0% tax for digital nomad achievable?

[baio12]

Is payment agent same thing as merchant of record? Such companies pay⁣ VAT on your customers behalf and send you the payment amount less a few %⁢ fee for their service.

You can agree with another company to be your merchant of︀ record and transfer the remaining amount to your company in different country?

 

[Don]

No its not the same.

The former deals only with the payment processing part of the⁤ transaction and not with tax, fulfillment, compliance, and disputes.

 

[baio12]

Does merchant of record have same license requirement as payment agent? If no you can⁠ start your own merchant of record or partner with another one in high tax country⁤ and have your actual company be in low tax country. Is there big downside to⁣ this or can it be the best solution that payment agent was trying to solve?⁢

 

[Macy]

Could a payment agent agreement also be done in the reverse of⁣ the way it is applied usually?

I.e., if I have a Cypriot holding company that⁢ owns a licensed broker in the Seychelles (or whatever country) and the broker cannot get︀ good banking, but the Cypriot holding can, can I use the HoldCo to process funds?︁ Usually the application is the opposite, where the offshore company owns an EU subsidiary to︂ clear the funds, but I don't really understand the reason, the opposite would seem to︃ be more cost-effective?

I also saw @Compliance Circle making some posts about payment agent, maybe︄ you can help to explain? Thx.

 

[daniels27]

A payment agent by definition is only︁ here for payments. A holding is a holding.

Apart from the terms, you could also︂ use your parent company to process payments. It would definitely be possible. It is like︃ a parent company buying services for all its subsidiaries in bulk to benefit from bigger︄ volume discounts. Like you have Lufthansa negotiating fuel for Swiss, Austrian, Bruxelles, Dolimiti, etc. Or︅ having them process all payments (which is bad example as airlines have distinct MCC codes,︆ but Meta, etc. would work).

 

[Sols]

It's unusual which will raise eyebrows and can make the︀ structure more inconvenient to use day to day.

However, in Cyprus, it's unlikely to be︁ a concern. There are other places where a holding company must be just a holding︂ company or it will lose some type of special status. That doesn't exist in Cyprus.︃ So you can use your holding company as a payment agent as well.

However, I︄ wouldn't recommend it.