Incorporation for non KYC

[JohnLocke]

daniels27 said:
Then, he should go to Switzerland or Liechtenstein, where they only get to see the addresses when they are doing the government audit at your office. But it most be possible. I mean Mullvad is big in Sweden and they are still operating.
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daniels27 said:
Yes, but his company is the Mullvad VPN for hosting. He won't have any customers if he knows them.
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So what you're saying is that the tax authorities in Switzerland are not as hysterical as the ones we know from Denmark? That sounds nice, and it makes me even more glad that I packed my things and got out of that shithole.

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[daniels27]

JohnLocke said:
So what you're saying is that the tax authorities in Switzerland are not as hysterical as the ones we know from Denmark? That sounds nice, and it makes me even more glad that I packed my things and got out of that shithole.
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Well, it is a nice place. Nice beaches and so. I like it. But for taxes, Europe is not the place to be. I consider Switzerland better than most of the rest, but it is also going down slowly now. But what surprises me is how Mullvad is able to operate from Sweden with an invoice like this:
https://www.collegesidekick.com/study-docs/2610691I mean it does not even say how much VAT has been paid. And it is just a bridge away from Denmark.

 

[Sols]

daniels27 said:
But what surprises me is how Mullvad is able to operate from Sweden with an invoice like this:
https://www.collegesidekick.com/study-docs/2610691I mean it does not even say how much VAT has been paid. And it is just a bridge away from Denmark.
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Mullvad's invoices are probably hard to use to claim back VAT for the buyer, but they are probably fine for Mullvad's own VAT filings. It's a Swedish company. The tax authority there wouldn't let it slide for this long. Mullvad's revenues for 2021 and 2022 were 97 million and 162 million SEK. The Swedish tax authority cares that enough VAT is being paid by Mullvad, which they can probably satisfy well enough by using the card information. Cards from cross-border financial institutions like Revolut and Wise might cause slight overestimation for some countries (Belgium, Ireland, and Luxembourg, IIRC), though.

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This is the probably the answer to your question.

 

[slade991]

Regarding the invoices, so that is one thing which is interesting in Singapore. As it is possible to use receipt, without customer information instead of invoices.

I haven't proposed retail model. Read the written again.

KYC as AML/CTF procedure is standard in all service models, including IaaS in almost every jurisdiction in the West.

Part of my portfolio includes IaaS in US, Switzerland, UK, Netherlands, Germany and Singapore where our operating companies have racks, cages and suites as well as antenna rooftop space with our equipment. Those companies lease resources to contractual parties against which we performed due diligence, hence we are compliant towards authorities, including US.

Those parties have access and usage rights of our resources and they can create whatever they want - creating FX virtual instances, switches with virtual IX access and IP transit, computational nodes, Storage-as-a-service, PTP and NTP stratum 1 time-as-a-service etc. - excluding obviously forbidden stuff.
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So you're basically saying that the US entity would bill the foreign entity which will not be considered reselling the servers / vps ? So how is that foreign entity supposed to justify getting payment from hundreds / thousands of customers and have a public website showing they provide hosting service ? This seems like trouble brewing, and a worst solution in the long run.

KYC/AML is standard for financial services, insurances, virtual asset providers etc... Unless i am mistaken there is no obligation for KYC in the EU or at the moment in the US for IAAS.

Last edited: May 6, 2024

 

[mraleph]

Your framework is this

slade991 said:
Hello all,

I currently own a us llc, however a new law for IAAS will soon require providers to ask customers for KYC information. Problem is our niche is exactly the opposite, not requiring any KYC and 90% of our customers pay with crypto.
The current setup is that the crypto is converted to fiat through exchange and then hit our corporate bank account.

I'm now looking at incorporating somewhere else where i can keep the no KYC requirement for my business. However it doesn't seem very clear where that would work.
Does anyone know which country i could incorporate where i could conduct my business without asking any information from my customer ?

Obviously we do not provide any financial solution or the like, only provide services and crypto is only used as a method of payment.

Thank you!
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where you later stated that you have rented US infrastructure.

So, my assumption is/was that you require to retain US operations thru US entity and infrastructure.

slade991 said:
So you're basically saying that the US entity would bill the foreign entity which will not be considered reselling the servers / vps ? So how is that foreign entity supposed to justify getting payment from hundreds / thousands of customers and have a public website showing they provide hosting service ? This seems like trouble brewing, and a worst solution in the long run.

