Mailbox company

Letterbox company ( english letterbox company , base company , nominee company , paper company , shell corporation ; spanish Empresa fantasma , German and mailbox company , base company or offshore company ; Switzerland and Liechtenstein : domiciliary company ) is in the vernacular the term for a after the law of its home country as formal society through registration in a business directory built companies which, although legally exists, but actually no business operates. The mailbox company only pursues the economic purposes of a backer, and this does not appear externally.

General

Internationally very different provisions regarding tax law , the transmission of data to other countries, the company register, the concealment of assets or accounts , money laundering , consumer and investor protection or the implementation of international agreements mean that individual countries provide advantages for certain corporate purposes . In these countries it is advisable to set up letterbox companies or to network them internationally. Even nationally established, nested letterbox company structures can bring tax advantages or serve illegal purposes ( corruption , leakage, etc.).

The internationally very different taxation means that there are high-tax and low-tax countries ( tax havens ). The tax liability is internationally - also in Germany - linked to the domicile (for companies) or domicile ( natural persons ) ( country of residence principle ). To assets or income not in a high-tax country to submit to the tax obligation, trying taxpayers through contracts , their assets and / or income to low-tax countries to shift to resident companies. Since these companies are taxable based on the country of residence principle, they are subject to tax in the low-tax country. Internationally, letterbox companies are also circumventing strict laws on raw material exploitation, environmental protection, finance, but also security and mercenaries in the countries from which the companies originally come. Black tills on mailbox accounts are also used by managers to embezzle corporate funds. In the international art scene, mailbox companies are sometimes used to hide the existence of supposedly lost works of art or the ownership structure of works of art.

According to estimates, 95 percent of the classic letterbox companies have a criminal background, 70 percent of which are said to be organized crime and only 20 percent to tax fraud. The fundamental global offshore wealth associated with this is estimated at US $ 21 to 32 trillion. From an international perspective, many banks, in spite of considerable money laundering concerns, provide offshore companies and letterbox companies with their own accounts or help to disguise money laundering.

In order to be able to act illegally with letterbox companies, anonymous shell companies, companies with imaginary names, foundation-like forms of investment, freedom of form of contracts, lack of judicial documentation (judicial or notarial protocol) during the formation process, the lack of the requirement of substantial company capital for the formation, the possibility of forming the possibility of camouflage by leading charitable organizations, the possibility of "shelf companies", informal mailbox accounts, uncritical registration authorities, provisions for uncomplicated company transfers, the easily feasible back-dating of contracts, the lack of certification requirements for signatures by company bodies and possibly electronic signatures.

Sham directors are used to disguise the true ownership structure of the mailbox company . These appear externally in the company register, although they neither control the business nor the accounts. The mock directors are obliged by law firms not to make any claims, to hand over control to the true owner by power of attorney and to terminate blank (so that the date can be entered later), to open accounts and to hold future general meetings or to prepare annual financial statements. In many countries the real existence of the mock directors is not properly verified. Basically, the mock director is often unknowingly exposed to a great risk because he may be faced with any claims or penalties against the company.

In order to prevent controversial tax-saving models, including the use of letterbox companies, anchoring effective formal requirements and an obligation to notify the corporate consultants, banks, tax consultants and lawyers involved is being developed internationally.

Mailbox companies are often only registered in the local commercial or company register (like the commercial register in Germany ), usually in the legal form of a corporation and thus meet the requirements for legal capacity . Beyond that, however, from a business point of view , these companies do not perform any operational functions ( procurement , production , sales and financing ) or service functions ( company management , human resources , administration , research and development or logistics ); their management is carried out by front men or in personal union. In addition, there is a lack of business premises as well as operating and office equipment , means of communication or personnel , so that an economic activity cannot be carried out at all. Since the postal address has to be deposited with the entry in the register, they are content with a post office box or mailbox , from which their name is derived. At most, an operational function is simulated.

