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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4085
Experience:  FCCA FCMA CGMA ACIS
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I co-own a limited company and following the TV programme

Customer Question

Hello, I co-own a limited company and following the TV programme 'The Town that took on the Taxman' I'm wondering, if I was to set up a company in the Netherlands for instance (in my name) that charged my limited company for branding/use of my methodologies etc. would I be breaking any tax laws? If not, would I be ok to set up another company in a non-tax paying country (again in my name) that held my company IPR and charged me, through the new Netherlands based business for holding these rights? This seems to be what other (very large) companies are doing and no one appears to be questioning them? I am not seeking to do this, just interested to know if I would be committing a crime if I did?
thanks
Paula
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, Paula, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Indeed the method of operation you propose is the way that firms like Vodafone, Starbucks and Amazon operate their businesses. You will also have noticed an increasing comment in the media commenting adversely against these practices which has been has been emhpasised by Google's latest settlement with HMRC. There seems little doubt that such tax avoidance practices, whilst perfectly legal, are likely to be blocked by future legislation. I should also mention that setting up companies, particularly in tax havens like Jersey, Gibraltar and the Turks and Ciaos Island, is an exercise which does not come cheap; they are big business there. So if you operated in the way you suggest you would be committing any offence, for now. I do hope that you find my reply to your satisfaction. Tax avoidance is legal, it is tax evasion which is criminal.