Best setup for crypto investments and freelance salary

[niceviewhere]

Hello

Thanks in advance for any help given 🙂

I'm looking for the most efficient tax strategy I can find. A bit about me:

• I have a British passport but I am resident in Spain. I have access to a UK address to register a company.
• I work as a IT contractor and invoice a US company direct, I am registered in Spain as a autonomo (freelancer). I have done this for the last two years. My salary is roughly €120,000 before tax (.
• I need about €3,500 per month to live
• Any other money I earn for the next 12 months I would like to invest in crypto.

My idea was to do the following:

• Set up a offshore company and bank account
• Invoice US company from offshore company (us company has no issue with this)
• Invoice Offshore company from Spain for €4,000 to pay expenses and tax. I would balance this income against expenses from my activity (IT equipment, subscriptions etc)
• Take the remaining money per month ~6000 in the offshore company and invest in crypto. For roughly €72,000 per year invested
• Next year I would begin investing in stocks and so would want access to a broker.

I do not see my life circumstances to change in the next 3 - 5 years.

I'm interested in the offshore company to reduce the amount of tax I pay in Spain and so that my crypto investments can be grown. If I later want this investment personally, I would either move to a country with no tax on world wide income and invoice the offshore company large invoices or buy property using the offshore company.

I would not bring any of the crypto money or offshore money into Spain or the UK other than through invoices I sent as a freelancer.

Is this most efficient set up? Is it worth doing with the levels of income I'm talking about here? What costs can I expect with setting up business, bank, bank fees, etc? What risks would there be?

What offshore country would be good to review for this setup?

 

[Martin Everson]

niceviewhere said:
My idea was to do the following:

• Set up a offshore company and bank account
• Invoice US company from offshore company (us company has no issue with this)
• Invoice Offshore company from Spain for €4,000 to pay expenses and tax. I would balance this income against expenses from my activity (IT equipment, subscriptions etc)
• Take the remaining money per month ~6000 in the offshore company and invest in crypto. For roughly €72,000 per year invested
• Next year I would begin investing in stocks and so would want access to a broker.

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This falls under BEPS and is clearly profit shifting. In short you have no chance of this working while resident in Spain.

niceviewhere said:
I do not see my life circumstances to change in the next 3 - 5 years.
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Then your gonna have to enjoy paying full wack tax and just learn to live with it. And if you plan on staying in Spain a total of 10 years your screwed tax wise if you try and leave.

niceviewhere said:
I'm interested in the offshore company to reduce the amount of tax I pay in Spain and so that my crypto investments can be grown. If I later want this investment personally, I would either move to a country with no tax on world wide income and invoice the offshore company large invoices or buy property using the offshore company.
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You cannot do this so easily as Spain is a tax trap. Spain has exit taxation on unrealized gains for the wealthy with your idea in mind. I have talked about this in other threads. You should never have moved to Spain in a million years if you earn a decent wage like you do now. Spain is a nice place to live if your poor and plan to remain poor. You can read about Spanish exit tax below:

https://www.relocateandsave.org/en/exit-tax-spain/

niceviewhere said:
Is this most efficient set up?
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No

niceviewhere said:
Is it worth doing with the levels of income I'm talking about here?
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With your base income NO. But if you anticipate huge gains on your investments then YES.

niceviewhere said:
What costs can I expect with setting up business, bank, bank fees, etc? What risks would there be?
Click to expand...

If you plan on doing something offshore you would want to setup everything at arms length.

niceviewhere said:
What offshore country would be good to review for this setup?
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Any with no tax if setup is done at arms length i.e Dubai, Cayman Islands etc etc.

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

 

[niceviewhere]

This falls under BEPS and is clearly profit shifting. In short you have no chance of this working while resident in Spain.
Click to expand...

If I use a third party to set up the company, this is still a issue? Can I conceal who own's the offshore company?

Then your gonna have to enjoy paying full wack tax and just learn to live with it. And if you plan on staying in Spain a total of 10 years your screwed tax wise if you try and leave.

You cannot do this so easily as Spain is a tax trap. Spain has exit taxation on unrealized gains for the wealthy with your idea in mind. I have talked about this in other threads. You should never have moved to Spain in a million years if you earn a decent wage like you do now. Spain is a nice place to live if your poor and plan to remain poor. You can read about Spanish exit tax below:

https://www.relocateandsave.org/en/exit-tax-spain/
Click to expand...

This is only for investments over 4 million correct?

With your base income NO. But if you anticipate huge gains on your investments then YES.
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What is the level of income or investments should I be considering offshoring?

If I was to leave Spain, what would be other good countries to move to in or close to the EU? Would switzerland be a good idea?

 

[Martin Everson]

niceviewhere said:
If I use a third party to set up the company, this is still a issue? Can I conceal who own's the offshore company?
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Thats where arms length comes into it. You can't be on bank records or company records at all. It needs someone totally independent but who you may know to on paperwork.

niceviewhere said:
This is only for investments over 4 million correct?
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Yes

niceviewhere said:
What is the level of income or investments should I be considering offshoring?
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Over a 1m and if your investing in crypto with anticpation of 100x returns on 72,000 a year then than 1m threshold can be reached very quickly. Case in point is anyone who invested in Solana beginning of the year.

niceviewhere said:
If I was to leave Spain, what would be other good countries to move to in or close to the EU? Would switzerland be a good idea?
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Ireland as a resident non-dom would be good option. Then earn all your investment income passively offshore without remitting it to Ireland and it remains tax free. You would need to speak to a tax advisor over how best to do it. It may mean you end up using a service like Xolo Go to invoice the US company for consulting services for example which is quicker and easier than building structures for single source income.