History and origin of the term

Switzerland is regarded as the first tax haven , because with the introduction of strict Swiss banking secrecy in November 1934, it created the conditions for tax evasion through anonymity and low taxes . The Italian banker Michele Sindona - who was said to have ties to the Mafia - founded his first mailbox company, Fasco AG , in Vaduz in 1950 . The US American William J. Gibbons coined the term "base company" in 1957 for companies with the exclusive business purpose of tax avoidance. This was translated in Germany with the term base society , the name of which apparently first appeared in 1961. The basic society probably first acquired a negative connotation in 1964, when it fell into twilight. In June 1965, the state finance ministers in Germany issued a “tax haven decree”, which reacted to the transfer of income and / or assets to tax havens. After the Cayman Islands began with the duty-free sale of luxury goods in 1965 , the Norfolk Island has been the first island to allow letterbox companies since 1966. The Federal Fiscal Court (BFH) used the term base company for the first time in its judgment of July 17, 1968, according to which base companies are bogus companies for the purpose of tax evasion. At the same time, the term “letterbox company” appeared in this judgment. In turn, the term “domiciliary company” was predominantly used in Switzerland and Liechtenstein. In 1978, the “special company tax” payable by these holding and domiciliary companies accounted for 34.4% of total tax revenue in Liechtenstein . When the British Virgin Islands government offered companies to set up mailbox companies in 1984 , the companies made ample use of this in the period that followed. In 2000 there were already 400,000 of them, in 2015 there were 800,000 with just under 29,000 inhabitants. Such permits had already been issued in Vanuatu (1971), Cook Islands (1981) or Antigua and Barbuda (1982). The motive was - as in all tax havens - the improvement of the own economic structure and the generation of additional tax revenues . This succeeded, because the fee income from the establishment of such companies reached 50% of the state income in the Virgin Islands.

In the German-language specialist literature , a basic company, letterbox company or domiciliary company are sometimes differentiated from one another. The Federal Fiscal Court (BFH), which speaks of base companies, then also mentioned the domiciliary company in a ruling from December 1995, for it is "a company without its own staff, without its own business premises and without its own business equipment". For Gernot Brähler, the base company is an independent legal entity founded or acquired by investors based in high-tax countries, whose statutory seat is in a foreign country with generally favorable tax conditions. He wants to distinguish them from mailbox or domiciliary companies because the latter did not have their own staff, no properties of their own and no business operations. While the base company carries out its own economic activity, this is not the case with mailbox or domicile companies. The prevailing opinion in the specialist literature, however, describes letterbox companies as basic companies without their own staff and business premises. It can therefore be assumed that all three terms have the same content. The term base company has established itself under tax law. In Switzerland and Liechtenstein the term domiciliary company is common; it is a legally, economically and commercially independent legal person that carries out an administrative activity but no business activity. The administrative activity is limited to the administration of one's own assets.

species

In 1976 the business economist Lothar Haberstock differentiated between typical and atypical basic society in his habilitation thesis . He made their distinction dependent on economic interests. While the typical base society pursues its economic interests in third countries (i.e. neither in the base country nor in the home country), the atypical base society, on the other hand, has its economic interests in the high-tax country.

Legal issues

The BFH calls them “non-functional base companies”. They have been the subject of the BFH case law since January 1975 . According to settled case law BFH the interposition of base companies have been observed in the legal form of a corporation in low-taxing countries the offense of abuse of rights if this lack economic or otherwise respectable reasons. They fall under the offense of a sham transaction according to § 41 Paragraph 2 AO , the abuse of legal structuring options according to § 42 AO or § 50d Paragraph 1 EStG ( double taxation agreement ). According to Section 41 (2) AO, there is a sham tax transaction if the formal legal arrangements actually do not exist. According to § 42 sentence 1 AO, the tax law cannot be circumvented by misusing the structuring options of the law. According to the established case law of the BFH, there is an abuse of legal structuring options in this sense if a legal structuring is chosen that is inadequate to achieve the desired economic goal, is intended to serve the tax reduction and cannot be justified by economic or other significant non-tax reasons. According to this, a legal structure is generally inadequate which reasonable parties would not choose as unsuitable in view of the economic situation , in particular the economic goal pursued. According to the explanatory memorandum for the law, Section 50 d (1a) of the Income Tax Act serves to specify the principle that bilateral agreements are subject to circumvention. Section 50d (3) EStG excludes the right of a foreign company to tax exemption or tax reduction under Section 44d EStG or under a double taxation agreement, insofar as persons are involved in it who would not be entitled to tax relief if they generated the income directly and for the Involvement of the foreign company for economic or other significant reasons and it does not develop its own economic activity. If income generated domestically is "passed on" by a foreign corporation in order to avoid domestic tax, this also applies if the country of domicile of the foreign corporation is not a country with low taxation. Since the allocation of income is not part of the double taxation agreement, the respective national allocation regulations and thus also § 42 AO apply. A mere mailbox company, which is ultimately exhausted in its formal existence, does not meet the supranational requirements either.

