Where to incorporate company for loan agreement?

[EliasIT]

Where should one establish a company if its sole purpose (unofficially) is to provide a loan of approximately 50K EUR to a private individual?

I am fully aware that an agreement must be made and that a lawyer should be involved in the agreement, but where would you set up the company so that there is the least amount of hassle but still credibility behind it?

The loan is for a non-family member or relative.

I have considered a US LLC in Delaware or Wyoming, but the loan is to be given to someone residing in an EU country, so it needs to appear quite serious, or as close to that as one can get.

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[Don]

EliasIT said:
Where should one establish a company if its sole purpose (unofficially) is to provide a loan of approximately 50K EUR to a private individual?

I am fully aware that an agreement must be made and that a lawyer should be involved in the agreement, but where would you set up the company so that there is the least amount of hassle but still credibility behind it?

The loan is for a non-family member or relative.

I have considered a US LLC in Delaware or Wyoming, but the loan is to be given to someone residing in an EU country, so it needs to appear quite serious, or as close to that as one can get.
Click to expand...

It is best to use a jurisdiction that does not have WHT on interest and is cheap and easy to maintain.
Estonia works quite well for this purpose:

• There is no WHT on interest payments to non-residents.
• no tax before profits are distributed so effectively 0% on interest income until you distribute profits
• no audit by default, possible to establish with no reporting
• cheap to form and maintain
• EU jurisdiction, easy to open EMI accounts
• commonly used for cash loans
• can use the local arbitration court that is cheap and fast and the decision will be accepted internationally in most jurisdictions across the world
• loan can be accompanied with personal surety
• lawyers 10x cheaper than in US if you need to enforce agreements

Last edited: Mar 8, 2024

 

[EliasIT]

Don said:

• cheap to form and maintain

Click to expand...

What's the costs for the most simple setup?

Can the shareholder be a Switzerland AG ?

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[Don]

EliasIT said:
What's the costs for the most simple setup?
Click to expand...

incorporation fees depend on various factors, but normally it is between 500 EUR - 1.2k EUR

EliasIT said:
Can the shareholder be a Switzerland AG ?
Click to expand...

yes

 

[EliasIT]

TAT and everything can be handled remote?

What if we want to dissolve the company, what are the costs? Simple kill it as we can do with US LLC's and Offshore corps?

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[SoNewToAllShit]

A fully legitimated company for 1000 euro setup costs? what is the company form?

 

[mytoofood]

EliasIT said:
What if we want to dissolve the company, what are the costs? Simple kill it as we can do with US LLC's and Offshore corps?
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second that question.

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[Don]

EliasIT said:
TAT and everything can be handled remote?

What if we want to dissolve the company, what are the costs? Simple kill it as we can do with US LLC's and Offshore corps?
Click to expand...

Yes, everything can be done remotely. However, the procedure can be slightly different depending on your setup (e.g., if you hire local directors, have corporate shareholders, type of company etc.), and fees can vary greatly depending on what you need.

There is a simplified dissolution method if you have a simple structure (one-man company) or a dormant company, so striking off a company can be rather simple and quick. Some people also choose to sell the company to a "professional liquidator" who will buy your company and handle the strike-off shortly after. It can take 6+ months in some cases.

The absolutely cheapest option for formation is 20 EUR or 265 EUR (if you have an e-residency/digital ID which costs 100 EUR) + fee for the registered address

If you have corporate shareholders, then establishing through notaries can cost around ~1k EUR.

You can also buy a ready-made company with a local director and obtain the shares of the company without notarization (simple online agreement).

Turnaround time can be from one day to one month.
Obtaining an e-residency/digital ID can take 2 months, but it is optional.

 

[EliasIT]

Thank you, will proceed later this months with a new company.

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[Fulton Abraham Sanchez]

Both locations are suitable (Delaware and Wyoming) . As a single-member LLC, you won't be required to file taxes with the IRS.

 

[JohnLocke]

I believe the biggest problem will be convincing the tax authorities that the loan is genuine. I have a strong suspicion that if, for example, A lives in Sweden and is to take a loan from a company in Estonia that is owned by B who is in Italy, and there is possibly a link between them (Facebook, Instagram, TikTok, LinkedIn, etc.), they will look into whether they can twist it into being tax evasion and not a loan?

And then I don't think one should come with a lender consisting of a company in Delaware or similar places. I'm sure the tax authorities will tear it apart as if it were cotton and tax the alleged borrower heavily and maybe even with a fine.

So, I think one should consider the above and then have a serious conversation with a tax lawyer about such a setup. I have a strong suspicion that one really needs to pay attention to all the small details.

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Disclaimer: Nothing I say should be taken as tax, legal or financial advice. Anything I say is for general informational purposes only. Always seek independent professional advice.​

 

[SoNewToAllShit]

JohnLocke said:
I believe the biggest problem will be convincing the tax authorities that the loan is genuine. I have a strong suspicion that if, for example, A lives in Sweden and is to take a loan from a company in Estonia that is owned by B who is in Italy, and there is possibly a link between them (Facebook, Instagram, TikTok, LinkedIn, etc.), they will look into whether they can twist it into being tax evasion and not a loan?
Click to expand...

how would you solve this ?

 

[Don]

SoNewToAllShit said:
how would you solve this ?
Click to expand...

It should reflect the market conditions.

 

[clemens]

If anyone goes that route and gets everything set up with a loan agreement that's solid, I'd like to hear about it. I really think it'll be tough to convince the tax authorities about the validity of such an agreement if the parties involved know each other.

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