ECOVIS Kanzlei Mag. Thomas Hosp
Tax consultants in Liechtenstein
We were founded as a tax consultancy firm in Liechtenstein in 2005 and specialise in international tax law issues. Through a team of specialists, we are able to offer comprehensive and coordinated tax solutions involving the countries of Liechtenstein, Switzerland and Austria from a single source.
- Enforcement of legal rights (support during tax audits, initiation of legal remedies)
- Corporate tax planning
- Individual tax planning
- Foundation taxation
- Agreement of tax rulings
- Sales tax / value added tax
- Tax compliance
- Advice on disputed legal proceedings – if others are at a loss to know how to proceed
- Preparation of second opinions, expert opinions
International tax, audit, accounting and legal news
ECOVIS STLex with ETS Global in European business development24.03.2023
Educational Testing Service (ETS) is a non-profit organization founded in 1947 in the United States.
In 2001, ETS set up its European headquarters in the Netherlands in order to promote ETS testing, build and strengthen relationships with education and assessment leaders in Europe, and offer customized assessments.
The mission of the group is to promote quality and equity in education.
ETS develops, administers, and evaluates more than 50 million tests a year-including TOEFL® and TOEIC® tests, GRE® General and Subject tests, and Praxis® tests-in more than 180 countries, in more than 9,000 locations worldwide and conducts educational research, analysis, and policy studies and develops a variety of customized services and products for teacher certification, English language learning, and elementary, secondary, and post-secondary education.
The group is pursuing its international growth and development plans with the aim of increasing its presence and markets in various European countries.
In 2022 ETS Global BV decided to develop the business in Italy.
ECOVIS STLex has developed specific experience in supporting international companies in their expansion and operational development on the Italian territory by providing customised solutions of integrated multi-professional consulting and services such as: tax, audit, legal, accounting, payroll, corporate in a one stop shop logic with a focus on customisation and attention to detail.
There was therefore a perfect match of client expectations in terms of extending the range of services and the precision and timeliness of the professional partner’s response. Therefore, as of 2022, the team coordinated by the partner Emilio Martinotti was able to support ETS in the study and implementation of the most effective and efficient legal, accounting, tax and labour solutions to strengthen ETS’s presence in the territory.
ECOVIS STLex team is very knowledgeable and, like us, embraces innovation and digitization of accounting administrative processes. We get along very well because they help us find effective solutions for our needs and for the development of our business in Italy.Roman Magdik (Executive Director Tax & Finance at ETS Global BV)
ETS Global, already a customer of ECOVIS in Italy and Poland, satisfied with the support received so far, is continuing to grow in EMEA region and has decided to engage the ECOVIS network for its expansion into Spain, Germany and Dubai.
Tax return in Honduras: Everything you need to know23.03.2023
In Honduras, tax filing is a mandatory process for all individuals and legal entities that generate income. In this article, we will explain everything you need to know to comply with this tax obligation.
Who is required to declare taxes in Honduras?
All individuals and legal entities that generate income in Honduras are required to declare taxes. This includes independent workers, businessmen, professionals, landlords, among others.
What taxes must be declared in Honduras?
The main taxes to be declared in Honduras are:
- Income Tax (ISR)
- Sales Tax (ISV)
When should tax returns be filed in Honduras?
The fiscal period in Honduras is from January 1 to December 31. The deadline to file the ISR tax declaration is April 30 of the year following the fiscal period, the ISV tax declaration is the 10th of the month following the completion of the sale.
How is the tax return filed in Honduras?
The tax declaration is filed online through the online portal of the Honduras Revenue Administration Service (SAR), or in preprinted format at the country’s bank windows.
What documents are needed to file the tax return in Honduras?
The documents needed to prepare and file the tax return in Honduras are:
- Statement of income
- Balance sheet
- Proof of expenses and invoices
What are the consequences of not filing the tax return in Honduras?
Failing to file the tax return in Honduras can have serious consequences. Sanctions include fines, interest and even legal proceedings.
How can we help you?
