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Corporate tax structuring
A holding company (hereinafter referred to as "HoldCo") owns the assets of the business (including OpCo and IPCo) and is often created for the following purposes:
1. securing shareholders' control over the group and investor-relationships
2. consolidating the group's ownership and appreciation of its valuation
3. financing and managing of the group's assets;
4. mitigating operational risks at the level of OpCo and IPCo
5. hiring top management
6. motivating top management and staff (option plans)
7. reducing taxes at the level of OpCo, IPCo and group shareholders
8. enhancing the group's reputation and positioning; and
9. utilizing local infrastructure (legal, banking, business environment)
1. securing shareholders' control over the group and investor-relationships
2. consolidating the group's ownership and appreciation of its valuation
3. financing and managing of the group's assets;
4. mitigating operational risks at the level of OpCo and IPCo
5. hiring top management
6. motivating top management and staff (option plans)
7. reducing taxes at the level of OpCo, IPCo and group shareholders
8. enhancing the group's reputation and positioning; and
9. utilizing local infrastructure (legal, banking, business environment)
The operating company (hereinafter referred to as "OpCo") sells goods/services to customers and/or group companies. For the purpose of structuring, the following units are distinguished:
- profit centers, i.e. OpCo that sell the end product to customers
- cost centers, i.e. OpCo whose aim is to incur expenses in connection with the product or administration
- OpCo with high operational risk (stuff and customers, licenses, crowdfunding, certification, consumer protection requirements)
- OpCo with low operational risk (services within the group (R&D, management), technical support, agency services)
- OpCo can take the form of a legal entity (company), branch, partnership, non-profit foundation (foundation), etc.
An intellectual property holding company (hereinafter "IPCo") consolidates ownership of exclusive rights to intellectual property (IP) objects of the group (trademarks, copyrights, patents, etc.). For the purposes of structuring, the following units are distinguished:
- separate IPCos, which benefit from a low tax burden and protect IP assets from HoldCo's operational risks. In future, IPCo's shares can be sold without consequences for the group's structure
- HolCo performing IPCo's functions. The unit is used to simplify financial flows and the structure as a whole, to reduce tax risks and compliance requirements. But (!) it reduces flexibility and increases operational risks
- IPCo performing IP development which can additionally reduce the tax burden and risks, as well as increase the value of IPCo
- IPCo delegating IP development to OpCo in jurisdictions where it is easier to relocate the team and where labor costs are low.
German Real Estate Business
We assisted the German resident owner of the real estate business in Germany, Ireland and Czech Republic with succession planning and corporate restructuring. Of particular importance were the tax risks triggered by the change of control (stamp duties, transfer levies, capital gain taxes) and the effective tax rate on the profits distributed to the heirs. Among the corporate structures considered were foundations in Germany, Czech Republic, Cyprus and Liechtenstein, as well as trusts in Cyprus, Malta and Jersey / Guernsey.
Gluten-free Flour Products Manufacturer
Regulatory, corporate and tax structuring for the Gluten-free Flour Products Manufacturer entering the EU market and willing to take advantage of the "Made in the EU" labelling. Of particular importance were the EU labelling rules, import duties and VAT, as well as the different corporate income and payroll tax rates in the Eastern European Member States.
Cayman / Cyprus Investment Manager
As a result of the CRS / FATCA reporting compliance check of a Cayman / Cyprus registered / resident investment manager with broker accounts in Switzerland, we advised the Client on the implications of its current status and on potential remediation measures.
Chemical Producer for Cleaning Industry
International corporate tax structuring of the R&D hub's, production and trading companies` location for the manufacturer of the biomicrogels-based products. The comparison involved the UK, Ireland, Russia and Eastern European countries. The effective tax rates calculations were affected by the difference in domestic R&D tax credit provisions.
Global Sea Freight Holding
Report on the EU DAC6 Compliance (abusive tax planning reporting) for the Global Sea Freight Holding.
Global Brand Gym Franchisee
International corporate tax structuring of the Client's sport club business (a world known US franchise). We recommended a jurisdiction for the HQ (among considered were Hong Kong, Singapore, the Netherlands, Luxembourg, UAE, Cyprus) and a structure of dealings between the HQ and the regional affiliates. Of particular importance were the direct and indirect tax issues arising from the franchise / licensing model of the US law governed agreements, the terms of which we negotiated on behalf of the Client with the US brand owner
