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0% tax for digital nomad achievable?

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This is⁢ generally correct, however, exception can be applied in cases of representatives, which act only on︀ behalf of one of the parties (payer or the payee), in case there is no︁ need for license in certain jurisdictions.
This is because although payment services are regulated by︂ Payment Services Directive, the EU states have interpreted and transposed it slightly differently in their︃ legislation.
 
This is great info! I was unaware⁠ of this. Is there an official EU gov. link so I can read this?
 
Does anyone have an actual working set up using a registered corporation as "payment agent"‌ and have this validated by local tax authorities?

This all sounds nice in paper and‍ as long no authorities start looking into it, but it would be doubtful any of⁠ those structures hold when there is an investigation, especially if the companies are related and⁤ the "payment agent" has in fact only one customer which is yourself.

Authorities see through⁣ this nowadays, and questions will be asked such as : you received income but this⁢ is not declared as income by the payment agent.

If a business is small enough︀ and you are not on any radar you can get away with that. When they︁ start investigating you I don't see any of this upholding especially if you are the︂ ubo of both corporations and your payment agent customer is only your own related company.︃
 
Yes, its quite common and validated concept.
Kindly note︄ that it works the opposite way - payment agent provides service to another company for︅ payment processing.
Payment agent receives money on behalf of the other company and its not︆ declared as income.

I believe even this forum runs this way (please correct me if︇ Im wrong)
 
Yes.

That's the whole point of⁣ a payment agent. They only serve a single customer: its parent (and other group entities).⁢ That's what exempts it from being a financial service provider requiring a license.

While volume alone isn't an︄ indicator of being on someone's radar, there are payment agents in UK, Cyprus, and Malta︅ processing tens of millions EUR/GBP a month. No one bothers them.
 
Payment agent⁠ for this case would be on behalf of seller only is it right? Thus no⁤ need for license?
Billing company declare it as their⁢ own income but payment agent will not?
Can there be payment agent that has single customer but is not its parent or︃ group entity? Example is unrelated company they made deal with? I seen threads in this︄ forum with people asking if someone want to be their payment agent.
 
No, there is a very important distinction between your own money and someone⁠ else's money. If you're receiving, processing, or remitting your own money, it falls out of⁤ regulatory scope in some jurisdiction. But if it's someone else's money, it's a regulated financial⁣ service which in EU/EEA/UK requires some form of license. Things can be looser in other⁢ parts of the world.
 
What is negative side to billing⁢ company? It act as shield to main business and you can partner with other company︀ to do it or use your own subsidiary. There is no requirement for license too.︁ Seems like only positive sides.
 
I must correct my above statement, as these are slightly different concepts:

  • A billing⁤ company handles the invoicing and debt collection processes for other businesses, managing the creation, sending,⁣ and follow-up of invoices to ensure payment is made.
  • A payment agent acts as an⁢ intermediary to handle transactions between two parties, typically processing payments from the customer to the︀ business. They accept funds and then relay these funds to the seller or service provider.︁
  • Franchise is a business model where the franchisor grants the franchisee the right to use︂ its trademark, brand, and operating methods. The franchisee pays fees for these rights and operates︃ their business unit independently but according to the franchisor's stipulations.

I've seen different types of︄ agreements. Sometimes, companies are willfully not compliant and disregard the compliance obligations.
For example, a︅ franchise agreement with a capped fee of 4k per year managing payments for a few︆ million.
In practice, those arrangements seem to work out quite similarly, but in reality, compliance︇ obligations are different, depending on who holds the risks, etc., and there might be a︈ need to consider transfer pricing.
 
Payment agent requires license to work with unrelated⁣ company. Does billing company require license for it too?

Does customer or main company pay⁢ billing company? What is their revenue coming from?
 
Gibraltar company as a non-resident that owns a Wyoming LLC.

Stopping paying yourself a salary‌ so no income tax in many countries. (Just be careful of establishing a personal tax‍ residency in CFC countries that extend rules to individuals)
 
If you do that how will you explain where the money comes form, as a loan⁠ that needs to be paid back ?
 
A payment agent is definitely⁣ a legit structure if it acts really as an non-related payment agent.

If the payment⁢ agent is related and has the same UBO, tax authorities will quickly suspect that related︀ companies are being used to artificially reduce tax liabilities.

Volume doesn't mean you are on︁ the radar, there is a multitude of factors. Having a related company in a jurisdiction︂ as Malta or Cyprus is already one of them.

We have experience with this and︃ it's enough for EU tax authorities to see there is a related company in a︄ low tax jurisdiction to start a full blown investigation with raids, even the UBO does︅ not live in the EU. All the other tax authorities in Malta etc are contacted︆ and you shall provide all tax, bill, PL, bank transfer information of the past 7︇ years.

It might work and be useful in some setups, but it also draws a︈ lot of unnecessary attention. Malta company record is public and our businesses got into offshore︉ leaks. Which all drew authorities their attention.

I would personally not suggest anyone to create︊ and especially do business with a related company in a low tax jurisdiction if you︋ operate from an aggressive tax EU country or make sure you have setup the structure︌ well with a tax lawyer.
 
Yep. That's‍ one way.
  • 'Living off my savings' is another.
  • 'Return of Capital' is another, especially if⁠ you've done a revaluation of the business.
  • Paying yourself a hefty Dividend when personally tax⁤ resident in a non-dividend taxing country
  • Paying yourself under the tax thresholds is another
  • Geting the company to pay your travel expenses is another
The point is that you don't⁣ need to always pay yourself a salary from your company in order to live comfortably.⁢
 
Digital nomads who establish tax residency in Monaco are not required to pay personal income‌ tax on their worldwide earnings.
 
It sounds, as usual, like‍ a really good and simple solution. The question now is just how much money do⁠ you need to become a digital nomad in Monaco? Are the rules the same as⁤ if you need a residence permit there or just to live in Monaco? - I⁣ don't know - but if so, then I think it's not just that easy.
 
Monaco digital normad visa cost €2000.⁣ You do not need to be present in Monaco. But if you want to open⁢ a Monaco bank account, you need to visit Monaco.
 
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