Legal Planning and Structuring

What does legal planning and structuring mean?

Legal structuring refers to a category of services that businesses need for several purposes:

Tax optimization (including avoidance of additional tax charges);
The ability to legally conduct business in a specific jurisdiction;
The ability to establish a legal and/or economic presence in a selected jurisdiction;
The ability to obtain a license or other permits in a selected jurisdiction;
Compliance with the legislative requirements of a specific country.

What is the best structure for a business?

There is no single business model that would be ideal for absolutely every type and kind of business.

A corporate structure can be chosen both for special purposes (for example, acquiring a license) and for more convenient day-to-day business management.

For example, a business that is seeking to establish its presence in a third country may benefit from a simpler legal structure than a business whose goal is to optimize taxation for the parent and subsidiaries.

Why bother choosing a new corporate structure if the current one is fine?

Lack of attention to your own business structure increases many risks, including:

Additional tax assessment - regulators may not pay attention or may not even know that the structure of a business allows you to qualify for a preferential regime, receive deductions, and may also assess a tax in each of, for example, two related companies (without a clear structure or if unstructured at all).
Illegality of doing business in the country - for many areas of entrepreneurship, and sometimes independently of them, countries may impose special conditions for legitimate business, sometimes such requirements apply to the structure of both the business itself as a whole, and to a specific company within the business structure. Failure to comply with such requirements can lead not only to a ban on doing business in the country, but also to fines or criminal prosecution.
Legal and/or economic presence in countries that, if such presence is present, impose additional requirements and taxes or, conversely, if such presence is absent, recognize the activity as illegal and impose sanctions.
Slowing down the process of obtaining a license, refusing to issue a license or canceling an existing license in cases where the business structure does not comply with the requirements of the relevant regulator, requires significant clarification to it or has been changed in such a way that it no longer meets legal requirements.
Forced closure of the business.

What countries can you suggest for a good corporate structure?

As stated earlier in the article, there is no optimal corporate structure, therefore, there may not be specific countries in which many different requirements will be reduced to an absolute and will be observed.

The choice of countries will then depend on the criteria that you consider necessary. The Law&Trust International team will then select the optimal jurisdictions for you and offer one or more corporate structure options.

How can corporate structure be improved?

There are many options for changing the corporate structure:

establishing new companies;
merging two or more companies;
merging a company into another;
separating a company from another;
dividing a company into two or more;
liquidating companies;
establishing representative offices or subsidiaries;
creating a holding company or leaving the companies as independent or related/affiliated.

The options mentioned above are rarely used in a single order, i.e. only the separation of a company, only the establishment of a new one, etc. In most cases, several methods are used simultaneously, but the corporate structure is selected for each business individually.

How often do I need to update my corporate structure?

A corporate structure, once it has been approved and all the necessary conditions have been met, generally does not require subsequent updates or changes.

But there are cases when this may be necessary, for example, when expanding a business or when local legislation changes in any of the countries where a legal entity is registered or has a representative office.

Where to start when changing a corporate structure?

Any proper change to a corporate structure begins with consultations. This is necessary to identify the criteria that you consider to be of primary importance, to analyze the entire existing structure, goals, and the legislation of the countries in which the business already is/is planned to be present.

The Law&Trust International team has prepared many successful corporate structures and provides services for their maintenance. When contacting Law&Trust International, we guarantee you a high level of service and will offer you the optimal structure that will be able to meet your requirements.