Reply to: How about a Contractor Owned ManCo?

[Lasta]

No news still... I read it, and thoughts, aha, if this is OK-ed by the reviewers, it will become the most successful thing that anybody heard of... was prepared to enlist and all that, when... abrupt stop to all activity. If anybody has any news, please could they please post it here?
Thanks

[Sergeant Murphys Cosh]

i've been reading this whole thing, following the story, the ideas developping... and I feel there is an ending missing?

What did Deloitte say?
Is Nodric in jail or awash with his legally earned money?

Read my post about double tax on dividends. Kisses Nodric's idea stone cold dead....

As for where he has gone to, maybe he's away with the fairies.

[xhak]

i've been reading this whole thing, following the story, the ideas developping... and I feel there is an ending missing?

What did Deloitte say?
Is Nodric in jail or awash with his legally earned money?

[DeludedAussie]

This should be a sticky - For people who dont need the money it makes sense to use offshore companies

[Sergeant Murphys Cosh]

Yes but if you are working in the UK or Belgium and you are tax resident, you'll have to declare your dividends there, and then they'll be taxed again!!!

I did post the paragraph from HMRC.

Divis are taxed twice...!!

Fiscuriosa - Tax Topic - Why foreign dividends paid out to a Belgian shareholder are taxed twice ?

[Sergeant Murphys Cosh]

Any updates on this subject lately?

[nodric]

Yes but if you are working in the UK or Belgium and you are tax resident, you'll have to declare your dividends there, and then they'll be taxed again!!!

I did post the paragraph from HMRC.

Divis are taxed twice...!!

If you mean you pay Corporation Tax, and then Dividend Tax, I agree.

The whole idea is to pay zero, or minimal Corp tax, so that when you pay tax on the Dividend the benefit is clear.

Remember in this thread I talk about foreign dividends. HMRC gives a credit of approx. 90% against foreign source dividends, to offset any corp tax paid by the foreign company, assuming a tax treaty exists between them.

If you therefore pay 10% Corp tax, zero withholding on the dividend, and then receive 90% credit for the 10% Corp tax paid, the net result is around 11% tax on the UK divi, assuming basic rate tax payer and obtaining the credit, you make a significant benefit. I'm not a mathematician or an accountant so actuals may vary slightly, but you get the idea.

Interestingly I also discovered that the UK (and Belgium, and most of the EU) have a full tax treaty with Mauritius provided you operate a GBC1 type company. Corp tax for this type of company is 3%, and no withholding tax on dividends! You still get the 90% of the 3% credited. A similar situation exists across the EU to credit tax paid at the Corp level.

However, getting an agency to pay you in Mauritius may be more challenging.

[BlasterBates]

Yes but if you are working in the UK or Belgium and you are tax resident, you'll have to declare your dividends there, and then they'll be taxed again!!!

I did post the paragraph from HMRC.

Divis are taxed twice...!!

[nodric]

There is no problem with taking divis monthly in the UK. In fact, my accountant even recommends it.

You just have to remember to i). fill out a divi declaration sheet at the time, ii). only take it out of the actual profits of the company (thus leaving enough for corp. tax).

Rather than start a debate about dividends here, I'll kick of a thread as ERS legislation is way beyond the scope of this discussion.

For my part, the frequency of dividends is a personal choice. I would support whatever the client desired.

[Sergeant Murphys Cosh]

I would recommend a dividend every 3 months. This is to avoid it being treated as salary by the appropriate Hector.

You could take a monthly dividend, but then the onus is on you, the shareholder, to demonstrate that this is not required to cover your general living expenses.

There is no problem with taking divis monthly in the UK. In fact, my accountant even recommends it.

You just have to remember to i). fill out a divi declaration sheet at the time, ii). only take it out of the actual profits of the company (thus leaving enough for corp. tax).

[nodric]

How often do you foresee a taking of the dividends?

I would recommend a dividend every 3 months. This is to avoid it being treated as salary by the appropriate Hector.

The employment-related securities ('ERS') legislation in Part 7, ITEPA 2003 is among the most complex pieces of legislation on the statute book. In essence, your local Hector could consider a monthly dividend as pure tax avoidance, and could classify it as salary, and therefore shaft you for tax and SS/NI.

