[charlesdm]

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.

[ringtail]

Any real world success & failure stories I can read upon ?

> Some EU countries have tax laws that look through said structures, attributing earned income to the shareholders. That's one reason.

Even if the company is not tax resident of said countries ? Mind pointing me to the laws/countries.

> doing it right also requires a great deal of additional paperwork (+ extra overhead expenses)

Any estimate ?

This is very informative. Thank You.

[charlesdm]

You could write a whole book on that first question. In fact, books have been written about it. It depends on the laws of your country of residence.

One UK example: http://bit.ly/2kAqV7r

> 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.