: The Perfect Tool for EU Citizens to Avoid New Swiss Withholding Tax on Income from Assets deposited with Banks in Switzerland. |
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Deutsche Consult (Asia) Ltd., Hong Kong |
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Trade Leads types: [Seller] The Hong Kong Limited: The Perfect Tool for EU Citizens to Avoid New Swiss Withholding Tax on Income from Assets deposited with Banks in Switzerland. |
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The Hong Kong Limited: The Perfect Tool for EU Citizens to Avoid New Swiss Withholding Tax on Income from Assets deposited with Banks in Switzerland. Understandably reluctant Swiss authorities and a tax-starved EU are still haggling over various details, but the basics are now almost a certainty: Starting July 2005, nationals from EU countries holding assets with Banks in Switzerland will be subject to withholding tax on interest income, dividends as well as capital gains. Beginning at 15 per cent in July, this levy will be raised to 20 pc. three years on, and from 2011 even reach 35 per cent; no small beer indeed! Moneys so withheld will be transferred to the relevant EU country, the only consolation for those hapless clients being that at least their names and particulars are not to be disclosed along with such transfers. Neither all those offshore companies from some tropical islands nor the much touted Liechtenstein foundations, nor indeed most offshore trusts, will escape the dragnet: For years already, Swiss banks have been held to internally record the beneficial owner(s) behind such smokescreens, and Switzerland’s professional trustees must fill in a special disclosure form when opening accounts for their notoriously shy clients. In the face of stiff penalties, banks and trustees alike generally abide by these rules. Borrowing from existing US regulations, Swiss banks are, however, allowed to deem clients’ EU citizenship irrelevant where they are the beneficial owners of “a well managed and controlled company”. To qualify for this one and only exemption, the legal entity holding the bank account must be a.) A company with liability limited by shares and a share capital of at least USD 30,000.- or equivalent; b.) The company’s shareholder(s) must have no direct access to the corporation’s assets, bank accounts etc. The Board runs the company; its shareholders receive (at best) dividends; c.) The company must maintain proper books, prepare a financial report at least annually and hold an annual general shareholders’ meeting. Private limited companies incorporated in Hong Kong (“Hong Kong Ltd.”) meet at these requirements ideally indeed: • The Hong Kong Ltd. must have at least one shareholder and one director, who can reside anywhere in the world and may even be one and the same person (although, with a view to point b. above, this should be avoided, where the Hong Kong Ltd. is to hold a Swiss bank account); • The share capital of the Hong Kong Ltd. – a strictly unimpressive minimum 13 US Cents by law- can easily be brought to USD 30,000.- (or higher), costing just 0.1 per cent stamp duty thereon; • The Hong Kong Ltd. must maintain proper books, prepare at least annual financial statements, and the latter even have to be audited by a local CPA. It is also required by law to duly convene an annual general shareholders’ meeting. Whereas companies from many other jurisdictions may meet the requirements under points a – c. above, there is one additional aspect, which makes the Hong Kong Ltd. almost unique, and the magic word is tax: Corporate profit, where generated in Hong Kong, is taxed at 17.5 per cent; offshore profits (i.e. those generated abroad, in the PRC or indeed Switzerland!) are tax-exempt! As a result, a well managed and controlled Hong Kong Ltd., even where beneficially owned by EU citizens, will neither be subject to any Swiss withholding tax on profits generated by its bank account in Switzerland, nor does it have to pay any tax thereon in Hong Kong! Better still: Under Hong Kong Law, investment income received by private individuals is tax-fee. Where the (nominee) shareholders of that Hong Kong Ltd. are only subject to our tax regime, they can thus freely receive the entire profit from that Swiss investment in the form of dividends without any deduction so ever, and are equally free to pass that money to their EU client as the company’s beneficial owner. How the latter then declares these funds to his friendly taxman at home is his business. Hong Kong does not care, and any sum or currency under the sun may freely pass its borders. Indeed even a suitcases full of crispy cash pass our customs controls smoothly, although inspectors there –in their relentless war on drugs and, of course, terror- where you have bank notes in excess of USD 15,000.- are authorised to take your name and passport number; you might be Bin Laden after all… In a nutshell: No restrictions here, no questions asked. Although we must reiterate that some details conc. the technicalities of Switzerland’s new withholding tax are still in the making, the basics seem to stand and that this levy will come into force is almost as sure as the approach of next July! If you have EU citizenship, have a Swiss bank account and don’t like to be fleeced, act now! We can assist you with properly set-up Hong Kong companies ( http://deutsche-consult.com ), advice and even put our contacts to Swiss trustees and banks at your disposal, -Just ask! With kind regards Your DEUTSCHE CONSULT Team 1/F Wilshire Park, 12-14 MacDonnell Road, Central, Hong Kong Tel.: (+852) 2522 7099 Fax: (+852) 2522 4766 ... http://deutsche-consult.com The above information is given to the best of our knowledge but without warranty for its correctness. Copying and/or redistribution (or parts thereof) without any liability for us are welcome and complimentary, where they quote the authors: Deutsche Consult (Asia) Ltd., 1/F Wilshire Park, 12-14 MacDonnell Road, Central, Hong Kong; Tel:(+852) 2522 7099; Fax: (+852) 2522 4766; http://deutsche-consult.com |
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| Post date: | 2004-11-02 | ||||||||||||||||||||||||||||||||
| Expiry Date: | 2020-12-31 | ||||||||||||||||||||||||||||||||
| Location/Origin: | Hong Kong | ||||||||||||||||||||||||||||||||
| Incoterms Condition: | not available | ||||||||||||||||||||||||||||||||
| Price/Fee: | not available | ||||||||||||||||||||||||||||||||
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