What is this BEPS everyone is talking about?

At Dr Werner & Partner the incorporation of company in Malta is only one aspect of our service – to be honest, from the overall procedures and effort it’s one of the smaller aspect. People ask us “Why don’t you help me with setting up a LTD in Malta, all my business partners have one”. It’s not because we don’t like you as clients, it’s because we know it will not work.

Incorporation of company in Malta often not legally useable

To be clear: The company setup will work, the bank account opening will work, the VAT registration will work and probably even the first months or years of trading will work – but that does not mean

a) that the structure is legally useable and
b) that after 10 years the inland revenue will not want to audit you for the past ten years, which is possible and which has happened.

“To make it work” means that the client has piece of mind and must not fear legal proceedings for tax evasion.

OECD launched BEPS actions

The OECD have just launched 15 actions to combat BASE ERROSION AND PROFIT SHIFTING (BEPS) – basically they are trying to make it much more difficult for people to achieve what people normally trying to achieve with a company setup in Malta: Big savings, no effort, no substance, mailbox companies, no real service, artificial arrangements, no business activity in Malta and so forth. And who can blame them? I honestly understand why the OECD has published the action plan and I hope that countries will implement it quickly and that it will have all the effects it was designed for. It is an intellectual masterpiece and you have to give the authors credit for the astounding reach and complexity of this work.

Only real structures work in Malta

The quint essence though is very simple: “be real”. Companies with a genuine setup (and I am not talking about ticking all legal boxes) but thoroughly genuine have nothing to fear – they might have to regard the compliance burdens of BEPS but in general they are fine.

You find the detailed action plan here: https://www.oecd.org/ctp/BEPSActionPlan.pdf

Yes, it’s very complicated and no, we don’t know everything about it, especially not what the actual pragmatic impact is going to be and what courts make out of it – but we try to stay on top. We can however tell you if and how you should setup a company in Malta – and if you are in the scope of BEPS or not. Don’t just go and setup a company. Speak to someone before and get an honest opinion. Otherwise you will run into trouble sooner or later. Speak to Dr Werner & Partner today.

About Philipp M. Sauerborn

Philipp Maria Sauerborn is a certified tax advisor and expert in International Tax & Blockchain. As CEO of Dr. Werner & Partner in Malta, he has already advised over 3000 clients on their tax situation.

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The above-mentioned article is simply based on independent research carried out by Philipp Sauerborn and cannot constitute any form of legal advice. If you would like to receive further information, please contact us for an appointment.

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