run your business from slovakia
TRANSCRIPT
Run your Business from Slovakia
by Andrej Filanda, Partner at PF/ACT, s.r.o.
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
3rd International Business Conference “Planning of International Business: Experience of Europe and Asia”
1-3 June 2011, Park Inn ****, St. Petersburg, Russian Federation
Jurisdiction Characteristics✓ continental law (Commercial Code)✓ permitted forms of legal entities:
‣ Limited Liability Company (spoločnosť s ručením obmedzeným)- 1 Director (EU/OECD citizen)- Supervisory Board voluntary- max. 50 shareholders
‣ Joint Stock Company (akciová spoločnosť)- 1 Director (EU/OECD citizen)- Supervisory Board mandatory (min. 3 members)- Audited annual accounts
‣ Partnership (verejná obchodná spoločnosť)‣ Limited Partnership (komanditná spoločnosť)‣ Cooperative (družstvo)
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
Everything taxed once @ 19 per cent ....
That’s it...
Thank you for your attention :-)
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
Taxation
Taxation
✓ taxation - flat rate, simplicity & no exceptions‣ Corporate income tax @ 19 per cent (since 2005)‣ No separate capital gains tax‣ Real estate tax - varies across country (municipal tax), calculated per m2
‣ Real estate transfer tax, inheritance tax, gift tax, stamp duties, tax ondividends @ NIL
‣ Value added tax @ 19 per cent (20 per cent “crisis” regime in place now)‣ No thin capitalization & no CFC rules‣ EUR currency (2009)‣ Stable tax laws‣ OECD transfer pricing rules in place (2009) - advance rulings possible
(5 years)‣ Advance dividends payments not allowed‣ No group reliefs - each entity taxed separately
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
Nominee services & “substance” issue✓ Nominee Director
‣ concept not recognized by the Commercial Code - (dis)advantage?(Nominee Director = de facto Director)
‣ Director responsibilities towards:1. the shareholders - accommodated by the provision of AoA2. third parties - cannot be waived in any circumstances
‣ mutual safeguards with the shareholders✓ Nominee Shareholder
‣ Foreign corporate bodies used for anonymity = recommended‣ foreign natural persons can be used‣ concept not recognized by the law = potential tax consequences
✓ “Substance” issue‣ standard anti-avoidance rules in place, HOWEVER...
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
Examples of Slovak Cos I✓ Slovak trading company
‣ Corporate Income Tax @ 19 per cent on its worldwide income‣ no tax on dividends paid to the shareholders (incl. those in OFC)‣ tax losses carried forward for 7 years
(if fixed assets in possession - “indefinitely”)‣ suitable for SMEs (equation paradox 19 % < 10 %)‣ viable alternative to “high profile” financial centres‣ wide DTA treaty network (62 agreements with 61 countries)
✓ Slovak holding company‣ no tax on dividends received from its subsidiaries worldwide
(incl. those from OFC)‣ capital gains (sale of shares in subsidiaries) subject to 19 per cent tax‣ “substance” and its costs (+)
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
Examples of Slovak Cos II
✓ Slovak financial company* ‣ suitable for intra-group & bank financing (debt financing)‣ no WHT on interest income paid to the Slovak company by the OpCo
company (Russia, Austria, Bosnia and Herzegovina, Czech Republic, France, Germany, Hungary, Ireland, Italy, South Africa, Spain, UK, USA + Nordic countries)
‣ interest income received by the Slovak company taxed @ 19 per cent‣ outbound interest paid to the holding company is tax deductible
for the Slovak company‣ alternative to Cypriot financial company‣ “substance” and its costs (+)
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
* Alexandrov • Vasilieva and Associates: Memorandum on Slovak financial company, 2010
Slovak financial company may be used for work with intra-group and bank financing from jurisdictions which have no favourable DTTs with Russia: Poland (10 %), Norway (10%), Italy (10%), Israel (10%), Kazakhstan (10%), Japan (10%), Malaysia (15%), Singapore (7,5%), Slovenia (10%), Switzerland (5/10 %) and Turkey (10%).“Flow-through” financial company with no business presence and substance unacceptable.
Pros & Cons of using Slovak Cosflat rate of Corporate Income Tax (@ 19 per cent)simple tax rules (no exceptions)no tax on inbound/outbound dividendsno thin capitalization rulescosts of substance & business presenceEUR currency (2009)stable tax lawsfavourable geographic locationreasonable professional ratesOECD transfer pricing rules in placeabsence of group reliefs
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383
Sounds almost like a fairy tale? It is...
www.pfact.sk, e-mail: [email protected], tel.: +421 2 3211 7811, GSM: +421 903 451 383