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  • What is an “operative agent” and what benefits can I gain from using one?

    Firms that are not resident in the EU – that is, firms who have neither a VAT ID number/tax number nor a representative office in the European Union – have long taken advantage of the fully legal solution of enlisting an “operative agent”.

    Though the concept is quite simple, the legal structure is complex. The enlisting party (principal), who possesses the requisite knowledge and expertise regarding the operations of their business, commissions an autonomous and completely independent company (operative agent) to act as an agent for some or all of their company’s international business activities.

    This type of agreement is used frequently for delivering goods and services to companies located in the EU.

    How do offshore and non-EU companies use an “operative agent”?

    The operative agent enters into commercial agreements with the principal’s customers on the principal’s behalf. Usually, a formal agreement is made between the principal and the operative agent for this purpose. The operative agent receives a set amount of remuneration for the service they provide. All business transactions are carried out by the operative agent under the instruction of the principal.

    The operative agent is a company established in the EU specifically for this purpose and has the requisite VAT ID number, tax number and bank account in the EU country in which it is based. To be accepted by the tax authorities, an operative agent must have been created specifically for the above-mentioned purpose and must have multiple independent principals (among other things). EU countries such as Cyprus or Bulgaria are not suitable as bases for operative agents.

    Example

    Under the principal’s instruction, the operative agent enters a commercial agreement for the purchasing of shirts from a Portuguese shirt manufacturer and the selling of these shirts to an Italian fashion group. The shirts are delivered to a free trade zone for further transhipment. The Portuguese company sends the invoice (for the market value of the shirts) to the operative agent, stating the VAT ID number. Both EU firms have a VAT ID number, which means that the operative agent is not required to pay VAT. At this point, the operative agent sends an invoice to the Italian fashion group. Again, both companies – the operative agent and the Italian fashion group – are registered for VAT in the EU, which means that the VAT does not need to be paid. After the goods have been received and checked, the Italian fashion group transfers the value of the invoice to the operative agent via SEPA transfer, who then uses SEPA transfer to send the shirt manufacturer’s payment to Portugal within a payment period of 60 days.

    The proceeds from this transaction are paid directly to the principal’s account, minus the individually agreed remuneration for the operative agent..

    Fees For Using An “Operative Agent”

    Application for and preparation of agreement (one-off): USD 215.00
    Operative agent commission: according to individual agreement

    Operative Agent Info ARTICLE FROM OUR INSIDER REPORT (01/2016) ON THE TOPIC OF GLOBAL AGENCIES

    Did you know that existing offshore and non-EU companies can operate “incognito” in Europe in a fully legal way?

    No?

    In today’s article, you’ll learn what the term “global agency” refers to, how such an agency is used to best effect and what advantages it can offer your firm.

    A global agency – also known as an operative agent – is an EU firm founded specifically to transact business on behalf of a non-EU or offshore firm. To enable it to fulfil this purpose, it has a valid VAT ID number, a tax number, a business premises and a bank account in the EU country in which it was founded.

    To be accepted by the tax authorities, an operative agent must have been created specifically for the above-mentioned purpose and have multiple independent principals (among other features.)

    Firms that are not resident in the EU – that is, firms who have neither a VAT ID number/tax number nor a representative office in the European Union – have long taken advantage of the fully legal solution of enlisting an “operative agent”. This protects their identity whilst enabling them to conduct international (particularly Europe-based) business transactions that are recognised under fiscal law.

    Though the concept of a “global agency“ is simple, the legal structure is complex.

    Upon the written instruction of the principal (e.g. an offshore company), the operative agent / global agency enters into a contractual agreement with the principal’s customer. The principal, who possesses the requisite knowledge and expertise regarding the operations of their business, retains executive power over this contractual relationship.

    The principal’s instructions to the global agency take the form of a formally concluded agreement between the two parties.

    This agreement serves to ensure customer protection and mutual adherence to the obligation of confidentiality. It also establishes the operative agent’s level of remuneration and defines the exact nature of their role.

    In return for providing this service, the operative agency receives a single one-off payment per transaction, with the amount dependent on the value of the contract. For this amount, the operative agents agrees, at the principal’s instruction, for all associated transactions to be conducted through them, for payment to be received by them and forwarded to the operative agent, etc.

    A GLOBAL AGENCY AFFORDS YOUR COMPANY DISCRETION AND FLEXIBILITY

    Regardless of where your company is resident – starting now, you can have access to any economic area!

    Today’s insider tip isn’t just well-suited for business between offshore and European firms – operative agents can exist in any other shape or form imaginable.

    Let your creativity run wild and get in touch! We guarantee that the Privacy Management Group’s global agency service will offer your firm advantages you never thought were possible.

    Offshore Insider Report 2020

    This report and other useful content will be available soon in English. Please enter your email to be notified when they are.

    I have read and agree to the Data Protection Declaration, as well as the General Terms and Conditions.

    Legal Notices

    Privacy Management GroupFZ-LLC regularly checks and updates the information on its websites. Despite all due diligence, it is possible that some facts have changed in the meantime. It is therefore not possible to assume liability or provide any guarantee as to the relevance, completeness or correctness of the information provided. The same applies for all other websites that are accessed through the hyperlinks provided. Privacy Management GroupFZ-LLC is not responsible for the content of websites that are accessed through these links. Furthermore, Privacy Management GroupFZ-LLC reserves the right to make changes or additions to the content provided. In addition to the content and structural copyright protection rights of Privacy Management GroupFZ-LLC websites, the reproduction of information or files, in particular the use of texts, extracts or images, is prohibited without the prior written consent of Privacy Management GroupFZ-LLC.