You could take a monthly dividend, but then the onus is on you, the shareholder, to demonstrate that this is not required to cover your general living expenses. The law is complex, and almost impossible to fight with a tax specialist on your side. Cost/Benefit analysis says you’ll lose one way or another.

Quarterly is the recommended minimum.

[Sergeant Murphys Cosh]

I foresee no tangible benefits in keeping it. However, others may.

If I take a salary from Cyprus, and it’s a big if, then I will declare this on my personal tax return, together with any dividends. Did I mention dividends are taxed at 15% in Belgium, with no SS

To gain 15% (and not 25% which is standard), the shares need to be named (your name on them), and have a cash value.

How often do you foresee a taking of the dividends?

[nodric]

Two things.

I don't mean this in any rude or dis-respectful way, but how do we know we can trust you?

Only you know for sure if this scheme works the way you say it does. (And that's assuming you actually got it right!). Maybe you should issue a 'Certificate of 100% Compliance' for the collective solution, to give peace of mind. Gold-embossed, of course.

How does SS get paid under this scheme? It doesn't, right? Meaning you need to provide your own pension & health insurance? (That doesn't make it a problem, just a caveat to aware of).

SS is paid on your salary. If you pay yourself a salary you pay SS/NI in the country you are tax resident in.

In the collective solution, you would invoice for your monthly fees, either as a freelance independent, or as a MyCo. In the freelance case you would pay SS/NI on the total, and in the MyCo case you would pay SS on any amounts you subsequently paid yourself as a salaried employee.

Remember, the whole concept is to separate you from the bulk of the fees by you becoming a shareholder in the Cyprus company, to identify opportunities for contracts, and to pool your knowledge and resource with others, to support the delivery of such contracts. Any opportunity you identify and successfully secure, you do on behalf of the company, and therefore it is the company that delivers it.

Think about the wording of that very carefully!

With some finessing by Deloitte’s, this should even satisfy the UK’s MSC and IR35 legislation. Irrespective of the UK specifics, it will accomplish the main aim of lowering your tax and SS liabilities substantially.

You would never become a salaried employee of the Cyprus company.

Question Two

In short you don’t! BUT, that never stopped 1000s of contractors handing over their monthly fees to numerous other intermediaries every month. In fact they still do!

I started this thread by talking about a contractor owned ManCo, and that is still my goal, a ManCo owned by contractors through shares. Some may take a more proactive and managerial role, some may just use it to manage their career/contracts.

In the end you pays your money and takes your choice.

If after the company structure is established, the advice from Deloitte’s is scrutinised, you meet the directors, you talk to the lawyers, and you receive detailed written answers to all your questions, you are still not sure, then there’s always AFSS, Connexions reborn, and a long list of others eager for your trust (insert huge amount of sarcastic grinning here!)

The alternative? Set up your own IBC and avoid the risks of using a collective solution. If you need the expert advice and guidance of a collective solution, do your own due diligence, and make an informed choice.

In the end, the only sure fire way of controlling your own destiny, is not to put it in the hands of others, it’s just some need guidance. Many turn to the church for that guidance, and some turn to tax advisors

Please Note: No direct comparison or offence intended, although as all early forms of tax were imposed by societies controlled by religion, we could suggest they were inextricably linked, at least from an historical perspective. TANGENT

[nodric]

I wonder what will you be doing with you BVBA, will it loose it's purpose and you will close it or you see further advantages of still owning it ?

I foresee no tangible benefits in keeping it. However, others may.

If I take a salary from Cyprus, and it’s a big if, then I will declare this on my personal tax return, together with any dividends. Did I mention dividends are taxed at 15% in Belgium, with no SS

To gain 15% (and not 25% which is standard), the shares need to be named (your name on them), and have a cash value.

[Sergeant Murphys Cosh]

In the end, if you want to pay no tax and SS at all, then work in the black, offshore everything, and eat plenty of roughage while using one of the old school ManCos.

Two things.

i). How does SS get paid under this scheme? It doesn't, right? Meaning you need to provide your own pension & health insurance? (That doesn't make it a problem, just a caveat to be aware of).

ii). I don't mean this in any rude or dis-respectful way, but how do we know we can trust you?

Only you know for sure if this scheme works the way you say it does. (And that's assuming you actually got it right!). Maybe you should issue a 'Certificate of 100% Compliance' for the collective solution, to give peace of mind. Gold-embossed, of course.