Tax evasion is regularly in the news. Sometimes it is about tax evasion and in the past it is about tax optimization. The first is illegal when the second is legal. In both cases, one or more offshore companies are often found.
The creation of an offshore company is legal for most sectors of activity, but what is not always the activities that derive from this offshore company and the failure to comply with certain rules imposed by the country of fiscal residence . Still, when you want to create an offshore company, the first question is often whether it can be done, and if it represents a real interest.
Activities authorized by French law
Here, we will exclusively focus on French tax residents who want to create an offshore company . Indeed, the rules differ according to the country of tax residence. France authorizes the creation of such a company since it concerns a legal activity that is not in the field of craftsmanship or requiring a national diploma.
However, this does not mean that it is enough to create an offshore company to no longer have to declare taxes in France. In any case, as a natural person residing in France for tax purposes, you are obliged to declare all your income and assets to the French tax authorities, even those from abroad (this is the case in Hong Kong by example). This does not mean that you will necessarily pay French taxes on income from abroad, depending on the agreement signed between France and the country in question.
For a legal person, that is, a company, the rule is different. As a rule, the profits made in Hong Kong are not subject to French taxation . It is therefore not mandatory to declare the structure and its activities to the French tax authorities, unless: the company established abroad is owned at least 10% by tax residents in France and that it benefits from a tax privilege, ie if the tax on profits in the foreign country is less than 50% of its French equivalent.
Anyone can create an offshore company
From the moment your activity is not artisanal or requires a national diploma, you can create an offshore company .
However, if your goal is tax optimization, the offshore company becomes interesting from the moment the turnover of your company located in France is at least 38 120 euros . Indeed, from this threshold, the company must pay a tax of 15% minimum. Similarly, when your company makes profits of at least 50,000 euros, the corporate tax is implemented. It amounts to more than 15% of profits.
By creating an offshore company, you have the opportunity to declare a portion of the revenue and profits in a more tax-efficient destination. Nevertheless, the creation of an offshore company is not free. And you have to take that cost into account. But do not forget that this calculation must be done over the long term and that if your company is doing well , profits should increase in the coming years.