EU resident. Where to incorporate for a first business?

[Bofferding]

Hey there,

My current situation is particular and I hope to get some feedback from people who were in a similar situation.

I'm resident in an EU country where taxes are high but not so crazy as its neighbours. I managed to save a small chunk of money and I'm currently have in mind to launch an online business. I am also planning to relocate later this year to another country where living costs are cheaper so to get the most value out of my company. I was thinking about Estonia, Latvia, Lithuania, Ukraine and Georgia. Basically, post soviet countries as I speak some Russian. My plan is to live there for 1-2Y just the time to let the business grow. Afterwards, I might go back home or leave EU in a whole, as I'm getting tired of their legislations and how it is becoming.


Now, let's say eg. I decide to move to country B in September this year, but I want to launch a business today in country A. I thought about 3 possibilities:

1) Opening a local entity. This is not a problem and I also don't mind paying taxes. What I fear is to create ties and later it becomes problematic the moment I change my residence. The other problem I have is that I would like to test different business ideas. I would need to be very general in the description during the entity creation and I'm also not sure if I am allowed to use different Trading names.

2) Therefore, I was thinking about using UK entities. This would allow me to be more flexible when I'll change residence and I could use different Trading names or create more Uk entities. But, the problem here is that I fear it would create more complications. Like eg. when I have to declare taxes due to the different jurisdictions I would have lived.

3) The last possibility would be what some people here in MG are doing. This would be my last option.

What do you guys think? Is there another method/structure that I'm not aware of? Am I overthinking for a first business?
What would you do if you were in my shoes? What would be a good strategy during a residence transition period and for testing different business ideas?

 

[Sols]

The company is going to be tax resident wherever you are based. If you're an EU national and don't mind warmer weather, look at Malta or Cyprus. You can achieve low tax there without any wonky offshore structures or multinational setups (except for a foreign holding company in case of Malta).

You could easily start a company today in Cyprus or Malta, appoint local directors, and then take over the company (remove the original directors and appoint yourself) once you relocate there. This isn't 100% airtight but very close. There is a risk your old country's tax authority will find out about the company and go after you, but it's unlikely and there's room for debate as to whether the company should be considered tax resident when it was only controlled from there for a brief period of time. It's unlikely to be an issue.

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This is the probably the answer to your question.

 

[Bofferding]

Thanks @Sols . I appreciate your reply.

Warmer weather doesn't bother me. Never been to both places your recommend but I'm pretty sure it's nice to live there. I am sure they are the solution to my problem. Although, both cases don't work for me as I'm just starting a business and cost wise it's not optimal.

That's why today, opening a local corp or an UK entity or even what some MG people doing here are the 3 options I think I have. Later, when I will settle in the new country, I would have more options of course. If eg. I decide to live in Estonia, I could open an Estonian Oü. If in Georgia, a LLC or even the 1% Individual Entrepreneur. Problem is, creating and then disolving entities in multiple jurisdictions might make my business journey more complicated.

This is an example, but let's say I open an entity today in my country (A), but I decide to move to Estonia (B) in September. I start to live there, but at some point I will be considered tax wise on the Estonian side. Should I disolve company A and opening an Estonian Oü the moment I become tax resident in B? Since Estonia is in Europe, I don't see both jurisdictions making my life difficult if I keep company A, but I could be wrong. However, If country B would be outside the EU eg. Georgia, this is a different story.

Am I missing something? How can I optimize this whole situation when you just start a new business but in a few months you decide to relocate?

 

[Sols]

If you go for the multi-jurisdiction approach, you end up having to deal with multiple tax residences and worrying about tax filings, VAT reports, tax credit rulings, company dissolution, transfer of agreements, transfer of assets, and so on across Estonia, UK, Georgia, and any other countries you involve.

You're saving a little bit of money today by robbing your future self of both time and money ”” and potentially some heft fines/penalties and back taxes if you don't do things right.

Mousel said:
How can I optimize this whole situation when you just start a new business but in a few months you decide to relocate?
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Incorporate where you plan to move to. If that's Estonia, form an Estonian company. If it's Georgia, form a Georgian company.

It's usually best if you appoint local directors at first, but you can appoint yourself as a director. The company is technically tax resident where you live, at least for the period prior to your move, but it's unlikely anyone will bother you.

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This is the probably the answer to your question.

 

[Bofferding]

Sorry for reopening the subject, but what are your thoughts on these two cases:

UK Ltd:

Milky Moon said:
Cheapest, easiest solution is a Limited, with nominee services (director and shareholder) and virtual office. Till £85,000 you have no vat requirements, and reporting is lax.
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Basically he explains that having a UK Limited with nominee services and a virtual office could be a solution for someone living in the EU. And he also quotes:

Milky Moon said:
As long as the money is in the Ltd account no reporting requirements for your home country.
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This means that, if I keep the money in the UK Ltd, I wouldn't have to worry until I change residency. To be honest, it sounds too easy to be true.


UK LLP:

CaptK said:
If you use a secretarial service which you have an agreement with to process your business on your behalf.
A nominee and the company are partners in the LLP.
Nominee is non UK resident therefore any profit is non taxable in the UK.
As the LLP is a pass through there is no profit and payments are sent to you.
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CaptK said:
for a legal point of anonymity you are good. You just have a contract with Secretary company who has provided an LLP for pass through. The UBO (nominee) has to declare just like all the other jurisdictions but if he asked the question. He is a resident of UAE end of story. The structure and contract stand up to the test, speaking from experience.
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Similar to previous example, but this time a UK LLP, with a nominee and a secretarial service as partners. According to him, this structure is legit, works and is used.


Could UK entities work for my particular case where I would jump from 1 country to another while being legit on my country side?

 

[CaptK]

Depends on many factors, industry, residency turnover and nationality.

Short answer is yes it would work for OP who started the thread.

 

[SoNewToAllShit]

wonder why you never finished your discussion here @Mousel - you could have got a valid and finished solution from the two guys responding.