In this segment of our site we have assembled a practical and detailed compilation of information regarding relevant legislation in a great number of countries around the world in which Mellius specializes, helping companies set up legal entities abroad.
Also, in every country you will find an updated list of relevant tax regulations.
There are two basic types of tax agreements:
1. Double Taxation Agreement (DTA)
2. Tax Information Exchange Agreement (TIEA)
When the rules determined in agreements conflict with relevant national laws of that state, the agreement terms precede local laws.
In this day of globalization and the proliferation of companies with trans-territorial business activities there are many circumstances in which several countries hold rights to impose taxes on individuals, companies, partnerships or any other legal entities.
The Double Taxation Agreement is an agreement between two countries determining their mutual tax settlements, such as tax division, primary and residuary tax rights, terms to reconcile differences in basic tax laws, etc.
The aim of such treaties is the prevention of double taxation in both countries for the same reported income, and thus also removing obstacles and encouraging international investments, as taxation constitutes an important consideration for investors in their decision making.
The need for such treaties arises particularly due to the clash between different tax systems, such as personal vs. territorial taxation, as well as gaps in terminology and definitions (determining who are residents, what constitutes income, what is or is not taxable, etc.)
This type of treaty addresses issues of information exchange between countries, such as when country requests data regarding an individual and/or legal entity for a civil investigation of tax infractions and/or felony investigation.
In contrast to double taxation agreements, that invariably include an article regarding information exchange, this type of treaty constitutes a discrete and particular agreement focusing only on this one issue.
Information exchange is usually conducted within certain discretionary limits, either through the court system or authorized legal forums, but the requesting country need not demonstrate that the person or company in question committed any transgression (in their homeland or elsewhere).
We recommend consulting with an attorney and/or accountant before choosing the area of legal jurisdiction suitable for your new entity.
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