Shell corporation

A letter box entity ( letter -box entity ) is a company that is only a mailbox has at its registered office, while the business to another location, the county seat, is taking place. For reasons of international private law companies would exist primarily in the legal system of common law. On the European continent, Dutch, Swiss and especially Liechtenstein mailbox companies are to be found.

However, the current upheaval in European society conflict of law also allows letterbox companies from all EU and EEA Member States. As a result of the ECJ judgments Daily Mail, Centros, Inspire Art and Seering has Germany the companies validly incorporated under the law of those states recognize, even if the office is situated in Germany. It is Germany thus fails to apply the real seat theory in such cases, according to the companies, if necessary, foreign legal capacity shall be refused as a legal entity.

Traditionally, companies would serve the anonymity and tax planning, but above all the general tax evasion or concealment of money flows. Also, such companies are established for the purpose of fraud or other crimes in countries where no law is to be feared. For many years they allowed especially within the EU to avoid the highly regulated continental legal forms and so, for example, the share capital ( sum of € 25,000 liability establishing a GmbH in Germany ) to save. The legislature tried this design option by the entrepreneurial company ( limited liability) to deal with.

Tax planning and tax evasion

Companies are trying to reduce the tax burden through the involvement of foreign companies or sites at suitable locations. For the fiscal design target tax recognition as a foreign-based company is required. The conditions for tax recognition of a foreign company are not satisfied when these so-called letter box entity ( The international tax law speaks of a society based, as usual, the names are: seat, domicile or intermediate company ) represents. Such companies are, even if a company legally effective foundation exists for tax purposes ignored. The income of a base company attributable directly to its shareholders, the results from the general tax abuse rule of § 42 Tax Code (AO).

From a tax point of view, based company is described by the following components: base companies are usually foreign corporations, since only distinct legal entities, the domestic neither established, nor the place of management who can achieve the purpose of shielding the profits. Because of the intention to use a tax differential, the base company usually has its registered office in a low-tax country. Based companies entertain no appreciable own a business, the business does not go beyond the mere capital assets generally. In general, it is sales, purchasing, financing, patenttransfer or holding companies.

The Federal Fiscal Court (BFH ) went several times the question is when to start from such base companies and an abuse of legal design options pursuant to § 42 AO exists. According to established a supreme court ruling is expected from an offense of abuse of law, if the interposition of shell companies in the form of a corporation lacking economic or otherwise significant non-tax reasons in low-taxed abroad. The absence of economic reasons is usually assumed, if the foreign company has in each case not have its own offices, no suitable telephone and fax connections, no on-site staff and not a business.

Sham companies

As sham companies ( often wrongly known as a front company ), however, a company is called, which does not exist in reality. Performed regularly to the use of the name or address of such company alleged to anonymize or the pretense of seriousness. Sham companies are therefore almost always used for illegal purposes.

Mailbox Bank

For credit institutions in the form of a letter box entity is called a mailbox database.