Forbes magazine rates Delaware among the first two tax havens in the world; indeed this small US state with only 900 thousand inhabitants certainly knows how to attract businesses.
Delaware = 0% corporate tax = Offshore
Investing in Delaware means virtually paying no taxes. With an offer of 0% corporate tax, that’s hard to beat. Non-residents of Delaware, who conduct only offshore activities, are only obliged to pay the minimum taxation of 300 euros. Therefore, it is not surprising that most of the companies listed on the United States stock exchange have their headquarters in Delaware.
However, the States are currently looking for ways to limit the transfer of capital to this type of economic zone. One means of achieving this would be to render all transfers that have been made for the benefit of companies located in Delaware non-deductible.
Making the best use of Delaware’s offer
So it would be ill-advised to establish the head office of a holding company in Delaware if this company has been set up to manage activities located in France, because the dividends would not be deductible. A wiser choice in this case would be to reserve the use of Delaware corporations for real estate operations carried out in the United States.
It would also be ill-advised to use a Delaware corporation to carry out an activity for customers who reside in countries that impose a surtax, such as France, Germany, Italy, and others since the local tax authorities (IRS) would most certainly reclassify and reject these invoices that are unsatisfactory in form and substance. The local tax authorities may even go so far as meeting with the director and the beneficiary of the transfer. In short, Delaware’s appeal is mostly geared towards Americans with issues of inter-state taxation rather than Europeans.
Once again, we see the importance of obtaining counsel by a qualified and seasoned professional.