Best way to set up company to charge customers Tax Free?

[HeinzKetchup69]

Is there any company (between the ones listed below) that allow the company to be used to charge clients for services/goods, and then transfer the funds tax free into a foreign company: (e.g: UAE company) without going into illegal tax evasion areas?

For example:
- Irish company used to set up Stripe charges clients
- Profits are distributed from the Irish company into a UAE company either through Dividends OR the UAE company charges the Irish company for services
- The Director would be a resident of the UAE or similar low tax jurisdiction ( such as: Hungary, UAE, Hong Kong, etc...)


Is this possible and what is the Tax legal framework to make this work?

The reason behind this is that I need one of the countries below to charge my clients since it has high reputation and Stripe is easily supported.

Countries I'm talking about to set up the company that would charge clients on the front end:
Australia Austria Belgium Canada Czechia Denmark Finland France Germany Ireland Italy Netherlands New Zealand Portugal Romania Spain Sweden Switzerland
( I can legally reside in all of these countries to open bank accounts if required since I hold multiple passports )

 

[EliasIT]

The topic has already been covered in several threads here. It requires that you first register an operating company in the destination country (Company A), and then register a subsidiary (Company B), which is 100% owned by Company A and is registered as the payment processor for Company A.

You'll need an accountant or a lawyer to help you register this properly, otherwise, you might end up paying taxes in both countries.

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My personal favorite thread posted in the Mentor Group. Group of investment companies to avoid licensing.

 

[HeinzKetchup69]

EliasIT said:
The topic has already been covered in several threads here. It requires that you first register an operating company in the destination country (Company A), and then register a subsidiary (Company B), which is 100% owned by Company A and is registered as the payment processor for Company A.

You'll need an accountant or a lawyer to help you register this properly, otherwise, you might end up paying taxes in both countries.
Click to expand...

That is a problem. It is not seen very well from payment processors, and some banks, they want a real director (not a company) when you set up an account with them.

Is there a way to simply "charge" the main company a fee to transfer the funds into the secondary (tax free) company and keep them separate?

 

[EliasIT]

HeinzKetchup69 said:
Is there a way to simply "charge" the main company a fee to transfer the funds into the secondary (tax free) company and keep them separate?
Click to expand...

Not as far as I know.

HeinzKetchup69 said:
That is a problem. It is not seen very well from payment processors, and some banks, they want a real director (not a company) when you set up an account with them.
Click to expand...

if it is a problem, look inside mentor group gold, can only recommend it. as @jafo says.... There i fixed it for you.

Toggle signature
If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability!
My personal favorite thread posted in the Mentor Group. Group of investment companies to avoid licensing.

 

[daniels27]

To be honest, it definitely is possible. And I have seen many companies like this in the DACH area. You can for example setup a German company for your processing needs. Towards stripe you will claim to be resident in Germany and show them adequate proof of address. You then "relocate" to Switzerland and register your German company there. You then apply for a ruling with the tax authorities (most DTA include a ruling sharing, hence you only need one ruling with one country). You must state that you are a bona fide resident of Switzerland and only live in Switzerland but have the German company still and would hence suggest it to be taxed uniquely in Switzerland under the DTA articles X.

This is the very official way. It takes some effort, you can do it without tax advisor on your own if you want.

The alternative is that you set up your company in Ireland etc. You will still need to go there and get some address proof. Maybe open a bank account on a hotel you stay in etc. You will also need some mail receiving and forwarding agent for this in Ireland. You then set up another company in the jurisdiction of your choice. This company does all the operations while the Irish company acts as a Seller/Merchant of Record and only does the selling at a margin of typically 1 to 3%. You then pay taxes on those 3% in Ireland, which is about 1/400 of your turnover.

 

[HeinzKetchup69]

daniels27 said:
To be honest, it definitely is possible. And I have seen many companies like this in the DACH area. You can for example setup a German company for your processing needs. Towards stripe you will claim to be resident in Germany and show them adequate proof of address. You then "relocate" to Switzerland and register your German company there. You then apply for a ruling with the tax authorities (most DTA include a ruling sharing, hence you only need one ruling with one country). You must state that you are a bona fide resident of Switzerland and only live in Switzerland but have the German company still and would hence suggest it to be taxed uniquely in Switzerland under the DTA articles X.

