Best YAX set up for online e-commerce business?

[banafinfodafuggiano]

I am a resident of a high tax country (I can't move out from here).

I run a very profitable online e-commerce business, and my customers are 100% outside my residency country. My warehouse is based in China.

I have no business presence in my residency country other than me being present here.

I also cannot set up a business in my residency country due to the registers being public and I have a debt in my previous residency country
which I will be paying in the future but not now. SO I need to stay OFF THE RADAR (Google and credit reports) for a while...

How can I minimize my taxes to the minimum in a legal way?

I don't want to pay over 30% taxes, I refuse, my work is hard work and years of sacrifices.



Repeat, I can't move to any other country for the next 4 years.

 

[Sols]

I'd take a look at shifting the business into a corporate service provider which incorporates a new company and provides tax residence for the company in for example Isle of Man, Gibraltar, or maybe Malta or Cyprus. They provide tax residence by acting as directors of the company. You can be a shareholder directly, or more commonly through a nominee structure. You may need to insert a trust or similar instrument to remove yourself as UBO (i.e. in Malta).

You can continue operating the business behind the scenes but any agreements are signed by their directors, and they will normally be the sole signatories on the bank account.

You pay yourself in the form of interim dividends or salary, which is taxable where you live ”” there's no getting around that. But don't be greedy and withdraw 100% of the capital reserves every month, since that might trigger red flags and get you investigated. Grow it gradually. Pay off your debts and plan long-term. For example, if you can live on a reasonable salary for a number of years (5, 10, 15, 20), set aside the excess money in a trust which pays you upon obtaining residence in a tax haven.

There a lot of companies that can help with this. Some notables examples:

https://www.applebyglobal.com/
https://www.csbgroup.com/
https://www.conyers.com/
https://www.grantthornton.com/
https://tridenttrust.com/
https://www.vistra.com/
https://whpartners.eu

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This is the probably the answer to your question.

 

[JustAnotherNomad]

Sols said:
I'd take a look at shifting the business into a corporate service provider which incorporates a new company and provides tax residence for the company in for example Isle of Man, Gibraltar, or maybe Malta or Cyprus. They provide tax residence by acting as directors of the company.
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Note that this won't protect you from your residency country.
If the tax authorities in your residency country find out that you own that company and they take a closer look, they will see that the company is run from your country and then they will still tax it like a local company. If you want to avoid that, you'd have to build substance, which would mean hiring employees/directors at realistic salaries, not nominees for a salary that no proper director would ever accept.
Can it work? Yes. Is it legal if you're not paying the taxes for the company in your residency country? No.

There's another alternative: Get a second residency in a country like Estonia or Cyprus (assuming you have an EU passport). Rent a cheap apartment and maybe also a cheap office - or use the apartment as the business address. Then register everything on that address. You can also add a nominee or part-time employee on top.
This way, your business might be considered as having more substance and you could say you always manage it from the other country - you don't work while you're at home in your own country. Even if something goes wrong, it might only be considered a “mistake” on your behalf and not intent to illegally evade t
Obviously this won't work if you spend 300+ days at home though.

Before setting up anything, you should double check the consequences with an accountant in your residency country.

 

[banafinfodafuggiano]

JustAnotherNomad said:
Note that this won't protect you from your residency country.
If the tax authorities in your residency country find out that you own that company and they take a closer look, they will see that the company is run from your country and then they will still tax it like a local company. If you want to avoid that, you'd have to build substance, which would mean hiring employees/directors at realistic salaries, not nominees for a salary that no proper director would ever accept.
Can it work? Yes. Is it legal if you're not paying the taxes for the company in your residency country? No.

There's another alternative: Get a second residency in a country like Estonia or Cyprus (assuming you have an EU passport). Rent a cheap apartment and maybe also a cheap office - or use the apartment as the business address. Then register everything on that address. You can also add a nominee or part-time employee on top.
This way, your business might be considered as having more substance and you could say you always manage it from the other country - you don't work while you're at home in your own country. Even if something goes wrong, it might only be considered a “mistake” on your behalf and not intent to illegally evade t
Obviously this won't work if you spend 300+ days at home though.

Before setting up anything, you should double check the consequences with an accountant in your residency country.
Click to expand...

Unfortunately, I cannot leave my current residency country for the next 3-5 years since I'm working on getting citizenship.

So I have to spend 10 months a year in this country, but at the same time, I'm not willing to pay 40% tax. No fucking way.

I have a second passport, in a EU country, if that helps?

 

[JustAnotherNomad]

banafinfodafuggiano said:
So I have to spend 10 months a year in this country, but at the same time, I'm not willing to pay 40% tax. No fucking way.
Click to expand...

Like I said, you can rent an apartment in Estonia or some other country and set up a company there. Then go there once a month for “meetings.” Ideally hire some local staff, too. That should give you at least some sort of substance and a slightly better chance to survive an audit.
If you only use nominees and somebody finds out that you're behind the company, it won't look good for you - if they catch you.
Since you asked about legal solutions.

Of course there are other solutions, but they would either be illegal or much more expensive. If you have a very high income, you could think about expensive, legal solutions with proper substance. Or you could go for something illegal to hide your identity. There are no solutions to your problem that would be both cheap and legal, otherwise nobody would be paying the tax in your country.

