I think this is what you want:
Flag.JPG
Here are the "special tricks" I did to make it work:
First, I had to COMBINE the vectors (it's like "Group/Ungroup" except for vectors).
Use the vector-selection arrow (the thin arrow).
Drag to select all of the "TRD" logo. Then do Path -> Combine. This groups the whole thing into one object.
Resize it appropriately.
Do the same for the flag.
Then you can copy the TRD logo, and do the outset (I did 5mm).
Drag the TRD logo offset (or copy & paste) over the flag.
Use the vector selection arrow, and select the flag, press PGDN, then shift-click the logo. Path -> Difference.
Drag the actual (non-offset version) of the TRD logo into the "hole".
Tip: After you do the Path->Combine, select the object using the vector arrow, and then set the Fill to X and the stroke to some color (black), and the stroke thickness to 0.1mm or 1 px. I find it's easier to work this way.