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Cross-border advisor Switzerland <> Singapore

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MrNollid
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Joined: Thu, 11 Jun 2020 8:31 pm

Cross-border advisor Switzerland <> Singapore

Post by MrNollid » Thu, 11 Jun 2020 8:44 pm

Hi All,

I work for a small firm (w/o HR support) and will be moving soon to Singapore from Switzerland and am looking for an "relocation advisor" (local PwC or so) that has cross-border experience for relocations from Switzerland in order to advise me and my firm on how to best structure this move on a financial level (tax, social-security, who shall be my employer: the Swiss and/or the SG entity, etc.). We are already been advised for local procedures e.g. work permit etc. so I am looking specifically for an advisor with cross-border knowledge between Switzerland and Singapore.

Any input would be highly appreciated. Many thanks in advance.

Best regards
Julien

Myasis Dragon
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Joined: Wed, 05 Feb 2020 7:13 am

Re: Cross-border advisor Switzerland <> Singapore

Post by Myasis Dragon » Fri, 12 Jun 2020 12:43 am

MrNollid wrote:
Thu, 11 Jun 2020 8:44 pm
Hi All,

I work for a small firm (w/o HR support) and will be moving soon to Singapore from Switzerland and am looking for an "relocation advisor" (local PwC or so) that has cross-border experience for relocations from Switzerland in order to advise me and my firm on how to best structure this move on a financial level (tax, social-security, who shall be my employer: the Swiss and/or the SG entity, etc.). We are already been advised for local procedures e.g. work permit etc. so I am looking specifically for an advisor with cross-border knowledge between Switzerland and Singapore.

Any input would be highly appreciated. Many thanks in advance.

Best regards
Julien
You will not find any "relocation advisor" worth a damn unless you contract with PWC or equivalent. That will be very expensive, especially as these firms are geared towards large companies. And, I don't think you need to do that. Most local accountants and lawyers can advise you of Singapore law and practice but are clueless when it comes to cross-border questions. Thus, you need to pick and choose.

Note: I established my primary business in Singapore. I opened wholly owned subsidiaries in Malaysia, Thailand, and Hong Kong. I created a taxation entity in Australia. My comments here stem from my experiences.

You will always work for your Singapore registered entity. You cannot have a work permit in Singapore without have a Singapore legal business entity apply for your work permit. And you cannot work in Singapore without a work permit.

You will be considered tax resident in Singapore for all personal income tax purposes, and Switzerland will also honor that arrangement. Google "Singapore Sweden tax treaty" to get the details. In general, where you live and work is where you pay personal taxes.

You can be paid by the Swiss firm. You can be paid by the Singapore firm. You can have your money deposited into a Swiss bank or a Singapore bank or a Malaysian bank or the Mississippi River Bank. You can be paid in francs, in dollars, or yen. Neither the source of the money or the bank into which it is deposited makes any difference with respect to your personal tax treatment.

You will be working on an employment pass in Singapore (more on that below). As such, you will pay income tax but will not be eligible or liable for Singapore's social programs, primarily CPF. You will need to check with a Swiss accountant to see what your status is regarding social contributions. I can tell you that, as an American, I could not contribute to social security, even if I wanted to, since I was being paid by a foreign company and filing foreign tax returns.

The vast majority of foreign companies that start a company in Singapore create a private limited with a sole shareholder that is the foreign company. This creates articles of incorporation in Singapore and provides for a number of financial incentives if formed this way. There are two other ways to form a company. A representative office - you won't want this for a variety of reasons. A branch - operates under the articles of incorporation of the foreign company. This is much more difficult to setup, you lose certain financial benefits afforded to Singapore incorporated companies.

You will want to hunt around for a good CPA. My judgment is that Singapore lawyers are ferking useless when it comes to these kind of things. You need to find a CPA who knows how to incorporate a private limited with a foreign company as sole shareholder. It's not that hard to do, but, you will need to deal with the issue of a local director.

And that will be you. Your accountant must also set you up as director of the firm and apply for an employment pass for you. Stay away from the firms advertising easy setup and a rented nominee director. Singapore is inundated with people who think they will create a local company, obtain a work permit, and find an easy way to sneak into Singapore. But, it's not, and the shenanigans that people have used have made it harder for legitimate entities to get started. These companies will insist on being your director, have access to your bank account, approve all contracts... because they have liability for being your director.

Singapore will welcome an established company with a track record when it desires to open a subsidiary in Singapore. You just need to make sure that you don't end up with some lunkhead that can't jump all the hurdles to get it done. It would be advisable to have some sort of business plan, with break even pro forma financials, plus contracts or identified business, to help convince the authorities that you have a legitimate business.

Finally, your Singapore entity is an independent entity from the foreign firm. This means a couple of things are true. First, your corporate profits are taxed at a Singapore rate. Singapore tax exemptions are very generous, and unless you are absolutely making a shitpot of money, you will not pay Singapore corporate tax.

Second, you will need to determine how money is repatriated to your foreign firm, and for this you will need accounting advice in both Switzerland and Singapore. You can repatriate profits, which, as I have noted, will be subject to little or no tax in Singapore. You will need to understand how profits previously taxed in Singapore are handled in Switzerland.

Or, you can repatriate profits in the form of fees, licensing, management services, etc. For example, your Singapore company actually had a profit of $200,000. But, you pay a management fee or a franchise fee or some such to the Swiss company of $200,000 so that you profit goes to zero.

You must look at two aspects of this transaction. Almost certainly, this will be treated as income in Switzerland, to be taxed at the Swiss rate. And, you need to ensure that you are not running afoul of accepted practice in Singapore by reducing your profits to zero. My view is that you will be better off declaring profits in Singapore but I am not familiar with Swiss tax law.

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