Factors to consider
The main factors to consider before choosing a tax jurisdiction are the judicial system of the country, banking, costing and the culture of the jurisdiction. There are also other factors to consider which are explained in more details in the incorporation section of our website however these factors will determine the quality and ease of your conduct of business.
It is very important to select a jurisdiction with a fair, strong and efficient judicial system. This is because very often shareholders dispute and in some cases a court decision must be obtained to resolve such disputes. If the court is fast and efficient such disputes are resolved and the company will continue its operations smoothly. If however court proceedings take a long time to be completed then this may have a negative impact to the operations of the company.
Another major consideration and of paramount importance, is whether or not the jurisdiction belongs within the European Union. If for instance a shareholder or a director wants to dispute a local court decision taken by the courts of Malta or of Cyprus then the company can apply to the European Court of justice. On the other hand, if a company is been established in the UAE, let's say in Dubai for instance, it is less likely that such a local court decision is challenged.
Following the global war against terrorist activities and money laundering, the banking requirements especially within the European Union have becomes stricter. As a result, money coming in from all jurisdictions are more thoroughly examined by the banks which needs to be satisfied over the origin of funds and the commercial sense of the transactions. Therefore the banks may request supporting documentation for such transactions including the preparation of audited financial statements. Therefore, even though a jurisdiction does not demand such audited or management information to be prepared or filed locally the European Banks may request such information. Therefore, the cost of the maintenance of the company increases as a result.
Consequently, it is very important to consider the banking transactions the company will have with other counter-parties and where their banks are located to avoid unnecessary delays, frustration and costs as a result.
When it comes to costing, it must be broken down into two parts. Incorporation cost and maintenance cost. Incorporation cost is straight forward as the majority of jurisdictions cost fairly the same with the most expensive jurisdiction been more expensive by app. Euro 1,300.
Similarly the local disbursements for the initial set up may vary but they are not significant to justify further analysis as the more expensive jurisdictions may vary by Euro 500. The important cost is the post incorporation cost which varies depending on the service providers or local registered agents schedule of fees. As a result, such a comparison can not be accurately be prepared.
However it is safe to assume that a high cost of living jurisdiction such as the Netherlands would be a more expensive jurisdiction to maintain an IBC than a smaller county in Belize Cyprus or Malta. If for instance the IBC requires audit and legal services
following a bank request of additional information, it is safe to assume that this incremental cost is expected to be much lower in Cyprus and in Malta than in the Netherlands. Similarly disbursements (government fees) for the creation of government documents or the apostilations of such documents are also expected to be lower in the Seychelles or Belize for instance than Luxembourg.