International Tax Planning
International tax planning, also known as international tax structures, is one element of international taxation that was created to implement the guidelines of various tax authorities following the global recession of 2008. It allows to minimize the tax burden associated with operations done from and to other territories, through the Tax Treaties as well as multilateral agreements (Direct Tax European Union Directives and VAT Directives) stands out and becomes very useful. Applying these rules together with the internal Law could achieve a significant tax burden reduction that affects every business or specific transaction. These include the avoidance of double taxation and the use of reduced taxation.
In other words, international tax planning supports your organization's business objectives. Through this process, profits remain within your organization, not transferred through taxation. This means increased cash flows that can be used to develop your business and lay the foundation for future activities.
Good planning can also lead to the development of a comprehensive strategy that is used to assess and use international opportunities as they arise.
What are the main areas of tax planning?
Legal double taxation occurs when the same taxpayer with the same income or assets is simultaneously subject to the same or comparable taxes in two or more countries. In the case of economic double taxation, the identity of the taxpayer is abandoned in favor of an economically defined identity. This is the case, for example, if the profits of a foreign subsidiary are subject to taxation abroad and are simultaneously taxable in Spain as an investment income of the parent company.
Reduced taxation occurs when the use of international differences in tax burdens results in a reduction of the tax level compared to the burden in the country of residence. This is achieved by exploiting inter-state tax differentials, differences in international tax systems and incomplete inter-state coordination. A reduction in taxation can thus arise within a group of companies if taxable assets, e.g. in the form of profits, are transferred to foreign subsidiaries, are subject to lower taxation there and are exempted from domestic taxation when distributed to the domestic parent company (transfer prices).
What are the long-term goals?
In addition to main areas, tax planning also pursues a number of qualitative goals, most of which are long-term:
- Fiscal goodwill refers to a company's good reputation with the tax authorities. It can be advantageous in the discretionary decisions of the tax authorities.
- Adaptability is understood to mean the fiscal flexibility with which it is possible to react to changed economic or fiscal conditions through appropriate tax planning.
- The pursuit of security and independence leads to a relative minimisation of tax risks in the form of unexpected tax back payments and sanctions. Due to the increased complexity of international tax planning, adaptability, as well as security and independence, have a high priority.
With this aim, to support and give the best possible advice to our globally active clients we offer the following services in various matters, such as:
- (Inter)national legal certainty.
- The effectiveness of measures to avoid double taxation.
- Representation of international companies with regard to the reimbursement/exemption of withholding tax withheld in Spain.
- VAT and customs law aspects of international trade in goods.
- International assignments to (or from) Spain.
- Financing concepts.
- Study of opening new markets and internationalization of companies: analysis of the more beneficial tax and legal option regarding the investment features.
- Permanent Establishment for VAT purposes and Income Tax purposes and request for Foreigner Identification Number (NIE)
- Setting up subsidiaries for non-residents in Spain or subsidiaries of Spanish companies abroad.
- Foreign subsidiaries of Spanish Companies follow up and tax advice.
- Subsidiaries in Spain of non-Spanish Companies follow up and tax advice.
- Information obligations and filings of assets located abroad (720, D6, ETE, etc )
- Spanish Non Residents Tax Return
- Reporting and special counseling about the FATCA rules and new methods of exchange of information between states
The possibilities for optimizing international tax planning are numerous and individual and vary from case to case. Our team of experts for international tax planning assists Spanish companies with their foreign business transactions as well as foreign companies with their projects in Spain.