Residence in Monaco + US LLC
- Thread starter baltic7
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You can't transfer all the profits from Estonia to Delaware without paying taxes. I can confirm this 100%. Words of a tax advisor from Estonia.
I think i found the best place to setup a company with Monaco residency. Guernesey.
Guernesey and Monaco have tax agreements signed. It is one of the 33 countries that have a treaty with Monaco.
What I have been able to see is that Guernsey is perfect for Monaco in every way.
- 0% corporate tax.
- 0% on the distribution of dividends to a resident of Monaco.
- A local director is required, which is perfect for creating substance.
- It is easy to open a bank account for the company with Lloyds or Barclays.
- It is an hour and a half by private flight from Nice airport.
- It is in the European time zone, so it is easier to work with banks than with one in the Caribbean.
- Simple hiring a couple of part-time employees to create more substance.
Better than using structures in countries that do not have agreements with Monaco and the territorial tax system that is not clear (with a little research, although Gibraltar turns a blind eye, on paper you can claim taxes on profits accumulated in bank accounts in Gibraltar, source: the Gibraltar government website).
I have to consult everything with local lawyers in Guernsey and Monaco in the next few days, but it seems like the smartest solution.
I don't know how to send a PM 🙁
Last edited: Feb 11, 2024
This doesn't mean merely transfering profits from the Estonian company, and is not really comparable to royalties structure.
In a partnership both parties contribute and are also exposed to the risks, and are entitled to the share of profit based on the agreement.
It could be the case that Estonian entity's contribution is mainly responsibility for invoicing and payment processing so naturally it should not be entitled to the major share of the profits.
Its a rather unconventional structure and hasn't been promoted much due to the complexity, but works well in a tandem with a lower tax structure.
I will be confortable with something around 150-200k.
I take the rent expense and the substance expenses of the company as a flat tax. And it still allows me to save most of the taxes I would have to pay in Estonia.
And in addition to the tax savings, I improve the quality of life because Monaco is much nicer to live in than Estonia.
Monaco taxation agreement approved by EU
Although on paper Monaco does not care too much from which jurisdiction the funds come from as long as their origin is legal, if in the future I decide not to continue in Monaco, the European Union banks will probably be concerned about the origin of the funds received. in Monaco. Or maybe not, I don't know.
But it is better to use jurisdictions that have tax treaties with Monaco, so that everything is more transparent to the West.
Suppose that when I am 60 years old, I get tired of living in Monaco and decide to go to my home country. I suppose it would be better to declare in compliance with the banks in my country that the funds all arrived following tax agreements between countries.
And also, if Monaco in the future, due to pressure from the West, decides to follow the CFC rules, it is better to operate with a country with a double taxation agreement.
Monaco has a corporate tax of 26.5% on companies resident in Monaco in which the origin of more than 75% of the income occurs outside of Monaco. Just what my company is.
Bahamas and Guernsey are the only two jurisdictions with which Monaco has a tax treaty that have 0% corporate tax and 0% dividend distribution.
Guernsey is closer than the Bahamas, although both would work the same. It's just the convenience of being able to take an hour and a half flight and be there, in case you need to do some business for the company.
2Checkout works with company in Guernsey.
Anyway, I even think I can use Stripe and other processors with the following structure.
US LLC which is a subsidiary of a company in Guernsey.
But I would need to consult with an advisor if this is possible, I think so. USA allows ownership of an LLC by a foreign company.
How much do you spend on rent and how much the've requested to keep in their banks?
The substance will protect from CFC rules. DTAA is for other purpose, for more transparency.
Why better Gibraltar than having the 12.5% corporate tax on income in a Gibraltar bank account?
Companies are subject to Gibraltar taxation on income accrued in and derived from Gibraltar.
Last edited: Feb 11, 2024
There is no reason to bank in Gibraltar, and that is also incorrect. It's irrelevant if the funds are remitted to Gibraltar or not, corporate tax is applied only on Gibraltar sourced income.
If you want, open a thread where we can compare Guernsey and Gibraltar companies. I'm interested too.
In general, you will have access to more EMIs with a Gibraltar company, and there are also no substance requirements meaning less bureaucracy. AFAIK you can always redomicile the company to Guernsey if needed.
Income Tax Office
I think you overlook a lot of details.
1. In Gibraltar, businesses that exceed 1M in profits are subject to audit. Which is my situation. So the difference in maintenance is not as cheap as you mention compared to other jurisdictions. Saying that I am fine auditing my business, but only as a fact that is never mentioned.
2. In no official source of the Gibraltar government do I find that companies are only subject to corporate tax in Gibraltar for income generated from a Gibraltar source, nor that profits originating abroad are exempt from taxes even if they are transferred to bank accounts in Gibraltar . What I do find is that companies in Gibraltar are subject to corporate tax, but nowhere are those exemptions that are mentioned.
3. Thinking about savings in incorporation and maintenance expenses as something positive for choosing the jurisdiction makes little sense to me. Because they are a tiny part. I have greater savings depending on the commissions charged by one payment processor or another. And that doesn't give me too much of a headache either, because there are no substantial differences.
4. I will not take the information provided by a provider of business formation in Gibraltar as 100% valid after personal experiences. I have emails from Free Zones in Dubai assuring that the 9% corporate tax is only paid by companies that do locally, when we all know today that this is not the case.
There may be loopholes in Gibraltar that allow you to look the other way and not pay corporate tax. And even the Gibraltar government does not make much effort in this regard.
But if there is a law that says that a corporation tax is paid at 12.5%, I also want to see clearly the points where the Gibraltar government mentions exemptions. I don't want to be like a monkey dancing on blades, because in the future the tears may come.
In other jurisdictions where 0% corporate tax and 0% dividend distribution are clear, the risk is lower. Because the law is clear.
The reason to bank income in Gibraltar is because most payment processors do not allow funds to be collected into bank accounts other than the country of origin. With the exception of the EU. Gibraltar is not in the EU.
Probably nothing is better than 0%. You will be able to reinvest more in your business and boost growth.
A flat tax is when all taxable income is subject to the same tax rate, regardless of income level or assets; in this case, it's more like a fixed expense.
Take a moment to think about if your income will multiply 10x or 100x.
The fixed expenses will start being increasingly less important.
Well, I take the rent and substance expenses as if they were a flat tax. Because I know what it's going to cost me every year.
I agree with you. And that's what I wrote. Having a fixed expense is not important to me, that's why I don't mind paying rent in Monaco or substance in a company. That doesn't change the business bill 10x or 100x.
A tax of 5% or any other amount, yes.
Does your country of origin see Monaco as a blacklisted country for residence for natural persons?
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