In these cases there is the actual presumption that those who cannot give a convincing reason for the interposition of such a company are pursuing the avoidance of domestic taxation with this arrangement. If income generated domestically in order to avoid domestic tax is "passed on" by a foreign base company in the legal form of a corporation, there may be an abuse of structure regardless of whether the country in which the corporation has its registered office is a low-tax country.

The European company conflict law enables letterbox companies from all EU and EEA member states. As a result of the ECJ rulings on Daily Mail , Centros , Überseering and Inspire Art , Germany must recognize the companies effectively established under the law of these states, even if the administrative headquarters are in Germany. Germany - and all EU member states - are therefore refused to apply the seat theory in such cases , according to which foreign companies may be denied legal capacity as a legal person. One measure to create transparency and to combat illegal business with letterbox companies is the creation of registers of beneficial owners of companies .

Shielding effect

The so-called shielding means that for companies in the high-tax country the tax bases by increasing operating expenses and reduction of operating revenues (due to shifting into the low-tax country) decrease and increase correspondingly in the low control land ( primary screening ). The secondary shielding effect follows when the base company returns the profits accumulated from the primary shielding effect to the economic cycle of the high tax country.

Seat countries

Typical countries where letterbox companies are based are offshore financial centers such as Guernsey , Ireland , Isle of Man , Jersey , Channel Islands , Liechtenstein , Luxembourg or Switzerland (in Europe), in the Caribbean in particular the Bahamas , Barbados , Bermuda , Cayman Islands , Virgin Islands or in Central America Panama .

Legal consequences

If, according to § 42 AO, there is abuse through tax avoidance, the base company is negated for tax purposes, with the result that the income or assets it collects are attributed to the domestic taxpayer as if the base company did not exist ("tax penetration"). The refund of withholding tax 1a Income Tax Act from under § 50d para. Tax office to be refused if it is at the base of society is a purely artificial arrangement, as foreign company neither business premises or staff nor means of communication features and on objective, third party There are no verifiable clues that allow conclusions to be drawn about a “tangible presence” of the foreign company and that it is “real” self-employed. The domestic tax authorities are responsible for proving that it is a "front company". Foreign base companies are subject to unlimited German tax liability if the actual place of management is in Germany ( Section 10 AO).

Mailbox bank

In the case of credit institutions in the form of a letterbox company, one speaks of a letterbox bank .

Web links

Wiktionary: Mailbox company - explanations of meanings, word origins, synonyms, translations

Individual evidence

↑ With 1540 euros to the offshore company. In: DiePresse.com. April 4, 2013, accessed January 8, 2018 .

↑ ^a ^b Hendrik Wieduwilt: Panama Papers: What happened so far . FAZ of April 9, 2016, p. 22.

↑ cf. Isabel Pfaff, War and Oil: How Mercenaries Use Mailbox Companies , in: Süddeutsche Zeitung from April 14, 2016

↑ cf. Peter Richter and Alexander Menden, Panama Papers, are causing unrest in the art market , in: Süddeutsche Zeitung from April 19, 2016

↑ See Klaus Ott, Meike Schreiber, Katharina Wetzel, "What comes to Panama" in Süddeutsche Zeitung of July 21, 2016.

↑ See Markus Mayr, Alexander Mühlauer "Money laundering? So what!" in SZ from February 9, 2017.

↑ cf. Frederik Obermaier / Bastian Obermayer / Klaus Ott / Ulrich Schäfer / Vanessa Wormer , in: A letter box company, please , Süddeutsche Zeitung, accessed on April 14, 2016

↑ sueddeutsche.de: How ordinary citizens provide cheap services for offshore customers

↑ See e.g. B. "Countries want notification of new tax-saving models" in FAZ of December 2, 2016.

^ William J. Gibbons, Tax Factors in Basing International Business Abroad: A Study of the Law of the United States and of Selected Foreign Countries , 1957