Best offshore country

[Hermana]

It appears that there are certain European low-tax countries, where an EU citizen can be a (tax) resident and they don't care that much if you have an offshore company in a tax free country. They will not claim tax residency for the company in general.
This'd mean, I would be able to start a business anywhere in the world.

In this case, where would be the best place to start a company?

Company 1:
- The company does touristic activities in different countries in the world (EU and non EU).
- Turnover about 100.000, profit about 50.000.
- I need a nominee director.
- Goal is to mainly leave the assets in the company. Maybe take out some dividend.

Company 2:
- About 1.000.000 in assets.
- Wants to slowly start investing in real estate. Probably start in EU.
- Will need branches in (some of?) the countries in which I invest?
- I need a nominee director.
- Goal is to mainly leave the assets in the company. Maybe take out some dividend.

I do not want to do anything dark. I neither want to be red flagged in the countries I am dealing with as a resident (but that doesn't seem a problem in these countries) or in the real estate.

Where would be the best place to start the companies?

Last edited: Jun 5, 2021

 

[Sols]

If we're staying within EU, the two obvious candidates are Malta and Cyprus. You have two options: form a local company and pay the low but greater than zero local tax, or form an overseas company and hope that they continue to not bother well off expats, as long as you declare and pay tax (if any) on personal income derived from those companies. It's not by the letter of the law but they know they have more to gain from leaving such people alone. Things might change, though, so carefully examine the risks.

If you go for Malta or Cyprus, a common setup is to go for a quasi-offshore solution like Isle of Man or Gibraltar with local professional directors. This establishes the companies as tax resident there, and you can pay yourself dividends every once in a while.

However, you are engaged in industries that might require more complicated structures. I'd begin with speaking with CSPs like Dixcart, Vistra, and BDO about possible solutions.

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This is the probably the answer to your question.

 

[Hermana]

Sols said:
If we're staying within EU, the two obvious candidates are Malta and Cyprus. You have two options: form a local company and pay the low but greater than zero local tax, or form an overseas company and hope that they continue to not bother well off expats, as long as you declare and pay tax (if any) on personal income derived from those companies. It's not by the letter of the law but they know they have more to gain from leaving such people alone. Things might change, though, so carefully examine the risks.

If you go for Malta or Cyprus, a common setup is to go for a quasi-offshore solution like Isle of Man or Gibraltar with local professional directors. This establishes the companies as tax resident there, and you can pay yourself dividends every once in a while.

However, you are engaged in industries that might require more complicated structures. I'd begin with speaking with CSPs like Dixcart, Vistra, and BDO about possible solutions.
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Thank you so much Sols, for your valuable reply.
I will look into the countries you mentioned, this will sure give me a focus.
I will also talk with CSP's.

I was surprised about your suggestions Isle of Man and Gibraltar. I was expecting countries like Panama, Belize, Seychelles etc. Could you explain your suggestions for these countries and not the once that I was thinking about?

 

[Hermana]

Which risks do you see here?
If things change, I can pay the low taxes of the country of residence. Or am I missing some risks here?

Sols said:
Things might change, though, so carefully examine the risks.
Click to expand...

 

[Sols]

Hermana said:
I was surprised about your suggestions Isle of Man and Gibraltar. I was expecting countries like Panama, Belize, Seychelles etc. Could you explain your suggestions for these countries and not the once that I was thinking about?
Click to expand...

They are irreputable and impractical to operate as a result. Especially for the industries you're in. Even the relatively reputable jurisdictions of Isle of Man and Gibraltar can be a problem if you plan on offering retail travel/tourism services or engage in real estate investments.

Tourism is fraught with customer safety and liability concerns, so if you show up with Panamanian or other dodgy offshore company, it looks like you are trying to avoid lawsuits in case someone breaks a leg in your razorblade-themed water park or skip out paying bills. Vendors and financial service providers will treat you with suspicion.

In many countries, there are restrictions on foreign and corporate ownership of property.

Hermana said:
If things change, I can pay the low taxes of the country of residence. Or am I missing some risks here?
Click to expand...

The risks are ultimately the same as tax evasion in any other country.

