VAT - service from outside EU

BronYrAur

Registered User
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Hi All

Trying to structure my business in a tax efficient manner here and could use some help.

I have an Irish company providing services to the public. I have a non-EU offshore company of which I am the sole director. I live in the same offshore jurisdiction as this company.

I'll be extracting the profit from the Irish company straight into the offshore company and I want to know how best to do this.

Option A -

I charge the Irish company for management service which I am providing to it. I'll be making all the management decisions from offshore so it is completely legitimate.

Does this raise a VAT issue? I think the Irish company has to charge VAT to the offshore company on a reverse charge basis but for the life of me I can't figure out what this means practically speaking? Can anyone dumb it down?

Option B -

I can personally lease a residential property (which is the subject of the business) to the offshore company who can then sub-lease it to the Irish company and charge for that which will work to extract the profits.

Any issues here? Is there a VAT liability or is letting a property VAT exempt?

I'm comfortable with option A (bar from not understanding the VAT part yet) but Option B I have only begun to consider so I would be grateful if anyone could point out any issues they see.


Thanks
 
Not sure why you have an Irish company?

VAT is an EU tax so if you are not in the EU VAT won't apply to the services from your non EU company to your Irish company.
 
Not sure why you have an Irish company?

VAT is an EU tax so if you are not in the EU VAT won't apply to the services from your non EU company to your Irish company.

Suppose I'm not entirely sure myself. I got professional tax a while ago when I began looking at this and was advised against just using the offshore company when I queried whether I could. Although it does sem a bit of an ordeal to register a non-EU company in Ireland to trade. The property is located in Ireland if that makes any difference?

Are you sure about the second sentence? Everything I have read on the revenue website seemed to indicate that my Irish company will have to account for VAT as a reverse charge!?
 
Just a follow up - I went through my emails in relation to leaving out an Irish company completely and the following was the advice:

"Can I skip having an Irish domiciled company altogether and just use a BVI company?

I don’t think so, this is an Irish trade derived from an Irish asset and considered Irish source income."
 
How about instead of talking in riddles with Scenarios A and B, you just said what it is you actually want to do...

eg. I live abroad but want to make as much $$$ as possible from letting my Irish residence on AirBnB or similar (and damned if I want to pay taxes in Ireland to pay for all that developed world stuff that the Irish state aspires to provide...) so I'm trying to contrive an artificial structure whereby I spend a fair chunk of what I'd have paid in taxes as an individual, to professional service firms to administer my mini-Apple multinational corporate labyrinth.
 
Actually, you had it right until the very last part.

The "fair chunk" of what I'd have paid in taxes in Ireland I want to extract to the offshore jurisdiction WHERE I LIVE and where I will be running the "AirBnB or similar" business from. From that offshore company I'll pay myself a salary (and be subject to the income tax (albeit at a lower rate of income tax than Ireland) in that jurisdiction).

It's smart tax avoidance which in this case is not even morally questionable. It would be different if the structure was artificial in that I didn't live and operate the business from offshore. In fact, why would I pay tax in Ireland simply because the property is there when I don't live there or work there. If revenue wanted it that simple they would make it so. Nor could I use a structure like this without Revenue recently declaring that income from such businesses is considered trading income rather than rental income - which has put a lot of people at a disadvantage (i.e losing out on their rent a room relief). By declaring it trading income they are inviting people to incorporate and trade!

Do you think Revenue should be allowed have their cake and eat it? If it makes you feel any better, I'm already absolutely hammered on tax.

Can anyone actually answer the original legitimate question?
 
Actually, you had it right until the very last part.

The "fair chunk" of what I'd have paid in taxes in Ireland I want to extract to the offshore jurisdiction WHERE I LIVE and where I will be running the "AirBnB or similar" business from. From that offshore company I'll pay myself a salary (and be subject to the income tax (albeit at a lower rate of income tax than Ireland) in that jurisdiction).

It's smart tax avoidance which in this case is not even morally questionable. It would be different if the structure was artificial in that I didn't live and operate the business from offshore. In fact, why would I pay tax in Ireland simply because the property is there when I don't live there or work there. If revenue wanted it that simple they would make it so. Nor could I use a structure like this without Revenue recently declaring that income from such businesses is considered trading income rather than rental income - which has put a lot of people at a disadvantage (i.e losing out on their rent a room relief). By declaring it trading income they are inviting people to incorporate and trade!

Do you think Revenue should be allowed have their cake and eat it? If it makes you feel any better, I'm already absolutely hammered on tax.

Can anyone actually answer the original legitimate question?

But who owns the property?

And who is conducting the trade?

I presume you the individual own it, so you'll be doing very well to stand up an argument that you are letting it to your own BVI company to operate a holiday rentals trade, at a rent which is a fraction of the turnover of that business...
 
Yes I own it individually.

I don't think Revenue or anyone else has the authority to examine who I let my own property to and for how much - that's a private agreement and I'm completely entitled to do what I want with it.

It boils down to Revenue taxing gains in Ireland and the real trading is happening offshore.

I lose my CGT exemption by renting the property for commercial purposes anyway so that's where they get me and that's fine because that's the rules.
 
I don't think Revenue or anyone else has the authority to examine who I let my own property to and for how much - that's a private agreement and I'm completely entitled to do what I want with it.

I'm not sure Revenue will be overly concerned with what you think or don't think...!
 
I lose my CGT exemption by renting the property for commercial purposes anyway so that's where they get me and that's fine because that's the rules.

You lose your CGT exemption by not occupying it as your PPR. What you do with it while living elsewhere is irrelevant.
 
I'm not sure Revenue will be overly concerned with what you think or don't think...!

That's all well and good but Revenue along with every other state body have to operate within their confines. They don't have unlimited powers and rightly so!

That said, I'm more than happy to cooperate with them should they every look into my affairs because, it is all above board. It's a well established way of doing business

Airbnb is now trading income. Fine, then I'll trade. I'm living offshore. Fine I'll set up a company in my jurisdiction and do it that way.

Anyway, you've made your views known so no need to contribute further to the thread - they are judgmental rather than helpful and have no place on a thread asking a legitimate question.
 
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