Uses for Companies, Foundations & Trusts

Investments

As already indicated, the direct use of so called ‘tax haven’ jurisdictions are often of little direct use because of their ‘black-listed’ status and dearth of suitable treaties. However, with treaty knowledge it is often possible to legally avoid all, or nearly all, withholding taxes on dividends, royalties and interest payments by creating a tax treaty ‘sandwich’ between the recipient and paying jurisdictions. For example, if a Canadian firm wanted to invest in Germany, all remitted profits would be subject to a withholding tax rate of 15% in addition to a ‘distributed’ profit tax of 30%. If, however, the Canadian firm had sought professional tax planning advice it might have been suggested that a Luxembourg societe de participation financiere (SOPARFI) ‘holding’ company be used as an investment catalyst. It this had been done, the Canadian company could avail of Portugal’s EU membership and, in particular, directive 90/435 which prevents the application of withholding taxes on almost all dividend profit distributions

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