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

 

[niceviewhere]

@Martin Everson I'm now looking into the tax structure you suggested (non-dom, passive foreign income). If I use a service like Xolo Go, this would appear as income and then I would look like an employee working in Ireland rather than passive (such as a dividend)? That would be an issue right?

I guess I could put on the invoice license fees or similar and to show that I wasn't actively working in Ireland. I believe if I was working in Ireland then I would need to register as a employee in Ireland right?

 

[Martin Everson]

niceviewhere said:
@Martin Everson I'm now looking into the tax structure you suggested (non-dom, passive foreign income). If I use a service like Xolo Go, this would appear as income and then I would look like an employee working in Ireland rather than passive (such as a dividend)? That would be an issue right?
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Yeah you have a good point and Xolo was not a good example. Xolo Go is actually a partnership and you sign a partnership agreement with them so your not an employee. However it is indeed not passive income and where the duties are performed matter in which case it would be Ireland unless you do it outside there.

niceviewhere said:
I guess I could put on the invoice license fees or similar and to show that I wasn't actively working in Ireland. I believe if I was working in Ireland then I would need to register as a employee in Ireland right?
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Everything is billed from Estonia with Xolo. You could indeed say you were abroad when you performed the duties but would you want the hassle of keeping flights reocrds and proof to show where work was done etc. Then you run into problems with the other country and the circus begins. I know Xolo aint really into people using them to avoid taxes also.



P.S Why it took 8 months for you to reply....lol.

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

 

[niceviewhere]

@Martin Everson Sorry it took so long, I decided to stay put after it was clear there wasn't many options while staying in Spain...then 1 or 2 extra tax payments made me change my mind! Thank you for your help so far 🙂

For claiming the Irish citzenship within 5 years, I need to spend as much time as I can there during those 5 years so wouldn't want to say I was working outside the country. I don't think Estonia is the correct route.

The UK company is interesting, I'd rather pay ~5% tax rather than 20% though if I can structure in a better way. If the company had a Non-Resident-Director can that help? i.e. the company profits are made outside of the UK and its managed outside of the uk?

Or could a offshore company in Gibraltar work where I was a 100% shareholder and took dividends and had a director based outside of ireland & UK?

 

[Martin Everson]

niceviewhere said:
The UK company is interesting, I'd rather pay ~5% tax rather than 20% though if I can structure in a better way. If the company had a Non-Resident-Director can that help? i.e. the company profits are made outside of the UK and its managed outside of the uk?
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I would keep things simple and cost effective. You said your earning 120k euros before tax. You can still lower your effective tax rate with a basic UK company and family member as a director in UK and take home over 100k. Otherwise you can setup a Malta company with a local director and make use of the full imputation system and pay 5% tax. But the overheads of Malta company structure and local director will eat into the 120k and leave you with less money than if you just paid the UK corporate tax and lowered your effective tax rate by expenses.

niceviewhere said:
Or could a offshore company in Gibraltar work where I was a 100% shareholder and took dividends and had a director based outside of ireland & UK?
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Gibraltar was recently added to FATF grey list. I would maybe think twice about using that jurisdiction at present for anything especially in connection with U.S.

https://www.gbc.gi/news/FATFgibraltar-added-financial-action-task-forces-grey-list

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

 

[HoneyBoo]

You also have the option to keep it simple, let me share something you may find valuable and you can relate to

There a bunch of Nigerian programmers, they have experience in web-app dev and web3, mostly react-native or flutter and solidity, they get hired by US startups, they get paid in USD and they make quite a fortune, let me tell you how :

• They get a personal USD checking account with us at Sifr.com
• They get paid the same way an American would, but they are freelance and not employees so less paperwork for both employer and freelancer.
• They convert their USD to USDT (or BTC) and sell it in the local market at 50 % Premium.

There are no IRS or taxes involved, they have no incentive into registering a US entity and they keep all their earnings.
You of course can have a slightly different setup but we have you covered in regard to banking and crypto.

 

[JosephLL]

menzu said:
You also have the option to keep it simple, let me share something you may find valuable and you can relate to

There a bunch of Nigerian programmers, they have experience in web-app dev and web3, mostly react-native or flutter and solidity, they get hired by US startups, they get paid in USD and they make quite a fortune, let me tell you how :

• They get a personal USD checking account with us at Sifr.com
• They get paid the same way an American would, but they are freelance and not employees so less paperwork for both employer and freelancer.
• They convert their USD to USDT (or BTC) and sell it in the local market at 50 % Premium.

There are no IRS or taxes involved, they have no incentive into registering a US entity and they keep all their earnings.
You of course can have a slightly different setup but we have you covered in regard to banking and crypto.
Click to expand...

Any chance you could support Serbia or Montenegro?