Move Parts of Your Business Overseas and Save on Tax

If you are the owner of a reasonably sized business, you can save significant amounts of corporation and other taxes if you move parts of it to another country. Nowadays, you don't need to be a huge global player to do global business.

One example: Hans, the owner of a German family business (a wholesaler of kitchen items), generates annual sales of 6 million Euros. Around 60% of the business is generated through German customers, and 40% through customers in other European countries such as the UK, Holland and Austria. Hans' business employs 40 members of staff, all of them in one location in the East of Germany.

The German tax base for businesses is around 40%. Assuming a profit of €500,000 on the non-German part of the turnover Hans could save €100,000 in taxes by just moving that part of the business to the UK (where the corporation rate tax is 22%). Setting up a business in Malta and processing the orders from there could save Hans a whopping €175,000 a year (Malta has an effective rate of corporation tax of just 5%).

If Hans was prepared to move to the UK he could save all  personal income tax on his foreign income if he classified himself as 'Non-Domiciled' also known as 'non-dom'.

This is a simplified example. Please contact us for a detailed consultation should you consider any of these options for your own business.

In today's environment it is extremely important to actually 'live' what you claim. Simply having a company somewhere is not enough anymore. You really can establish a proper trade overseas with real offices, real people and a real business. Only then can you benefit from the tax advantages without getting into trouble with the tax man at home.

At St Matthew, the internationalisation of your business is a core competency. We have assisted, and continue to assist, many businesses, helping them legally optimise their tax base using structures in the UK, Malta and other jurisdictions, including offshore solutions.