This is the very official way. It takes some effort, you can do it without tax advisor on your own if you want.

The alternative is that you set up your company in Ireland etc. You will still need to go there and get some address proof. Maybe open a bank account on a hotel you stay in etc. You will also need some mail receiving and forwarding agent for this in Ireland. You then set up another company in the jurisdiction of your choice. This company does all the operations while the Irish company acts as a Seller/Merchant of Record and only does the selling at a margin of typically 1 to 3%. You then pay taxes on those 3% in Ireland, which is about 1/400 of your turnover.
Click to expand...

Sounds promising. Can you send me a PM?

 

[dany]

daniels27 said:
To be honest, it definitely is possible. And I have seen many companies like this in the DACH area. You can for example setup a German company for your processing needs. Towards stripe you will claim to be resident in Germany and show them adequate proof of address. You then "relocate" to Switzerland and register your German company there. You then apply for a ruling with the tax authorities (most DTA include a ruling sharing, hence you only need one ruling with one country). You must state that you are a bona fide resident of Switzerland and only live in Switzerland but have the German company still and would hence suggest it to be taxed uniquely in Switzerland under the DTA articles X.

This is the very official way. It takes some effort, you can do it without tax advisor on your own if you want.

The alternative is that you set up your company in Ireland etc. You will still need to go there and get some address proof. Maybe open a bank account on a hotel you stay in etc. You will also need some mail receiving and forwarding agent for this in Ireland. You then set up another company in the jurisdiction of your choice. This company does all the operations while the Irish company acts as a Seller/Merchant of Record and only does the selling at a margin of typically 1 to 3%. You then pay taxes on those 3% in Ireland, which is about 1/400 of your turnover.
Click to expand...

why make it so complicated? setup any company anywhere, register the processing company and done deal.

 

[JustAnotherNomad]

You could look into a partnership like a Dutch CV. Not sure how easy it would be to get banking for such an entity, but tax-wise, it would probably be a good idea.

 

[Houdini]

JustAnotherNomad said:
You could look into a partnership like a Dutch CV. Not sure how easy it would be to get banking for such an entity, but tax-wise, it would probably be a good idea.
Click to expand...

what are the tax benefits of an Dutch CV ?

 

[JustAnotherNomad]

It's a tax-transparent entity. To tax in NL if nothing happens in NL. Just like a US LLC, UK LLP etc.

 

[Houdini]

HeinzKetchup69 said:
That is a problem. It is not seen very well from payment processors, and some banks, they want a real director (not a company) when you set up an account with them.
Click to expand...

you can appoint a director in the UK LTD - no problem.

 

[bizman]

HeinzKetchup69 said:
That is a problem. It is not seen very well from payment processors, and some banks, they want a real director (not a company) when you set up an account with them.

Is there a way to simply "charge" the main company a fee to transfer the funds into the secondary (tax free) company and keep them separate?
Click to expand...

looking into mentor group gold I see lot's of methods to accomplish the mission with nominees, it's not that complicated.

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The reason to fail while you try to setup your business offshore....the guide that helped me setup my offshore company.

Wiseman sayings - May the gifts of three wise men fill your home with prosperity.

 

[Don]

JustAnotherNomad said:
It's a tax-transparent entity. To tax in NL if nothing happens in NL. Just like a US LLC, UK LLP etc.
Click to expand...

A dutch cv is not a legal personality.

Its basically just a contract, and it can not own assets or enter into contracts. Regardless its a tool that can be used in tax planning, but its only one part of the equation, as you would most often need to involve legal entities.

 

[sknomad]

Dutch CV is tax transperent entity. But dutch law states that all income passed through CV is considered to be income of a PE in Netherland. Each CV partner will be cobsidered a Dutch tax resident by having income in Netherland received by PE in Nerherland for all for income passed through Dutch CV. And all this income will be taxed in Netherland either. So if you form 2 offshore entities in a tax free jurisdiction which will be partners in Dutch CV, both companies will be considered a Dutch tax resident as all income passed through Dutch CV is considered of income of PEs of this 2 companies.
Dutch CV is unusable for tax reduction.
The same tax transparent entity exist in almost each EU country. And each EU country consider income passed through this type od entity of income received by a PE of entity partners.

