Tax planning

Tax planning is a process through which various possibilities are sought to determine if, when and how to conduct business transactions in order to eliminate taxes or lower their amount. As a taxpayer, every person has the right to take full advantage of the means provided by law to reduce the tax burden.

There are two internationally recognized terms – tax evasion and tax avoidance. The former does not refer to tax planning, but rather simply not paying them. This is known as tax fraud – using illegal means to achieve the result. Tax avoidance means reducing the taxable amount to the legal minimum using only the incentives provided by valid laws.

Tax planning also applies to submitting a joint income tax return for spouses if one of them is unemployed. As a result taxable income is reduced by the rate exempt from income tax of two spouses.

There are various tax planning strategies applied in the world, some of them are targeted at individuals, but most of them serve the needs of businesses. Irrespective of the strategy, it is based on one or several of the following aims:

• reduction of tax burden
• reduction of tax rate
• the time of making a transaction in order to reduce taxes
• the application of potential tax incentives

In order to put together an effective strategy for reducing tax, individuals as well as businesses need a revenue forecast for the next few years. It is necessary as the reduction of tax burden at a company level increases the potential income at an individual level. The more accurate the forecast, the easier it will be to put together a tax strategy.

The tax laws of various EU member states include a number of tax incentives. Due to the EU directives, decisions and opinions of the European Court of Justice, tax agreements and tax laws of member states it is possible to save considerable sums by using different companies of various countries. Without exaggerating, we can tell you that using different companies from different member states in your tax planning it is possible to save as much on tax expenditure as it was with offshore companies in the past. The only difference is that you do not have to hide anything from the Tax Board. You just have to follow the advice professionals give you.

Together with foreign law firms and tax consultants we have put together tax solutions that have remained successful to this day.