Fiscal planning has as its main objective to optimize, from a point of view of the tax burden, operations and economic investments.
International tax planning, linked to international economic operations, must not encroach on tax evasion or avoidance, which would obviously be a crime.
At the same time, it is advisable to indicate that it is not forbidden to take fiscally the least onerous way, for proper business management and for a prudent accounting of its company.
The taxpayers therefore, for a healthy balance of their activity, are free to pursue the best possible alternative that leads to greater tax savings.
Otherwise, as also enshrined in the Court of Cassation, an invasion of the field of freedom of business would occur.
The freedom of choice of the best solution to limit tax burdens is recognized not only internally, but also at the European level.
In particular, an economic operation can be said to be elusive when one of the following 3 conditions is true:
- The tax advantage, resulting from the obtaining of refunds or reductions in taxes, is undue.
- There is a circumvention of the obligations or prohibitions provided for by the tax system.
- The subject in question acted in the absence of valid economic reasons.
After this dutiful flouring, we find out why tax planning can save your assets.
How to best manage tax planning
Tax planning is an operation whereby the taxpayer can choose the most appropriate actions to reduce the tax burden.
For a correct business management the choices of corrective actions must be based on certain very important information, ranging from the budget posts to the reporting of losses, up to the taxation of the company and the members.
In this way you will have a complete management control, i.e. an operating system aimed at guiding the management towards the achievement of certain objectives set in the operational planning phase.
In the management control, by measuring certain indicators, the deviation between planned objectives and achievements is determined.
The responsible bodies are then informed of this deviation in order to make appropriate corrective actions.
A valid tax planning, very useful also for accounting, allows you to calculate in advance the taxes (current, anticipated, deferred and advances), thus verifying the adequacy of revenues with the sector studies.
You can manage multiple simulations, taking control of the fiscal impact over the course of the year and comparing the different solutions to choose the least onerous tax management for the company’s budget. The schedule allows you to:
- Perform multiple simulations during the year with projection for the entire exercise
- Develop real-time simulation directly from accounting management and for all systems
- Develop simulation for ordinary businesses directly from budget management
- Capture data from the previous year’s declaration
- Automatically derive data from the financial statements or accounts
- Reporting tax adjustments to the budget
We continue to read the article to understand why tax planning can save you marriage.
What is the double taxation agreement?
One of the most valuable systems to protect its assets is the double Taxation Convention, also known as the Treaty against tax impositions.
This is a particular bilateral agreement between two countries, in which the typology and the amount of taxes which both countries can collect on the income generated by investments and cross-border activities are agreed.
For example, the income generated by a holding company, in a foreign country, as set out in the double taxation agreement will not be taxed twice, but only in one of the countries involved.
The same concept is applied to copyrights, interests, capital gains made and sent through borders and other types of income such as pensions, wages, etc.
In many countries that adhere to the double taxation conventions, some tax benefits are guaranteed to investors from the other contracting country.
For example, where there is an agreement against double taxation, the reduction or total waiver of withholding tax withholds.
A planning against double taxation, well structured, studied and complies with the legislation on the subject, is the right way to optimize the profitability of the company, often combined with the structuring of the capital protection.
Bilateral investment protection agreements
Bilateral investment protection agreements are agreements between two countries, which agree that investors in the other country will not be discriminated against or treated worse than local investors.
The foreign investor will also be able to transfer the profits or proceeds made by the foreign country in his country of origin.
If the activities are carried out in politically or economically unstable countries, the bilateral investment protection agreements will be able to protect the same family investments as they prevent expropriation.
What is aggressive tax planning
If you request financial advice from an accountant, you may have rather “turbid” solutions that do not comply with the law.
We are talking about aggressive tax planning, which takes advantage of the technical characteristics of a tax system, or the inconsistencies between two or more tax systems to reduce the amount of tax due.
There are several schemes proposed by a non-honest accountant to implement this illicit practice, such as double deductions and double non-taxation.
Because aggressive tax planning involves the exploitation of disparities between two or more tax systems, it is clear that this system is mainly practiced by companies with a very high level of internationalization, i.e. by companies belonging to a multinational group.
Among the measures taken by aggressive planning there is profit shifting, which involves the shifting of profits to privileged tax regimes, that is, with a low percentage of tax levy, avoiding to pay taxes in countries where companies put in place substantial commercial transactions.
As mentioned, however, this practice is illegal, and it is increasingly countered by cooperation between States, both in order to harmonize legislative instruments, and to share methods and tools of work between financial administrations.
Now you know why tax planning can save your assets, I advise you to request financial advice from an experienced and reliable accountant to protect in the best way the accounting of your company according to a prudent company management.