In our company, we offer advisory services and preparation of tax returns in Honduras. We make sure that our clients comply with their tax obligations in a timely and efficient manner, avoiding sanctions and legal problems.
In addition, we offer accounting and financial consulting services for companies and individuals in Honduras. Our team of highly trained professionals handles all financial aspects of your business, so you can focus on what you do best.
Tax declaration is a mandatory process in Honduras for all individuals and legal entities that generate income. At our company, we offer tax return preparation and advisory services to ensure that our clients comply with their tax obligations in a timely and efficient manner.
If you need help with your tax return or have questions about our services, don’t hesitate to contact us.
Tax and Legal Director
Tax and Legal Director
Setting up a Business in India for Foreign Companies17.03.2023
Given India’s rapidly growing market, the country’s investment potential has enticed a slew of foreign companies to establish their presence in India. Over the last few years, initiatives have been taken to ensure that establishing a business in India is more straightforward and foreign companies are encouraged to invest in the country.
Foreign investment in India is governed by the Foreign Direct Investment (FDI) policy announced by the Government of India and the provisions of the Foreign Exchange Management Act (FEMA) 1999. The Reserve Bank of India (RBI) has issued a notification which contains the relevant regulations. Foreign investment is freely permitted in almost all sectors. Foreign Direct Investments (FDI) can be made under two routes—the Automatic Route and the Government Route. Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the RBI or the Government of India for the investment. Under the Government Route, approval by the Foreign Investment Promotion Board (FIPB), the inter-ministerial body responsible for processing FDI proposals and making recommendations for Government approval, is required.
Foreign investment in any form is prohibited in a company, a partnership firm, a proprietary concern or any entity, whether incorporated or not (such as Trusts) which is engaged, or proposes to engage, in the following activities:
- Business of a chit fund, or
- A nidhi company, or
- Agricultural or plantation activities, or
- Real estate business, or construction of farm houses, or
- Trading in Transferable Development Rights (TDRs).
Please note that real estate business does not include the development of townships, construction of residential/commercial premises, roads or bridges. To further clarify, partnership firms/proprietorship concerns having investments as per FEMA regulations are not allowed to engage in the print media sector.
In addition to the above, investment in the form of FDI is also prohibited in certain sectors such as:
- Retail trading.
- Atomic energy.
- Lottery business.
- Gambling and betting.
- Agriculture (excluding floriculture, horticulture, development of seeds, animal husbandry, pisiculture and cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agriculture and allied sectors) and plantations (other than tea plantations).
Mode of Investment
Indian companies can freely issue equity shares / convertible debentures and preference shares subject to valuation norms prescribed under FEMA regulations. Issue of other types of preference shares such as non-convertible, optionally convertible or partially convertible are considered debt. As such, the guidelines applicable for External Commercial Borrowing (ECB), viz. eligible borrowers, recognised lenders, amount and maturity, end use stipulations and so on, will apply to such issues. Since these instruments are denominated in rupees, the rupee interest rate will be based on the swap equivalent of the London Inter-Bank Offered Rate (LIBOR) plus the spread permissible for ECBs of corresponding maturity. As far as debentures are concerned, only those which are fully and mandatorily convertible into equity, within a specified time would be reckoned as part of equity under the FDI Policy.
Business Structure Allowed
We look at a few important facets of available structures in India.
A foreign company can begin to establish a business in India by incorporating/registering or by establishing a liaison, project or branch office in India. To have a permanent establishment in India, a foreign company or national can either form a private limited company in accordance with the Act or form a limited liability partnership as per the provisions of the Limited Liability Act, 2008.
Following are the entry strategies for foreign companies to establish a legal presence in India:
Foreign companies can establish a business by forming a strategic partnership with business entities in India. International joint ventures have become essential wherein two business entities join forces to achieve a commercial objective. Joint ventures are becoming the ideal way to enter industries where 100% of FDI is not permitted in India.
Joint ventures are a relatively a low-risk route opted for by foreign companies wishing to enter the Indian market, provided these companies conduct appropriate due diligence on the Indian partners prior to forming an alliance. It allows the foreign investor to benefit from the Indian partner’s established market and consumers, distribution channels, local know-how and management.
