Theoretically, I agree with you. I also believe that any kind of freelance work,like jobs on Upwork or income from platforms like AdSense, ACX, or Amazon KDP,should be considered a green flag, as long as you're performing these activities as a private individual and not operating as a registered business.
If you have an LLC in the U.S., I believe it's highly unlikely anyone︀ would know about it,as long as the money stays in U.S. accounts. Under the FATCA︁ agreement between the U.S. and Malta, the balances of American bank accounts held by Maltese︂ residents aren't shared with the Maltese authorities. Source: https://home.treasury.gov/system/files/131/FATCA-Agreement-Malta-12-16-2013.pdf
On the other hand, if you︃ set up an Estonian OU, you're dealing with one of the most transparent corporate structures︄ out there,virtually everything is publicly accessible on Google. And in the EU there is for︅ sure a UBO register (that they don't have in the U.S. thanks to Trump). So︆ if you're managing that company while sipping a mojito in Golden Bay, you could run︇ into POEM (Place of Effective Management) issues. That said, CFC (Controlled Foreign Company) rules generally︈ don’t apply in Malta if your accounting profits are under €750k.
To be honest, I'm︉ not entirely sure how likely a POEM-related audit is in Malta. After all, it's a︊ small island with infrastructure built for around 500,000 people, and it arguably lacks both advanced︋ automated controls (like Italy or Spain) and a large number of personnel dedicated to these︌ checks. That said, from a practical standpoint, you could reduce the risk by making key︍ strategic decisions while in Estonia, and limiting your activities in Malta to routine operations,such as︎ client communication and administrative tasks. I know it's borderline, but basically everybody in the island️ has a trading company incorporated in Malta and an holding company abroad to pay the famous 5%. Where do you think the POEM of that holding company is?
To the senior people out here, let me know what do you think. We are getting somewhere.
If you have an LLC in the U.S., I believe it's highly unlikely anyone︀ would know about it,as long as the money stays in U.S. accounts. Under the FATCA︁ agreement between the U.S. and Malta, the balances of American bank accounts held by Maltese︂ residents aren't shared with the Maltese authorities. Source: https://home.treasury.gov/system/files/131/FATCA-Agreement-Malta-12-16-2013.pdf
On the other hand, if you︃ set up an Estonian OU, you're dealing with one of the most transparent corporate structures︄ out there,virtually everything is publicly accessible on Google. And in the EU there is for︅ sure a UBO register (that they don't have in the U.S. thanks to Trump). So︆ if you're managing that company while sipping a mojito in Golden Bay, you could run︇ into POEM (Place of Effective Management) issues. That said, CFC (Controlled Foreign Company) rules generally︈ don’t apply in Malta if your accounting profits are under €750k.
To be honest, I'm︉ not entirely sure how likely a POEM-related audit is in Malta. After all, it's a︊ small island with infrastructure built for around 500,000 people, and it arguably lacks both advanced︋ automated controls (like Italy or Spain) and a large number of personnel dedicated to these︌ checks. That said, from a practical standpoint, you could reduce the risk by making key︍ strategic decisions while in Estonia, and limiting your activities in Malta to routine operations,such as︎ client communication and administrative tasks. I know it's borderline, but basically everybody in the island️ has a trading company incorporated in Malta and an holding company abroad to pay the famous 5%. Where do you think the POEM of that holding company is?
To the senior people out here, let me know what do you think. We are getting somewhere.
