In the complex and ever-changing business world, fiscal management has become a cornerstone for companies aiming to survive and thrive in the long term. Efficiency in tax burden can unlock essential resources that allow organizations to reinvest in innovation, expansion, and continuous improvement. However, achieving this efficiency requires expert knowledge, strategic planning, and a deep understanding of international tax regulations.
Specialized consultancy can transform a company’s tax burden, and one of the leading firms in achieving this goal is Hart Business Consulting, renowned for its excellence in tax and corporate advisory.
A Spanish retail company managed to reduce its tax burden by about 30% thanks to the intervention of Hart Business Consulting and the collaboration of Carlos Cerezo Arribas. The company operated exclusively in Spain, generating total revenues of €1,584,934. The breakdown of its operational expenses was as follows:
– Operating Expenses: €520,777.50
– Personnel Expenses: €382,390.50
– Other Expenses: €48,072
– Depreciation of Fixed Assets: €95,589
With an operating income of €644,121 and a corporate tax rate of 25%, the company faced a corporate tax of €161,030.25, resulting in a net profit of €483,090.75. The high tax burden limited the company’s ability to reinvest in its growth and improve competitiveness in the market.
Seeking an effective solution, the company approached Hart Business Consulting, known for its expertise in tax and corporate advisory. The strategy devised by Hart Business Consulting focused on establishing a holding company in the United Kingdom.
This entity would manage the intellectual property and trade names of the Spanish parent company, as well as handle institutional advertising. This restructuring allowed the company to shift a significant portion of its profits outside Spain, leveraging the favorable tax advantages of the British tax system. The new tax structure included:
1. Royalties for Intellectual Property: The UK holding would charge the Spanish parent company 6% royalties for the use of intellectual property.
2. Royalties for Institutional Advertising: The holding would also charge 3% royalties for managing institutional advertising.
3. Franchise Consultancy: A fee of €300 per hour for franchise consultancy was established, with a monthly retainer covering up to 10 hours of consultancy.
The implementation of this strategy resulted in a significant reduction in the company’s tax burden. Financial outcomes after the restructuring can be visualized in the following profit & loss statement for the operating subsidiary in Spain:
| Concepts | Amount (Euros) |
| Total income | 1,584,934.00 |
| Operating expenses | -520,777.50 |
| Personnel expenses | -382,390.50 |
| Other expenses | -48,072.00 |
| Depreciation of fixed assets | -95,589.00 |
| Royalties intellectual property | -101,457.00 |
| Royalties institutional marketing | -50,728.50 |
| Franchise consulting | -49,800.00 |
| Financial income | 7,500.00 |
| Financial expenses | -6,347.50 |
| Operational result | 337,272.00 |
| Taxes (25%) | -84,318.00 |
| Net result | 252,954.00 |
Thanks to this structure, the Spanish company was able to transfer a significant portion of its profits to the UK holding, resulting in a reduction of total tax payable from €134,526.25 to €84,318.00, generating savings of €50,208.25, equivalent to a 37.32% decrease in the tax burden. This profit & loss statement for the UK holding reflects that:
| Concepts | Amount (Euros) |
| Total income | 201,985.50 |
| Royalties intellectual property | 101,457.00 |
| Royalties institutional marketing | 50,728.50 |
| Franchise consulting | 49,800.00 |
| Financial income | 7,500.00 |
| Financial expenses | -6,347.50 |
| Operational expenses London office | -14,680.00 |
| Management fees | -18,450.00 |
| Operational result | 168,855.50 |
| Taxes (0%) | 0.00 |
| Net result | 168,855.50 |
The collaboration between Hart Business Consulting and Carlos Cerezo Arribas was pivotal to the success of this strategy. Their deep understanding of international tax and corporate regulations, combined with Mr. Cerezo Arribas’ expertise in international taxation, enabled them to identify opportunities and design an efficient and legally sound tax strategy.
This case underscores the critical importance of strategic tax planning in today’s corporate environment. A company’s ability to adapt and capitalize on fiscal opportunities available in different jurisdictions can be decisive for its success. While tax planning is legal and can be beneficial, it must also be ethical and transparent.
Companies must ensure that their tax strategies not only comply with the letter of the law but also with its spirit. The creation of complex structures may attract scrutiny from tax authorities, making rigorous compliance and proper documentation of transactions crucial.
Explore how Hart Business Consulting can transform your company’s tax strategy and unlock new financial possibilities. Their expert solutions are tailored to navigate the complexities of international tax regulations. Contact them today to schedule a consultation and start maximizing tax efficiency.