An international tax attorney will help you control overall international tax exposure; THEVOZ Attorneys can be a strategic partner.
THEVOZ Attorneys is a global tax firm with extensive experience working with international clients in Switzerland, Europe, the United States and around the globe. Our law firm started in Geneva and Lausanne, then expanded to Austin, TX to better serve a broad range of clients and businesses. We have learned that it isn’t just about keeping our clients compliant with diverse international tax regimes. It is about working with clients to anticipate where and how they want to take their businesses to grow, both in terms of potential tax exposure.
It is vital to have a legal advisor who understands the international tax implications, including tax treaties, the latest tax rules and other legal requirements when a company or an individual explores global opportunities, perhaps in offshore manufacturing, diversifying a supply chain or bringing a new product to market. As an experienced international tax law firm, we can develop a tax treatment for a new venture that increases the potential for success.
There are several strategically important decisions any company must make when planning a new venture in another country. THEVOZ Attorneys will work with you to find the best opportunity to control overall international tax exposure and optimize tax liability to preserve profitability. We can work with local counsel in jurisdictions in which we are not licensed.
When starting a venture in a foreign country, the most important decisions balance location, structure and tax treatment. It is also important to consider how to integrate the new venture with existing entities in a corporate group.
Important decisions include:
- Choosing the most favorable location for the new venture is important. THEVOZ Attorneys’ broad experience in global business gives us a wide view of the countries with the best business environments, as well as specific features and relevant rules of any tax treaty with countries involved in the new venture. Issues relevant to registering and incorporation all have legal ramifications and tax implications. Businesses in the United States must be incorporated, but incorporation terms are specific to states.. Moving a new venture to Switzerland requires being cognizant of the country’s tax law and rules, but also being aware of the differences in Cantons and staying compliant with their rules and regulations.
- Any new business must be aware of the “place of effective management,” which determines the tax regime the new venture will be governed under. Companies must also be cognizant of the concept of “permanent establishment.” In most cases, it is important for a company to conduct the majority of its business in the place of effective management because this can avoid unexpected tax bills. However, many companies doing business across borders expose themselves for taxation by more than one jurisdiction and could get tax twice by developing a permanent establishment in another country where a significant share of the company profits are created. The tax authorities of the permanent establishment country may require the company pay taxes on the profits produced in their country, which could result in double taxation.
The process for optimizing tax liability means asking three critical questions:
- Where is the activity that produces profits performed?
- How do you structure the investment? Careful tax planning is done with an eye for long-term profitability and minimization of tax liability. For example, Company A wants to create a new venture in another country. Option one is that they can loan the new venture, Company B, $1,000,000 to build the company. The debt service of five percent, or $50,000, is paid directly to Company A, where tax rules require it be treated as income and taxed at a rate of 25 percent. The loan repayment consumes a large portion of the gross profits of Company B in the year they repay it. Option two is to build the company as an investment by Company A, and they distribute $1,000,000 worth of equity to their investing partners. This equity results in an increment of $50,000 in dividends, or the profits for one year of Company B, being distributed to investing partners. These dividends are taxed at a rate of 10 percent. The tax difference between 25 percent on the loan payment and 10 percent on the dividend distribution could be the difference between an attractive investment and an investment not worth making.
- Where does the company want to pay taxes? The choice involves an analysis of tax rates and terms.
Our most productive relationships are with clients who have a vision of the future for their business and who understand that THEVOZ Attorneys’ international tax practice can be a strategic partner helping them realize that vision.