 

[sknomad]

HeinzKetchup69 said:
Is there any company (between the ones listed below) that allow the company to be used to charge clients for services/goods, and then transfer the funds tax free into a foreign company: (e.g: UAE company) without going into illegal tax evasion areas?

For example:
- Irish company used to set up Stripe charges clients
- Profits are distributed from the Irish company into a UAE company either through Dividends OR the UAE company charges the Irish company for services
- The Director would be a resident of the UAE or similar low tax jurisdiction ( such as: Hungary, UAE, Hong Kong, etc...)


Is this possible and what is the Tax legal framework to make this work?

The reason behind this is that I need one of the countries below to charge my clients since it has high reputation and Stripe is easily supported.

Countries I'm talking about to set up the company that would charge clients on the front end:
Australia Austria Belgium Canada Czechia Denmark Finland France Germany Ireland Italy Netherlands New Zealand Portugal Romania Spain Sweden Switzerland
( I can legally reside in all of these countries to open bank accounts if required since I hold multiple passports )
Click to expand...

Problem with this structure is a lenght arm principle as well as transfer pricing rules.

 

[JustAnotherNomad]

sknomad said:
Dutch CV is tax transperent entity. But dutch law states that all income passed through CV is considered to be income of a PE in Netherland. Each CV partner will be cobsidered a Dutch tax resident by having income in Netherland received by PE in Nerherland for all for income passed through Dutch CV. And all this income will be taxed in Netherland either. So if you form 2 offshore entities in a tax free jurisdiction which will be partners in Dutch CV, both companies will be considered a Dutch tax resident as all income passed through Dutch CV is considered of income of PEs of this 2 companies.
Dutch CV is unusable for tax reduction.
The same tax transparent entity exist in almost each EU country. And each EU country consider income passed through this type od entity of income received by a PE of entity partners.
Click to expand...

You got it the wrong way around. Partnerships only pay tax on their local PE.
Just because income passes through a partnership does not mean it's taxable and it DEFINITELY will not magically make the partners tax resident.
Partnerships are very frequently used to save taxes - but getting access to banking without local substance (PE = taxable) can be tricky, so I'm not sure if this would actually be a viable plan.

 

[JustAnotherNomad]

sknomad said:
Problem with this structure is a lenght arm principle as well as transfer pricing rules.
Click to expand...

Not really. If you use a treaty to move the tax residency of the company under a DTA (as suggested by @daniels27) then you avoid this. You could also use a foreign branch, then such income would in many cases also be exempted from tax.
But even if you have to comply with transfer pricing restrictions, then so what? What's a fair price for payment processing? 3%? So you pay, what is it, 12.5%? of corporate income tax in Ireland on the 3% of payment processing. That's a whopping 3.75% of taxes on the profits after you have already deducted the Stripe fees, business travel expenses etc.

Tax won't be the issue with such a setup. It will be a lot harder to get access to banking and not getting banned by payment processors.

 

[sknomad]

JustAnotherNomad said:
You got it the wrong way around. Partnerships only pay tax on their local PE.
Just because income passes through a partnership does not mean it's taxable and it DEFINITELY will not magically make the partners tax resident.
Partnerships are very frequently used to save taxes - but getting access to banking without local substance (PE = taxable) can be tricky, so I'm not sure if this would actually be a viable plan.
Click to expand...

Dutch law exacfty states that passed through incone of this type of entity is considered to be a income of the PE of the partners and that all partners receiving income through this entity are considered as having PE in Netherlands. Read dutch law before writing an answer.

 

[daniels27]

Are you guys sure?
https://www.gtlaw.com/en/insights/2...-partnership-rules-your-cv-may-become-taxable

 

[bizman]

sknomad said:
Problem with this structure is a lenght arm principle as well as transfer pricing rules.
Click to expand...

That's exactly what people need to consider in such corporate constructions, most don't even know about transfer pricing! Things are getting more complicated for every year from now.

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The reason to fail while you try to setup your business offshore....the guide that helped me setup my offshore company.

Wiseman sayings - May the gifts of three wise men fill your home with prosperity.