My current situation:
- I am a perpetual traveler
- My original country of nationality has a strict "days test" for determining tax residency - doesn't have tests like "habitual abode" or "center of life"
- I own a UAE freezone company (which currently acts as my holding company) and US LLC (for Stripe payment processing purposes) plus a couple of Cyprus companies that are subsidiaries of the UAE freezone company
- I have an Emirates ID, rent a house in the UAE, have an Ejari, UAE utility bills, etc.
- But I generally spend no more than 3-4 days every year in the UAE
- Business involves digital info-products / ecommerce through our websites with a majority of customers being in the U.S.
- Annual net operating profits > $2 million
- Significant short-term and long-term capital gains from shares, ETFs, options, etc. in both my personal IB brokerage account and the UAE company's IB brokerage account
Problem:
- UAE's new corporate tax and how to not have to pay it without falling afoul of their General Anti-Avoidance Rules (GAAR).
Initial solution I came up with:
- the UAE company, through a special board resolution, hands over ownership of the websites to me (maybe as a special in-kind dividend to its shareholders)
- I will immediately transfer the ownership of the web sites to the US LLC which then becomes the main holding company and books most of the profits.
My initial thinking was:
- the US LLC wouldn't come under UAE corporate tax laws because I only spend 3-4 days in the UAE every year, so doesn't seem like the US LLC will have a PE in the UAE
- handing over ownership of the websites to me as a special dividend won't fall afoul of GAAR as long as I do it before the beginning of the next financial year since no CT is applicable for this financial year. Maybe I am wrong about this and maybe there's a better way of transferring ownership of the websites - I am not sure.
Anyway, with all this being said, here's my question:
It may be best, contrary to what I had originally planned, to avoid the US LLC owning the websites. Mainly in order to avoid U.S. estate tax rules in case of my sudden death and more importantly, for asset protection purposes (i.e. if someone sues the U.S. LLC, I wouldn't want the LLC to have substantial assets in that case).
With this in mind, I am thinking of incorporating a holding company in a different jurisdiction. The jurisdiction needs to have:
- 0% corporate tax and capital gains tax
- Good banking
- Ability to open a brokerage account with IB
Good to have (but am flexible on these points - I know I have to compromise somewhere):
- No Audit requirements
- No substance requirements
- Annual maintenance costs < $5000
Any ideas on what the best jurisdiction would be in my situation?
Thank you.
- I am a perpetual traveler
- My original country of nationality has a strict "days test" for determining tax residency - doesn't have tests like "habitual abode" or "center of life"
- I own a UAE freezone company (which currently acts as my holding company) and US LLC (for Stripe payment processing purposes) plus a couple of Cyprus companies that are subsidiaries of the UAE freezone company
- I have an Emirates ID, rent a house in the UAE, have an Ejari, UAE utility bills, etc.
- But I generally spend no more than 3-4 days every year in the UAE
- Business involves digital info-products / ecommerce through our websites with a majority of customers being in the U.S.
- Annual net operating profits > $2 million
- Significant short-term and long-term capital gains from shares, ETFs, options, etc. in both my personal IB brokerage account and the UAE company's IB brokerage account
Problem:
- UAE's new corporate tax and how to not have to pay it without falling afoul of their General Anti-Avoidance Rules (GAAR).
Initial solution I came up with:
- the UAE company, through a special board resolution, hands over ownership of the websites to me (maybe as a special in-kind dividend to its shareholders)
- I will immediately transfer the ownership of the web sites to the US LLC which then becomes the main holding company and books most of the profits.
My initial thinking was:
- the US LLC wouldn't come under UAE corporate tax laws because I only spend 3-4 days in the UAE every year, so doesn't seem like the US LLC will have a PE in the UAE
- handing over ownership of the websites to me as a special dividend won't fall afoul of GAAR as long as I do it before the beginning of the next financial year since no CT is applicable for this financial year. Maybe I am wrong about this and maybe there's a better way of transferring ownership of the websites - I am not sure.
Anyway, with all this being said, here's my question:
It may be best, contrary to what I had originally planned, to avoid the US LLC owning the websites. Mainly in order to avoid U.S. estate tax rules in case of my sudden death and more importantly, for asset protection purposes (i.e. if someone sues the U.S. LLC, I wouldn't want the LLC to have substantial assets in that case).
With this in mind, I am thinking of incorporating a holding company in a different jurisdiction. The jurisdiction needs to have:
- 0% corporate tax and capital gains tax
- Good banking
- Ability to open a brokerage account with IB
Good to have (but am flexible on these points - I know I have to compromise somewhere):
- No Audit requirements
- No substance requirements
- Annual maintenance costs < $5000
Any ideas on what the best jurisdiction would be in my situation?
Thank you.
