You want to run your business, grow in your industry, and at the same time want to protect assets and minimise your tax burden. Thus the need for an investment entity arises. So, advisers suggest #polska fundacja rodzinna [Polish family foundation], #ASI (#alternative investment company), #FIZ (closed-end investment fund), #Polish holding company (PSH) regime, limited liability company under the Estonian CIT regime or other solutions. Before setting up an investment entity, it is worth considering a number of issues.
Before setting up an investment entity, it is worth considering a number of issues.
- What assets would you like to bring to it? Individual entities have restrictions on the exercise of a particular business activity or highly disadvantageous tax treatment for certain assets.
- What will be the sources of your income? Try to estimate how much the income will be. It is important to recalculate well whether an investment entity will be profitable for us, considering different income scenarios.
- You will incur costs not only for setting up the investment entity in question. There are also costs of its maintenance (accounting, auditing, lawyers, valuation, management costs) and liquidation (accounting, auditing, lawyers, taxation on exit from the structure). You should also consider the amount of time you spend on dealing with these issues.
- It is worth checking on the websites of the relevant professional local authorities whether the adviser who contacts you is professionally qualified or just gives such an impression. What is the reputation of the adviser concerned? Advisers can disappear and leave the client with a problem.
- Talk to a number of advisers. If an adviser specialises in a particular solution, there is a risk that they will want to sell their services regardless of whether it is the optimal solution in a particular case. Verify whether simpler and therefore less costly models, sufficient to achieve your objectives, are available.
- Avoid artificial constructions with no business justification. They can be challenged easily.
- Take your time to understand the mechanism of a given solution.
- It is important to remember that the law can change to your disadvantage. This will result in the need to change the structure (which generates costs) or reduce its profitability.
- The competition never sleeps. Reducing or postponing taxation can help leverage your business.
