Intercompany loan to a EU company

[maximg]

Hi all,

apologies if this was discussed previously, the search was not so helpful.

I have some funds in my Ltd in the UK and I am considering making a business loan to a company (also Ltd) in the Netherlands. Anything to keep in mind when setting it up?

Thanks!

[Lance]

Is the purpose of the loan to reduce tax? If it is then don't do it.

I'm not sure why a UK LTD would want to loan an NL LTD any money. I can see why a UK LTD might buy shares in an NL LTD.

A loan to a LTD is pretty risk IMO.
Make sure it's a good interest rate. I'd want >8% before I'd even consider it. And even then I'd want to know why the NL LTD wouldn't just take an ordinary commercial loan.

[maximg]

Is the purpose of the loan to reduce tax? If it is then don't do it.

Thanks for your response, I should have provided more details:

The purpose is to use a two-company setup as outlined by foxymonkey, but with the second company in the Netherlands - as my current base of activities is there and I expect the situation to stay like this for a few years.

I understand that you would be worried about counterparty risk; in this case I would think it is none as the companies have the same owner. Apart from currency risk, are there other considerations that would make this setup problematic?

[Lance]

Thanks for your response, I should have provided more details:

The purpose is to use a two-company setup as outlined by foxymonkey, but with the second company in the Netherlands - as my current base of activities is there and I expect the situation to stay like this for a few years.

I understand that you would be worried about counterparty risk; in this case I would think it is none as the companies have the same owner. Apart from currency risk, are there other considerations that would make this setup problematic?

I read that article, with increasing scepticism, until I got to "There is no obligation to pay back the loan and I’m the sole director of both companies.".

His growth of 7% is pretty high. How you going to get that?

Other than not using your contractor LTD as a trading company I cannot see what the advantages are here.
And the trading company as a Dutch company just complictes things.

I'm not saying that this is a terrible idea, but I cannot see anywhere near enough detail to understand what the risks and opportunities are.


Let's be very clear..... The guy is selling a book on how to get rich....


EDIT: read a little further and got to "Your company should pay a pension into a SIPP pot which grows tax-free.". This is a woeful lack of detail of what SIPPs are all about. I would encourage investment into a pension, potentially even a SIPP if you know what you're doing.


And the guy's been doing this for just three years :0

Summary: Ignore that site. Do your own reseach and make decisions from a position of knowledge.