tax solution for small business (30K profit)

[lionheart]

Hi

I have a small online business, lessons/consulation over ZOOM/SKYPE. The profit is about 30.000 euros per year. The gross income is 35-40K, so the extra is expences (independent contractors we work with).

I thought of a Cyprus LTD (I have a friend that has one), it will cost more than 4K, which is big chunk of the profit.

I am based in Greece, which means that we have strict CFC laws. That means that IF I went to a CY LTD, I would need nominee services to get around the CFC laws, right?

Anyway, what do you suggest for such small business?

 

[Sols]

Honestly, for 30,000 EUR/year, I don't think it's going to be worth it. Whatever you might save on taxes will be eaten up in extra fees, especially for professional directors in Cyprus.

Having directors in Cyprus isn't a guarantee that you have solved for CFC. The company may still be resident in Greece.

Focus on growing your business. Consider moving to Cyprus, if that's an option for you.

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This is the probably the answer to your question.

 

[lionheart]

Sols said:
Having directors in Cyprus isn't a guarantee that you have solved for CFC. The company may still be resident in Greece.
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Could you elaborate please? If name of nominees are the front, why would I have problem with CFC?

Moving to Cyprus is not a viable option right now.

 

[CaptK]

Its not worth it. You could expenses your phone bill, car, meetings and travel. 30K profit is not worth the hassel.

 

[Sols]

lionheart said:
Could you elaborate please? If name of nominees are the front, why would I have problem with CFC?
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Because at the end of the day, you're still calling the shots. You're still managing the company, from Greece. The directors only act upon your instructions.

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This is the probably the answer to your question.

 

[lionheart]

Sols said:
Because at the end of the day, you're still calling the shots. You're still managing the company, from Greece. The directors only act upon your instructions.
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Of course. They will be nominee directors, not real business managers. The tax authorities will have to accept the nominee as the real manager. Otherwise what is the point of having them?

https://www.offshorebvi.com/offshor...e.registration/nominee-director-functions.php"....the main purpose of the nominee director is to facilitate the confidentiality of the client...."

 

[Txaxandlxaxwxyxexr]

Hi. In any case you will have trouble in case of an audit and you will be out of the bound of the law.
It is not worthy.
Are your clients a person or a corporate?

 

[Sols]

lionheart said:
The tax authorities will have to accept the nominee as the real manager.
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They are not required to accept that. The tax authority decides whatever they want within the confines of the law. Then you can fight them in court, but you would lose because you are controlling the directors.

lionheart said:
Otherwise what is the point of having them?
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It establishes the company as tax resident in Cyprus. However, it can still also be tax resident in Greece, if the Greek tax authority decides that you control the company from Greece and the directors are just your puppets.

It's very complicated.

For a business your size, international tax planning is not the way to go. Just pay the Greek tax. Work with an accountant to determine how you can lower you tax base (expenses, tax rebates/incentives).

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This is the probably the answer to your question.

 

[lionheart]

The clients are 95% individuals and 5% companies.

I am trying to educate myself even if my size is still small.

Thank you guys.

 

[Txaxandlxaxwxyxexr]

lionheart said:
The clients are 95% individuals and 5% companies.

I am trying to educate myself even if my size is still small.

Thank you guys.
Click to expand...

In similar situations others, if they accept the risk of being non compliant with the tax law, would consider not to declare the revenue from private people than going throw the troubles of creating an offshore company.
In both cases you will be out of the law anyway. But you should also check in your country If the sanction are only administrative or also criminal.

disclaimer: just a personal opinion. Not meant as advice. I recommend to everyone to check with their advisors. Only informations and educational purpose.

 

[lionheart]

Txaxandlxaxwxyxexr said:
would consider not to declare the revenue from private people
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The problem is that all payments are made through credit cards (paypal, stripe etc) and deposited to bank accounts.

The bank accounts are in foreign countries. But since the CRS laws, all info is exposed.

 

[CaptK]

Take the time to build your company as things change all the time. What worked for you today will not work for you tomorrow.

Do as much research as you possibly can to ensure thats the right fit.
When profits are north of 100K then start the process.

 

[CaptK]

CaptK said:
Take the time to build your company as things change all the time. What worked for you today will not work for you tomorrow.

Do as much research as you possibly can to ensure thats the right fit.
When profits are north of 100K then start the process.
Click to expand...

We are all here to help each other and also learn from each other.

 

[user9823671]

Haven't seen anyone mention banking. That is what will get you. The bank will want to know the UBO (you). The bank will report you to Greece. Nominees will not help you with opening a bank account with the amount you have to spend

 

[lionheart]

user9823671 said:
Haven't seen anyone mention banking. That is what will get you. The bank will want to know the UBO (you). The bank will report you to Greece. Nominees will not help you with opening a bank account with the amount you have to spend
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I know. Banking and the CRS rules is my biggest concern.

Last edited: Jul 28, 2020

 

[Txaxandlxaxwxyxexr]

If you grow your business over 100k you could always move your tax residence (and yourself) and that is going to be the true game changer because you should not be anymore obliged to report offshore accounts (check always with a local cpa in case greece has some abnorme regulation that says otherwise), and you could tell to the foreign bank institute that you are a taxpayer of the new country (and they will not give the information to the previous country - Greece). Of course in that case choose a low tax country.

In that case you will stay in greece a little less than 6 months.

Right now in your case probably paypal is the real problem, because for banking you could open a bank account in a non crs country and receive there. BTW just to be clear, in this case of course you will be in violation of reporting laws (that require you to report yourself any bank account in any country) if you dont report and you will be facing high penalty if you get caught (that is highly probable in case or crs country).

 

[JustAnotherNomad]

CFC is not the issue. Greece requires that a CFC has at least 30% passive income which wouldn't be the case. The issue is permanent establishment/effective place of management. My fingers are becoming sore from having to type this. I don't know which idiot started spreading these CFC bulls**t rumors, it's really annoying.

As others have mentioned, you need to talk to Greek accountants. Legal optimizations would be expensive, so not worth it in your case.
Cheap options are moving to a different country, which you don't want, or outright illegal. With only 30k in taxable income, you'll really want to think twice if you're willing to risk jail time to save some taxes.

 

[Martin Everson]

30k?....30k?......30k profit? And your looking for a tax solution. Seriously don't bother. Unless your living in a country where 30k makes you Bill Gates follow the advice given already. Pay your taxes and be done.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[jackfrost]

on another note what you are suggesting in your early posts is tax fraud. neither would i ever recommend or condone that - for 30k (which would be 50% eaten up by any structure anyways) this is just blantantly stupid - actually no - batshit crazy stupid. No offense - stay legal and stay smart. as i have said multiple times, under 100k profit i would not even think about it and when you hit that number - stay legal which means move your butt and dont do stupid s**t like nominees especially nowadays.

 

[lionheart]

jackfrost said:
move your butt and dont do stupid s**t like nominees especially nowadays.
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I am sorry, "move your butt" means "relocate to low tax country"? I have a family and kids, relocating to another school is a problem.

So nominees are not a safe solution?

Thank you for your advices all. I understand now that 30K is too little, but I do like to educate myself.