How can I deal strategically with profit distributions from my foreign company?
A double taxation agreement clarification of the facts:
A foreign company that is classified under the CFC rules is subject to add-back taxation in the country of residence of the shareholder of this company.
As already explained, the profits of the foreign company are subject to income tax in the shareholder's country of residence for shareholders who are natural persons.
Strategically, the question arises as to how I can deal with the withdrawal or appropriation of profits from my foreign company.
Is it an EU company or not? Is there a double taxation agreement with your country of residence or not?
The differences:
1. EU facts ✔️
2. DBA facts ✔️
3. non-DBA facts
2 DBA matters:
The following should be taken into account when withdrawing or collecting profits from a DBA perspective:
? Dividends are paid out in the country of residence. This results in 25% withholding tax in Germany.
? Your company makes investments worldwide.
? You withdraw money with the credit card of the foreign company. The booking process is company bank to company cash register. This is not an inflow to a natural person.
? A German representative office can claim expenses from the parent company.
? The Money Laundering Act applies from 10,000 euros. If you bring 9,000 euros from the country in which the company is based, the tax office will not be notified. However, this transaction must of course be reported to the tax office.
? You can obtain a loan from the company on the same terms as third parties.
? You move your center of life to a "low-tax country" at the time of the intended profit distribution. Switzerland or Malta is a good choice. The profit distribution is made to a natural person. This is followed by income taxation in the "low-tax country" or so-called "zero taxation". If you change your tax residence to Germany again, the income is not taxed again.
This results in a ban on double taxation.
The constant change in legal matters makes it necessary to exclude liability.
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P.S. It follows: "Strategic profit distributions from my foreign company from a non-DBA substantive point of view."
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