KYC/AML is standard for financial services, insurances, virtual asset providers etc... Unless i am mistaken there is no obligation for KYC in the EU or at the moment in the US for IAAS.
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Our European companies are working with Equinix, DigitalRealty and IronMountain as primary providers - data center owners and operators in EEA where their KYC is/was performed routinely.

Even Swiss secondary providers are performing KYC with request to identify the end users - SolarCom and their derivatives (they are using DigitalRealty/Interxion).

Do you have ASN and own address scope or you get it from provider as well? The question is about your position in a chain - do you only rent U or whole racks with equipment? How do you secure the network - multihommed or?

I think that you do not comprehend the KYC requirements regarding IaaS and options you may have when proper corporate structure in favorable jurisdictions is set-up. I don't know your business model and can't go into any more assumptions, but one thing is sure - the era of anonymous cryptocurrency payments is soon to be over - if you don't structure your business in line with regulatory requirements, it will cost you much more than than you may save by trying yesterday's solutions.

My idea was to shield the actual business with one or more entities in appropriate jurisdiction(s) chained with separate agreements. US entity just leases whatever it leases from provider. That entity provides certain services to another foreign entity(ies) such as hyperscaled virtualization, metal-as-a-service etc. with a KYC. You actual hosting business should be the last.

Layer upon layer.

 

[slade991]

Our European companies are working with Equinix, DigitalRealty and IronMountain as primary providers - data center owners and operators in EEA where their KYC is/was performed routinely.
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Yes they do. But not because they have to, but because as you said it's widely spread and accepted. Mostly to prevent fraud. As far as i am aware there is no law in EEA and US at the moment to force IAAS to do KYC, apart for the one that might pass in the US.

Do you have ASN and own address scope or you get it from provider as well? The question is about your position in a chain - do you only rent U or whole racks with equipment? How do you secure the network - multihommed or?
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We don't have our own ASN at the moment. We rent bare metal and setup our own virtualization on top of that.

where you later stated that you have rented US infrastructure.

So, my assumption is/was that you require to retain US operations thru US entity and infrastructure.
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We have some servers in the US. We have servers in US, Canada and the EU. It would be a shame to have to get ride of the US server but if that is what it takes then we'll do it. We could also get rid of the US entity.

I think that you do not comprehend the KYC requirements regarding IaaS and options you may have when proper corporate structure in favorable jurisdictions is set-up. I don't know your business model and can't go into any more assumptions, but one thing is sure - the era of anonymous cryptocurrency payments is soon to be over - if you don't structure your business in line with regulatory requirements, it will cost you much more than than you may save by trying yesterday's solutions.
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If you can link me the laws and official texts that force IAAS to do KYC i'd be happy to be proven wrong. You're certainly right that i don't know the "options you may have when proper corporate structure in favorable jurisdictions is set-up." which is why i was posting here.
As far as we've looked into it, it is an everchanging system but there is no obligation as of now. I know that it will get harder and harder, to offer non KYC services however this is our niche and business model, so it is not an option to do KYC. Our business is setup with regulatory requirements, which are none at the moment. As it has been confirmed by accountant when we looked into Singapore, it would also be possible there for now with receipt instead of invoices. I agree with you that it's not likely to stay that way for very long, however we have no choice but to keep trying to find a friendly environment.

My idea was to shield the actual business with one or more entities in appropriate jurisdiction(s) chained with separate agreements. US entity just leases whatever it leases from provider. That entity provides certain services to another foreign entity(ies) such as hyperscaled virtualization, metal-as-a-service etc. with a KYC. You actual hosting business should be the last.
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I see but as the hosting business even if it is the last is still leasing without kyc wouldn't it still count as a reseller and be under the new law as soon as someone start looking?

does anyone knows any good All-in-one solution for incorporating and baking in Iceland, Switzerland, Liechtenstein ? Which seems to be the location i see recommended the most.

