Is there a reason to not go BVI/Nevis IBC route for a small online startup ? The no accounting/record-keeping requirement should look appealing to many, beside 0% tax :).
Some EU countries have tax laws that look through said structures, attributing earned income to the shareholders. That's one reason.
Second, if you play by the book (and a lot of people who use these entities don't), you can't control said entity directly from an EU jurisdiction. You need to fly there (or somewhere else with no corporate tax) and do board meetings there.
There are cases where it's worth it, but it almost always has to do with shaving off percentage points of corporate tax from your profits, and not with reducing administrative burden. If anything, if you want to use a company like this (or any foreign company), you need to be careful and understand what you can and cannot do under the laws of your resident country.
The internet does offer some additional opportunities, because it's not location linked and it's often hard to figure out how to tax internet generated revenue. It's easier to do tax arbitrage, but doing it right also requires a great deal of additional paperwork (+ extra overhead expenses).
You should read up on tax law -- the cost of getting it wrong can be high.
> Even if the company is not tax resident of said countries ? Mind pointing me to the laws/countries.
Yes. Broadly this falls under CFC ("Controlled foreign corporation") related laws. Taxation of the foreign entity could exist at either the corporate level (i.e. some domestic entity owns a low tax subsidiary in some tax haven), or the shareholder level (i.e. you own shares of a company in some tax haven).
> Any estimate?
Depends on the business. Some things you can't run through a low tax entity, others you can. If you sell an app on the app store, that would be relatively easy, for example. But you'd have to fly to the jurisdiction to sign the contract + probably have a local director.
The problem with these structures is not the set up cost. It's the cost of defending it in court if the tax authority of your residence country comes after you. And they do.
If you can't afford to defend yourself, you might as well not set it up.
Things have changed a lot in the last year with FATCA and other tax laws. Regardless of where the company is incorporated you will be taxed on where you do business (so if you live in Europe then your local tax office with ignore the fact the company is incorporated in an off shore tax haven and tax you as if it was local.
The next problem is getting a bank account, if you get a bank account in the offshore tax haven, it is hard for people to go business with you (paypal, payment processors). You could try and get a merchant account with your tax haven bank but this can be complicated and payments you put through may be rejected by the customers bank.
Thus you can try and get a bank in a better jurisdiction , however still paypal / payment processors won't touch you as want to know why your business / bank and you are all in different countries.
There are ways around this, but you need serious money to make it worthwhile.
As well, if you are from the US, things get even more complicated due to the IRS taxing US citizens in any way they can find out how to :)
Second, if you play by the book (and a lot of people who use these entities don't), you can't control said entity directly from an EU jurisdiction. You need to fly there (or somewhere else with no corporate tax) and do board meetings there.
There are cases where it's worth it, but it almost always has to do with shaving off percentage points of corporate tax from your profits, and not with reducing administrative burden. If anything, if you want to use a company like this (or any foreign company), you need to be careful and understand what you can and cannot do under the laws of your resident country.
The internet does offer some additional opportunities, because it's not location linked and it's often hard to figure out how to tax internet generated revenue. It's easier to do tax arbitrage, but doing it right also requires a great deal of additional paperwork (+ extra overhead expenses).
You should read up on tax law -- the cost of getting it wrong can be high.