Wholly Owned Subsidiary
By allowing foreign companies to establish wholly-owned subsidiary companies in India, the Indian market provides a convenient and beneficial business environment for these foreign entities. Foreign companies can set up wholly-owned subsidiaries by making 100% FDI in India through an automatic route (as defined previously) subject to the provisions of the Reserve Bank of India (RBI), Foreign Exchange Management Act, 1999 and the Act.
Requirements for Establishing a Company in India
Forming a new company provides flexibility and freedom as it can be structured in accordance with the requirements, objectives and obligations of both parties. A private limited company must have at least 2 (two) shareholders, while a public company should have at least 7 (seven) shareholders. Under the Act, it is a mandate that at least one director of every company is a resident of India [any person who has lived in India for more than 186 (one eighty-six) days is considered an Indian resident]. For a company to be registered, it must have an address in India. The legal jurisdiction applicable to the company will be determined by the city in which the company’s registered office is located.
Foreign companies can choose to establish a company with three directors, two being foreign nationals from the parent company and as a legal mandate, one being an Indian citizen. Further, as there is no requirement for minimum shareholding by the Indian director, foreign companies or nationals have the freedom to hold 100% of the shares of the Indian company.
For a foreign company to establish a temporary presence in India, a branch office is an effective strategy. The branch office is an extension of a foreign company and can engage in commercial business as a representative of the parent company.
Businesses keen on setting up a branch office should meet the following criterion as prescribed by the RBI:
- The applicant must be a body corporate incorporated outside India;
- The net worth of the parent company must not be less than USD 100,000 or its equivalent;
- The parent company should have a profit-making record during the immediately preceding five financial years in the home country.
Once established with the prior approval of the RBI, a branch office may remit profits of the branch outside India, subject to RBI guidelines and applicable taxes. Companies incorporated outside of India that are involved in manufacturing or trading are permitted to set up branch offices in India with the prior approval of the RBI. These branch offices are allowed to represent the parent company in India and carry out activities including, but not limited to, the following:
- Export/import of goods.
- Rendering professional or consultancy services.
- Promoting technical or financial collaborations between Indian companies and parent companies.
- Representing the parent company in India and acting as buying/selling agent in India.
A liaison office serves as a communication link between the parent company, principal place of business or head office and entities in India, but it does not engage in any commercial, trading, or industrial activity, either directly or indirectly, and is restricted to gathering and providing information to potential Indian consumers.
Businesses wanting to set up a liaison office should meet the following criterion as prescribed by the RBI:
- The applicant must be a body corporate incorporated outside of India.
- The net worth of the parent company must not be less than USD 50,000 or its equivalent.
- The parent company should have a profit-making record during the immediately preceding three financial years in the home country.
Liaison offices are not allowed to undertake any business activity or to earn any income in India. The expenses of liaison offices are covered through inward remittances of foreign exchange from the head office outside India.
As the name suggests, project offices are established by foreign companies to execute specific projects as per contracts to represent the parent company’s interests in India.
The RBI has granted general permission to foreign companies to establish project offices only if they have secured a contract, to execute a project in India, from an Indian company and subject to the following conditions:
- The project is funded directly by inward remittance from abroad; or
- The project is funded by a bilateral or multilateral international financing agency; or
- The project has been cleared by an appropriate authority; or
- A company or entity in India awarding the contract has been granted a term loan by a public financial institution or a bank in India for the project.
The RBI has given general permission for setting up project offices in India if the above-listed criterion is met. However, if the listed conditions are not met, the foreign company must approach the RBI for approval.