Last edited: May 6, 2024

 

[lavel]

Sols said:
Mullvad's invoices are probably hard to use to claim back VAT for the buyer, but they are probably fine for Mullvad's own VAT filings. It's a Swedish company. The tax authority there wouldn't let it slide for this long. Mullvad's revenues for 2021 and 2022 were 97 million and 162 million SEK. The Swedish tax authority cares that enough VAT is being paid by Mullvad, which they can probably satisfy well enough by using the card information. Cards from cross-border financial institutions like Revolut and Wise might cause slight overestimation for some countries (Belgium, Ireland, and Luxembourg, IIRC), though.
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I don't understand how the tax authorities in Sweden allow that kind of invoice and approve them as valid. Most laws are the same in Scandinavia, and today there must be the name and address of the customer on the invoice for them to be valid.

 

[slade991]

lavel said:
I don't understand how the tax authorities in Sweden allow that kind of invoice and approve them as valid. Most laws are the same in Scandinavia, and today there must be the name and address of the customer on the invoice for them to be valid.
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When you go to a brick and mortar shop, there is no customer information. I am not familiar with scandinavia but it might be that they are able to use receipt instead of invoices, the same as how the brick and mortar shops usually do.

 

[mraleph]

slade991 said:
Yes they do. But not because they have to, but because as you said it's widely spread and accepted. Mostly to prevent fraud. As far as i am aware there is no law in EEA and US at the moment to force IAAS to do KYC, apart for the one that might pass in the US.



We don't have our own ASN at the moment. We rent bare metal and setup our own virtualization on top of that.


We have some servers in the US. We have servers in US, Canada and the EU. It would be a shame to have to get ride of the US server but if that is what it takes then we'll do it. We could also get rid of the US entity.


If you can link me the laws and official texts that force IAAS to do KYC i'd be happy to be proven wrong. You're certainly right that i don't know the "options you may have when proper corporate structure in favorable jurisdictions is set-up." which is why i was posting here.
As far as we've looked into it, it is an everchanging system but there is no obligation as of now. I know that it will get harder and harder, to offer non KYC services however this is our niche and business model, so it is not an option to do KYC. Our business is setup with regulatory requirements, which are none at the moment. As it has been confirmed by accountant when we looked into Singapore, it would also be possible there for now with receipt instead of invoices. I agree with you that it's not likely to stay that way for very long, however we have no choice but to keep trying to find a friendly environment.


I see but as the hosting business even if it is the last is still leasing without kyc wouldn't it still count as a reseller and be under the new law as soon as someone start looking?

does anyone knows any good All-in-one solution for incorporating and baking in Iceland, Switzerland, Liechtenstein ? Which seems to be the location i see recommended the most.
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If you rent the bare metal with US entity, you may resell it with KYC to another entity in different jurisdiction. Virtualization should be performed by second entity but VM/VC hosting should be offered with third entity, all in different jurisdictions. It would not constitute reselling between second and third entity as there would not be the same service.

Be creative and use clustering solution so you can combine resources from different jurisdictions.

I think that you are aware that you should adapt both your business model and structure.

 

[slade991]

If you rent the bare metal with US entity, you may resell it with KYC to another entity in different jurisdiction. Virtualization should be performed by second entity but VM/VC hosting should be offered with third entity, all in different jurisdictions. It would not constitute reselling between second and third entity as there would not be the same service.
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Thank you i will look into it.

 

[Forester]

slade991 said:
does anyone knows any good All-in-one solution for incorporating and baking in Iceland, Switzerland, Liechtenstein ? Which seems to be the location i see recommended the most.
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I know personally one clever Swiss freelancer who is managing this at CH and LI for smaller and medium businesses that are seeking tailor-made solution. From what I have witnessed, she does her job well. Yet she insists on performing some due diligence on her clients, to prevent reputation risk with her partner lawyers, banks etc.
Honestly, I am not sure whether she is able to help you as your business might be too complicated or too large in scale ”“ but I can ask her, if you are interested.


Just a side-note: In my amateurish opinion, @mraleph is truly right here Incorporation for non KYC and here Incorporation for non KYC.

Last edited: May 6, 2024
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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[Marshal]

Marshal said:
Monero will soon be removed from all licensed crypto exchanges. There will be no way to cash out this crypto easily and cost effective. Anonymity is costly.
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Just as predicted... On May 7, LocalMonero announced that, effective immediately, all new signups and advertisement postings for Monero (XMR) trades are disabled. On May 14, the platform will disable the trading of the privacy-focused crypto asset.