It depends on how and why they change. Suppose you've been violating the letter of the law for a long time, repercussions could be far worse than just paying back-taxes.

It's just that for the time being, the tax authorities in Malta and Cyprus are leaving foreign companies owned by well-off foreigners alone. Just pay and declare what you owe personally.

Be careful with VAT and property tax, too, because those are taxes and laws enforced not by Malta/Cyprus but where the customers and property are located. It's one thing to not pay corporate tax in Malta for a foreign company, and a very different to have an EU tax authority chasing after you.

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This is the probably the answer to your question.

 

[CaptK]

Hermana said:
It appears that there are certain European low-tax countries, where an EU citizen can be a (tax) resident and they don't care that much if you have an offshore company in a tax free country. They will not claim tax residency for the company in general.
This'd mean, I would be able to start a business anywhere in the world.

In this case, where would be the best place to start a company?

Company 1:
- The company does touristic activities in different countries in the world (EU and non EU).
- Turnover about 100.000, profit about 50.000.
- I need a nominee director.
- Goal is to mainly leave the assets in the company. Maybe take out some dividend.

Company 2:
- About 1.000.000 in assets.
- Wants to slowly start investing in real estate. Probably start in EU.
- Will need branches in (some of?) the countries in which I invest?
- I need a nominee director.
- Goal is to mainly leave the assets in the company. Maybe take out some dividend.

I do not want to do anything dark. I neither want to be red flagged in the countries I am dealing with as a resident (but that doesn't seem a problem in these countries) or in the real estate.

Where would be the best place to start the companies?
Click to expand...

To give a real example of a structure for both I would do the following as a resident in Malta.

First thing you need to remember if turnover is more than 10-85K depending on the country then VAT is liable for EU and UK resident customers. Bare in mind you will be required to put a bond down as surety for your customers in the event your business fails

UK Company 19%

Irish company 15%

Netherlands company about 8%

And it's possible using a Luxembourg company to get the tax down to 2%

The property company gets a bit more complicated. The property is taxed in the country so it doesn't matter what entity you use you are liable.

To mitigate you could loan the funds from a holding company in a sensible jurisdiction like UAE. Therefore tax is on the net profit after interest and capital repayments in the country of the property.
Pay your fair share and you will be ok. Try and charge yourself 15% interest and you will lose your money. 5% is a fair interest rate to pay.

 

[Hermana]

Sols and KaptK,
I really apreciate your input! Let me get into what you have just said and give some more information about the businesses. I'd apreciate it if you see any mistakes in how I see things!

CaptK said:
The property company gets a bit more complicated. The property is taxed in the country so it doesn't matter what entity you use you are liable.
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For the real estate, yes the taxes will need to be paid in the country where the real estate is located. Also capital gain taxes etc. So for that reason there is no use to move the business to another country. As a matter of fact, the EU country where I am looking into, will not accept a foreign company to buy real estate. So I would have to work with a branch.

CaptK said:
To mitigate you could loan the funds from a holding company
Click to expand...

Great option!

Sols said:
They are irreputable and impractical to operate as a result. Especially for the industries you're in. Even the relatively reputable jurisdictions of Isle of Man and Gibraltar can be a problem if you plan on offering retail travel/tourism services or engage in real estate investments.
Click to expand...

I was thinking to open a business in the country of the property in my private name and then sell the business to the offshore company, to avoid problems with getting a bank account etc. Then once the company is running, I am not sure what problems I could run into.

Anyway, I would still need a nominee director, for which I can not find good options in most countries. So for that reason alone I would need a country in which this is a good possibility.



The tourism: Our customers are international, a niche market. They book with us directly. We offer them something they are very intested in. Hardly any marketing needed, mostly word of mouth. They do not tend to do research on the origin of the company, liability etc. Neither do the local companies we work with, who are paid in advance. We do not transport the customers from their countries.
Actually, considered the niche we are aiming on, I think they would all fully understand if the company is in some offshore country.

Sols said:
Tourism is fraught with customer safety and liability concerns, so if you show up with Panamanian or other dodgy offshore company, it looks like you are trying to avoid lawsuits in case someone breaks a leg in your razorblade-themed water park or skip out paying bills.
Click to expand...