Analysis of Differences Between Liaison Office, Branch Office & Wholly Owned Subsidiary
|Basis||Liaison Office [LO]||Branch Office [BO]||Wholly Owned Subsidiary (WOS)|
|Meaning||A Liaison Office [also known as representative office] can undertake only liaison activities i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot have any income in India.||Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to setup Branch Offices with specific approval by the RBI. Normally, the Branch Office should be engaged in the activity of the parent company.||An incorporated entity formed and|
registered under the Companies Act, 1956. It is a distinct legal entity, apart from its shareholders.
|Permitted Activities||As per its ‘main objectives’ stipulated in the Memorandum of Association subject to Indian regulations.|
|Criteria for set up||A private company is required to be incorporated with a minimum authorised & paid up capital of INR 100,000 and minimum two subscribers. No requirement of track record of parent company as shareholder|
|Typical Terms of approval||A private company is required to be incorporated with a minimum paid-up capital of INR 100,000 and minimum two subscribers. Broadly, it:|
The conditions will be different for Public Limited Companies.
|Time limit of approval||Normally 3 years from the date of approval.||Normally 3 years from the date of approval.||Until the company decides to close down.|
|Basic Registration||The following registrations / approvals will be required:||The following registrations / approvals will be required:||The following registrations / approvals will be required:|
parent company/Head office
|Parent company’s liability is unlimited for all acts and omission of LO.||The liability of the Branch is unlimited. The assets of the parent company are at risk of attachment in case the liabilities of the branch exceeds its assets.||The liability of the Parent company is limited to the extent of its shareholding in the WOS. The assets of the foreign company are not subject to any attachments.|
|Permitted Incomes||The entire expenses of the LO in India will be met out of the funds received from Head Office through normal banking channels.|
There will not be any income of the LO.
|The entire expenses of the BO in India will be met either out of the funds received from Head Office through normal banking channels or through income generated by it in India.||All income arising out of its business activities.|
|Indian Income Tax||Since there is no income accrual, there is no income tax.|
LO is required to file information in Form 49C with the Income Tax Department.
|Since a branch office of a foreign company is taxed as a foreign company in India, it is taxed @ 41.2% or 42.23% if the taxable income exceeds INR 10,000,000 during any financial year (FY).||Any Indian company is taxed @ 30.90% or 33.99% if the taxable income exceeds INR 10,000,000 during any financial year (FY).|
|Payment of Dividend to Parent||Cannot pay dividend.||Dividend/surplus distribution to Parent is tax free subject to normal tax in India||Dividend can be paid & now shareholders need to pay tax.|
|Management||LO is managed by Authorised Representative, resident in India (Country Manager)||BO is managed by Authorised Representative, resident in India (Country Manager).||Minimum two directors (can be foreign national, no need to be resident in India).|
a. Statutory Audit
|Financials would be liable for statutory audit by a chartered accountant.||Financials would be liable to statutory audit by a chartered accountant.||Financials would be liable for statutory audit by a chartered accountant.|
|b. Internal Audit||Not Applicable.||Not Applicable.||Applicable, subject to conditions. Paid up capital + free reserves exceeding certain limits.|
|c. Tax Audit||Not Applicable||Applicable for cases where turnover exceeds INR 4 million. Non compliance would result in a penalty @ 0.5 % of the total turnover or INR 0.1 million, whichever is the lesser amount.||Applicable in case of turnover exceeding INR 4 million. Non compliance would result in a penalty @ 0.5 % of the total turnover or INR 0.1 million, whichever is the lesser amount.|
|Transfer Pricing||Not Applicable||Applicable||Applicable|
|Annual Compliance |
|b. Meeting||Not Applicable.||Not Applicable.||Board – One meeting per quarter.|
Shareholder – One meeting per year.
|Remittance of Profit to Parent company||None, except upon closure of LO.||Profits can be freely repatriated to the Parent Company subject to payment of applicable taxes.|
|Borrowing||Not allowed||The BO is not allowed to borrow locally unless given prior approval by the RBI.|
Various factors are to be considered before choosing the best strategy for establishing a business in India including, but not limited to, the due diligence of the Indian partners, exit strategies, Indian laws and regulations, and operational issues such as connectivity, employment and state-wise regulations. Additionally, the preferred path for a foreign company to establish a presence in the Indian market will also depend on the company’s specific requirements, such as the size of its operations, expansion and commercial goals.
For any questions or advice about establishing a business in India as a foreign company, please get in touch with us at email@example.com.
ECOVIS RKCA, India