LocalMonero to shut down P2P exchange after seven years of operation

 

[slade991]

I know personally one clever Swiss freelancer who is managing this at CH and LI for smaller and medium businesses that are seeking tailor-made solution. From what I have witnessed, she does her job well. Yet she insists on performing some due diligence on her clients, to prevent reputation risk with her partner lawyers, banks etc.
Honestly, I am not sure whether she is able to help you as your business might be too complicated or too large in scale ”“ but I can ask her, if you are interested.
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Thanks! At the moment we are looking into different options. But i'll let you know if we need. I appreciate the offer.

Just a side-note: In my amateurish opinion, @mraleph is truly right here Incorporation for non KYC and here Incorporation for non KYC.
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I agree that he is right, i noted his comments and will definitely consider them. However the setup he is referring too doesn't change the core of the problem which is KYC for customers. His setup is a way to be able to keep the US entity and the US servers by layering companies. Which is great, but at the end of the day the company doing the hosting business still need a jurisdiction where it can do so without KYC which is the main point of the post. We do not have the funds now to be able to layers 3, 4 or more companies to save the US business / servers, especially considering that it is a fraction of our userbase. The mose important and urgent matter is to incorporate somewhere where we don't need to publish customer information while doing our taxes.

Just as predicted... On May 7, LocalMonero announced that, effective immediately, all new signups and advertisement postings for Monero (XMR) trades are disabled. On May 14, the platform will disable the trading of the privacy-focused crypto asset.
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Damn... That sucks. Kraken also just dropped Monero for Germany. The last hope will be Haveno when it is ready for release.

 

[Forester]

slade991 said:
Thanks! At the moment we are looking into different options. But i'll let you know if we need. I appreciate the offer.
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OK. You are welcome.

slade991 said:
We do not have the funds now to be able to layers 3, 4 or more companies to save the US business / servers, especially considering that it is a fraction of our userbase.
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Oh well. Yes, this is fully understandable.

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...

 

[mraleph]

slade991 said:
We do not have the funds now to be able to layers 3, 4 or more companies to save the US business / servers, especially considering that it is a fraction of our userbase. The mose important and urgent matter is to incorporate somewhere where we don't need to publish customer information while doing our taxes.


Damn... That sucks. Kraken also just dropped Monero for Germany. The last hope will be Haveno when it is ready for release.
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I presume that your user base are natural persons and maybe some legal ones as well.

For a fraction of users, it's not feasable to set-up layered structure. And especially if you don't own the infrastructure. But you haven't presented that at the start.

Iceland may be a legal jurisdiction for your company regarding KYC requirement for IaaS as some providers offer anonymous hosting. But, do a reaserch about that.

Beware that payments are/will be regulated within AML framework hence you'll have KYC requirement

Don said:
KYC is usually undertaken as part of Anti-Money Laundering (AML) requirements.
KYC-only is in cases, for example, when you need to verify someone's age.
In more and more jurisdictions, accepting crypto payments is immediately subject to AML rules. So you should select a jurisdiction which does not have that issue.
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You may upgrade to MG and contact user @VESTANON - perhaps, their service can be of assistance regarding your specific case.

Last edited: May 10, 2024

 

[GPT]

JohnLocke said:
From personal experience you better have the customers name and details on each invoice. If the tax office is going crazy they will tell you these invoices are not real but fake and you get taxed personally on the total amount of each invoice.
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I also experience this right now.

First time I experienced it was when Cyprus went bankrupt about a decade ago and you had to upload an underlying document for every outbound transaction. Yes, this is not the same as this new USA legislation. Only mentioning it as it is nothing new.

More recent in Switzerland (postfinance in 2018-2019) I had about once per month a request for documentation for inbound or outbound transfers. The claim here had to do with sanctions.

Also in the Netherlands in 2023-2024 banks ask at random for their underlying documents. Here a contract would also suffice. In NL specifically it could also be the tax authorities that use the banks to collect information to build their cases.

In general the following;

With b2b clients tax authorities in both first and second world countries will not accept “email address only” when you are being audited. The thought process here is VAT fraud.

For b2c you can get away with less information on your invoice for as long as you mention the vat and pay the vat. It depends a bit per jurisdiction but with lower amounts it isn't a big problem (yet).

However. things are changing. It won't be years anymore before you have to collect more information from your customers. In that sense, look into changing your business model. Going to the next jurisdiction isn't the solution.

Last edited: May 10, 2024