 

[banafinfodafuggiano]

JustAnotherNomad said:
Like I said, you can rent an apartment in Estonia or some other country and set up a company there. Then go there once a month for “meetings.” Ideally hire some local staff, too. That should give you at least some sort of substance and a slightly better chance to survive an audit.
If you only use nominees and somebody finds out that you're behind the company, it won't look good for you - if they catch you.
Since you asked about legal solutions.

Of course there are other solutions, but they would either be illegal or much more expensive. If you have a very high income, you could think about expensive, legal solutions with proper substance. Or you could go for something illegal to hide your identity. There are no solutions to your problem that would be both cheap and legal, otherwise nobody would be paying the tax in your country.
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I understand, but Estonia is very far from where I live now.

Also, many countries have banned my country of residency and also my country of passport due to COVID so I cannot travel for a while.

 

[JustAnotherNomad]

banafinfodafuggiano said:
I understand, but Estonia is very far from where I live now.

Also, many countries have banned my country of residency and also my country of passport due to COVID so I cannot travel for a while.
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You can also only rent the apartment and never go there, or only once per year. You can also only use nominees, as @Sols suggested. But the less substance you have, the higher the risk during an audit.

Other people in the mentor group would recommend you to just use fake documents or a homeless person to register the company. This way it would be much harder to find out that you're behind the company. But if you are caught anyway, the consequences would obviously be much worse, too. That's why I generally wouldn't recommend such an approach. But everybody's risk appetite is different.

 

[banafinfodafuggiano]

JustAnotherNomad said:
You can also only rent the apartment and never go there, or only once per year. You can also only use nominees, as @Sols suggested. But the less substance you have, the higher the risk during an audit.

Other people in the mentor group would recommend you to just use fake documents or a homeless person to register the company. This way it would be much harder to find out that you're behind the company. But if you are caught anyway, the consequences would obviously be much worse, too. That's why I generally wouldn't recommend such an approach. But everybody's risk appetite is different.
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Registering a company on someone else fake name is doable but how do you cash out?

ATM withdrawals have cameras everywhere

Crypto to your bank accounts you still have to pay taxes on those earnings


so what other solution?

 

[Sols]

JustAnotherNomad said:
Note that this won't protect you from your residency country.
If the tax authorities in your residency country find out that you own that company and they take a closer look, they will see that the company is run from your country and then they will still tax it like a local company. If you want to avoid that, you'd have to build substance, which would mean hiring employees/directors at realistic salaries, not nominees for a salary that no proper director would ever accept.
Can it work? Yes. Is it legal if you're not paying the taxes for the company in your residency country? No.
Click to expand...

It's not always that easy. It's a good rule of thumb, but it's not accurate to assume that a company managed this way would always qualify as tax resident in the UBO's country. You have to look at the relevant laws and see if there is any applicable case law. If you can prove that all agreements have been signed by directors resident in that jurisdiction and that they are also the sole signatories on the bank account, it's not as easy "But you own the company so it's tax resident where you live". If that were true, foreign and cross-border investment would be dead. At some point, the UBO ceases to be in day-to-day control of the company and has crossed the vague, blurry line between being CEO and being investor.

Having to hire employees is also a good rule of thumb but not always correct. Tax laws aren't a checkbox exercise. There is room for interpretation. A company as described above doesn't need employees and the UBO could reasonably appoint directors in a low/zero tax jurisdiction to run the business.

But it should be discussed not only with a good fiduciary in the relevant jurisdictions but also with a local tax adviser where the UBO resides.

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This is the probably the answer to your question.

 

[JustAnotherNomad]

Yes, of course.
But in a case where you'd claim that a company making $100k a year in profits is run by a single guy who makes $2k a year, while you're just a passive investor (hidden behind a nominee shareholder for what reason exactly?), I don't think anybody would believe you. 😉

 

[Sols]

The general rule that if you manage or control the company, it's tax resident where you live does not always play out the same. What is management and control? The answer varies by country.

There can be nuance here and that nuance can be leveraged to set up some types of businesses in jurisdictions like the ones mentioned. Not all businesses are the same. Every situation has a unique set of circumstances.

You're not going to get professional directors for 2,000 USD per year with the service providers mentioned above. It's usually twice that just for the deposit and then they bill you by the hour. Incidentally, those billable hours can function as further proof that the company's management has taken place where the director is based.

Don't get me wrong. I encourage erring on the side of compliance. But there is such a thing as over-compliance and assuming things based on broad stroke generalisations.

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This is the probably the answer to your question.

 

[JustAnotherNomad]

I guess the risk is also that they do not dispute the company's tax residency, but simply say that there is ALSO a permanent establishment in his country of residency, and then simply tax that.
But of course I completely agree with you that one shouldn't just always assume the worst, but try to find a solution that works.

I guess that if you work with a provider that also has accountants/lawyers in your country, you'd be able to get a legal opinion from them. So that even if there should be a disagreement with the taxman later, the worst case scenario would be some additional taxes and not a criminal investigation.

 

[lavel]

banafinfodafuggiano said:
Registering a company on someone else fake name is doable but how do you cash out?
Click to expand...

You find a person that will do the entire setup for you, see this link:
https://www.offshorecorptalk.com/th...-with-paypal-and-emi.28845/page-2#post-153181
That's how I have made a few of my latest setups.