Clarifications

an expert point of view

Avoid "in-name-only" Foreign Company

Get in first person by becoming partners or administrators of the foreign structure. A company headed and administered by Italian people for the law is no longer a foreign company at 100%, even if it really has its headquarters abroad! It doesn't matter if you really are a company with a lot of offices and employees because for the IRS this is always a company that belongs, to all intents and purposes, to an Italian person. It is a case of esterovestizione, or to "dress up" a company as if it were foreign, and it is a crime that can result in a serious consequences (even criminal) if you do not regulate your position with the IRS. In other words, the fact of being members or administrators or opening a company abroad is not in itself a prohibited thing because there is no law that forbids it, provided you do not use the foreign company as a screen to pay less taxes or to make the tax fool Italian.

The Company Website

Another mistake not to commit the corporate website. Last week I got to talk to a customer who opened a company abroad of which owns 100% and also sole administrator. The company in question is actually a "foreign-dressed" company and when I explained how things are really the mirage of tax savings has vanished. To tell the truth this was not the only (big) error committed because there is a second: the company website has been opened in its name from Italy! A website registered to a subject resident in Italy and supported by Italian servers can be considered by the IRS as a "stable organization", or as if you had a real office with offices in Italy. In the end the only thing "foreign" that has this company is the address of the registered office and therefore is a company 100% Italian because:

  • is a company owned by subjects resident in Italy.
  • is a company administered by Italians has a website registered to a person resident in Italy.

Company Tax Residency

While the legal residence is a criterion of formal rule, identifiable in the place where the company has its own registered office, the residence tax can depend on several factors. In principle, the tax residence is located in the country where a company has established its registered office. Many countries consider fiscally resident a company not only if it has in its territory the registered office, but also for example if it has the centre of effective management of the business, or if in the country there is the principal object of the activity of the company. If two states are taking similar criteria to establish tax residency, it happens that a company is to be considered fiscally resident in two different countries. The double taxation treaties are intended to settle such disputes, which could generate a double tax at the company's head. In the case of the Netherlands and the United Kingdom, the Double Taxation Convention signed by the two States stipulates that the tax residence is assigned to the State where the effective management Centre is established. A company with its registered office in Amsterdam, but a centre of effective management in London, will have its legal residence in the Netherlands, but will be considered fiscally resident in the United Kingdom.

How to lose italian tax residency

I begin to explain how to lose the Italian tax residence in a legal way without risking investigations by the Revenue Agency to obtain legitimate tax benefits, it is not enough to take a plane find home abroad and live for the Most of the year e.g. In Malta moving to Malta, moving to the Canary Islands, obtaining residency or residency status in Bulgaria may seem quite simple, but you should know that some states require the possession of certain income requirements, a bank account abroad, a Signed lease. Obtaining the foreign tax residence is not always an easy task but it is even more difficult to achieve the loss of the Italian tax residence. To lose the Italian tax residence a citizen who intends to move abroad must carry out a formal step and a substantial step:

  1. Unsubscribe from the resident population register and enroll in the AIRE (formal step).
  2. Live abroad for at least 183 days a year, moving his domicile and residence there (substantial step). 

If I reside formally and substantially abroad I do not have to pay income taxes in Italy on the part of income I produce abroad.

Foreign company administered from abroad

We clarify in a simple way you can have a company abroad and manage it and administer it from Italy, paying taxes only abroad? Of course not! Of course you can have a foreign company, you can also have foreign tax residence, no problem, but the same to pay taxes only in the foreign country where it is located, must be really managed and administered from abroad. So if I have a foreign company and I manage it in full from Italy billing also to Italian customers for tax purposes is not correct and I will have to pay taxes in Italy. Here we go?? We have/contabili tax methodologies and the incorporation of foreign companies that can still make you pay less taxes than having a company at 100% Italian but you have to plan well the new corporate structure also at the level of quotas, and Administrators. The fiduciary management of a well structured foreign company is a method to save taxes.

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