    None of the content on any of the Privacy Management GroupFZ-LLC web pages represents an individual recommendation nor is it to be understood as an invitation to trade, default or purchase. Privacy Management GroupFZ-LLC also explicitly points out that you should seek advice from experienced tax consultants and/or lawyers, in particular for any cross-border activities. In principle, any income generated domestically or internationally is subject to taxation. It is solely your responsibility to fulfil your domestic and/or international tax obligations appropriately. Privacy Management GroupFZ-LLC does not accept liability under any circumstance. Additionally, our General Terms & Conditions as well as our Data Protection Provisions and Legal Details apply.

    Asset Protection

    CFC-Management-Services

    The taxation of companies on an international level generally follows the principle of decision-making power. A company is thus taxable in the country where ‘Management & Control’ is exercised. In general, international authorities assume that ‘Management & Control’ of a company is exercised in the same country where the general manager/director resides.

    Therefore, if you live outside of Panama, it makes sense to have at least local managing directors/directors in Panama. The level of authority of these Nominee-Directors can be determined individually according to personal needs and legal requirements.

    In addition, in most cases at least one foreign business address or even a foreign business premise is required. For this, we offer appropriate packages, with which this can be verified.

    Note: It is of course also possible to hire local managing directors instead of using nominee directors, should you prefer to do so. We are happy to advise you on the one-off and running costs upon request!

    Annual fees are only due after the first 12 months

    The annual fees are not due for payment until 12 months after the formation of your company in Panama. In the following years the settlement of the annual fees follows a 12-month cycle.

    For example: You establish a company in Panama on 14.07.2019. The start-up fees already include all the costs for the first year, with the exception of costs for optional services. After 12 months, at the latest on 14.07.2020, the annual fees for your company in Panama are due for payment (plus any optional services). Subsequently, the payment date recurs every year on 14th July at the latest.

    Renewal of the management fee annually USD 740.00
    Registered agent annually USD 245.00
    Registered office annually USD 245.00
    Corporate franchise fees annually USD 300.00
    annually

    Annual fees are only due after the first 12 months

    The annual fees are not due for payment until 12 months after the formation of your company in the Seychelles. In the following years the settlement of the annual fees follows a 12-month cycle.

    For example: You establish a company in the Seychelles on 14.07.2019. The start-up fees already include all the costs for the first year, with the exception of costs for optional services. After 12 months, at the latest on 14.07.2020, the annual fees for your company in the Seychelles are due for payment (plus any optional services). Subsequently, the payment date recurs every year on 14th July at the latest.

    Renewal of the management fee annually USD 190.00
    Registered agent annually USD 210.00
    Registered office annually USD 210.00
    Corporate franchise fees annually USD 190.00
    annually

    CFC-Management-Services

    The taxation of companies on an international level generally follows the principle of decision-making power. A company is thus taxable in the country where ‘Management & Control’ is exercised. In general, international authorities assume that ‘Management & Control’ of a company is exercised in the same country where the general manager/director resides.

    Therefore, if you live outside of the Seychelles, it makes sense to have at least local managing directors/directors in the Seychelles. The level of authority of these Nominee-Directors can be determined individually according to personal needs and legal requirements.

    In addition, in most cases at least one foreign business address or even a foreign business premise is required. For this, we offer appropriate packages, with which this can be verified.

    Note: It is of course also possible to hire local managing directors instead of using nominee directors, should you prefer to do so. We are happy to advise you on the one-off and running costs upon request!

    CFC-Management-Services

    The taxation of companies on an international level generally follows the principle of ‘location of decision-making power’. A company is thus taxable in the country where ‘Management & Control’ is exercised. In general, international authorities assume that ‘Management & Control’ of a company is exercised in the same country where the general manager/director resides. .

    Should you intend not to take on the position of local manager/director, despite having an investor visa, we can provide you with the appropriate trustee-service that will manage this position for you – a nominee is a natural person residing in the UAE. Similarly, should you not wish to officially appear as a shareholder of your Freezone-company in RAK, even in this case we can satisfy your requirements through the use of an appropriate Nominee-company. Let’s talk about it, we are at your disposal!

    CFC-Management Packages

    The international CFC-Rules are of particular importance when a Panama company wants to, for example, send invoices to companies based abroad.

    Each country implements CFC-Rules on a national and individual basis and thus makes different demands on the substance and structure of a foreign company. For the benefit of your customers, business partners and contractors and with the aim of not losing them, for example through ‘denied business expenses’ in your country of residence, you should adapt your company to international standards. In regards to this we can support you with one of our management packages.

    CFC Management Packages

    The international CFC-Rules are of particular importance when a Seychelles company wants to, for example, send invoices to companies based abroad.

    Each country has implemented the CFC-Rules on a national and individual basis and thus makes different demands on the substance and structure of a foreign company. For the benefit of your customers, business partners and contractors and with the aim of not losing them, for example through "denied business expenses" in your country of residence, you should adapt your company to international standards. In regards to this we can support you with one of our management packages.