I have been considering liability issues and this is a point of concern. Especially since we have a number of US clients. I was thinking for this reason a more dodgy country might even be a better option? Or, in any case, a country in which we can minimalize that risk. Either by law, terms and conditions, insurance.

Our locations vary. We have 1 EU location and 1 non EU location where we return regularly, we might make this fixed locations in the near future. Other locations (EU and non EU) are one time locations, for a few days upto a few months.

Sols said:
Be careful with VAT and property tax, too, because those are taxes and laws enforced not by Malta/Cyprus but where the customers and property are located.
Click to expand...

So, if I understand correctly: If I put the tourism business in a country where no VAT is required, I would still have to charge VAT to my EU and UK clients? And pay this to their country of their residence? To the country of my residence? Or to the EU country where these clients spend their time?

CaptK said:
UK Company 19%

Irish company 15%

Netherlands company about 8%

And it's possible using a Luxembourg company to get the tax down to 2%
Click to expand...

Can you explain this? Meaning if I open a Luxembourg company, I can charge the 2% on all the EU customers? But if I open a company outside the EU, I would have to pay a higher VAT %? The % of their country of residence? My country of residence?

CaptK said:
Bare in mind you will be required to put a bond down as surety for your customers in the event your business fails
Click to expand...

With a non EU company I would still be required to put a bond down? Required by which country? And held in which country?

Concerns that I am having for this company:
- I need a nominee director.
- I need flexibility in the ability to deduct our expenses. We do not receive company named invoices for all our expenses. Sometimes just a receipt. (A lot of times not even a receipt.) A country with strict bureaucratic rules for this is a no-go.
- In some countries where we go we need to stay under the radar, as extortion of business owners is a regular thing. We can not have a business in that country.
- The liability issue.

Sols said:
The risks are ultimately the same as tax evasion in any other country.
Click to expand...

I am not planning on tax evasion, more tax avoidance 🙂 I do not have the intention to conceal information, I would be paying the 10-12% corporate tax, no problem, but if a country has the opinion that any income earned by a business in another country is taxable in that other country and that country does not tax me, then I am very happy to go along with that.

 

[CaptK]

Travel Company

So you would be better to set up a UAE entity that way you mitigate the VAT issue.

I'm guessing your products are very bespoke like a concierge business or specific type of travel where you accompany the client like Yacht fishing expeditions.

A nominee not gives you substance via local presence and but the flexibility you are after.

The Luxembourg structure is part of a more complex structure that won't work if you don't want the bureaucracy.

 

[Hermana]

CaptK said:
I'm guessing your products are very bespoke like a concierge business or specific type of travel where you accompany the client like Yacht fishing expeditions.
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Yes see it as a Yacht fishing expedition in which we organise everything, but do not have to be present. I am sometimes present, because I attend the expedition, but not as staff. Others provide the service.

If we put it in a UAE entity we do not have the VAT issue? Not even if the clients are EU citizens and/or we have our Fishing trip in an EU country?
I assume this goes for other non-EU offshore companies as well?

 

[CaptK]

Yes no VAT because the company is in UAE.

 

[uplana]

CaptK said:
Yes no VAT because the company is in UAE.
Click to expand...

You mean you don't have to charge VAT at all to anyone if you operate from inside the UAE, sure ?

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[no1d]

Hermana said:
It appears that there are certain European low-tax countries, where an EU citizen can be a (tax) resident and they don't care that much if you have an offshore company in a tax free country. They will not claim tax residency for the company in general.
Click to expand...

I'd really want to know what EU country is that, I guess its RO, BG maybe HU?

 

[lory]

no1d said:
I'd really want to know what EU country is that, I guess its RO, BG maybe HU?
Click to expand...

They are, so Cyprus is a good place. If you get the right connections there you can have a nice, silence live without to pay much taxes. It's also not that expansive.

 

[sonato]

best country may be depending on what you are into and where you want to live. I moved from one of the most hardest taxed countries in Europe to Zug, I hope to enjoy freedom very soon.