Tax saving strategy to use for my existing business

[Rachitskiy]

Hey Guys,

have been researching the possibility of legal tax saving for some time and each time I settle on something - I get information that contradicts with what I read before. Could you help me out with the solution to the following:

I have 100% legal established business with big profits and a many daily transactions. Currently most of my clients use PayPal and Stripe (credit cards). Business is a US LLC. There is no office nor employees in the US (besides me). I'm looking to move business to offshore to not pay corp. taxes on retained profits - so I can invest them before taxes. My family and I will be moving from US as well, most likely somewhere to Europe (northern).

What reliable country of incorporation would you recommend preferably with no tax or very little tax ? Who would you recommend as an agent ? What bank should I use and how easy would it be to get 2checkout and PayPal (maybe some other payment processors) ? The fees don't matter that much, I would rather pay more for solid services if needed.

Am I able to keep US LLC and pay to it from time to time, so it can manage my US assets, such as hosting services ?

Thanks for all your help,

Anton

 

[JohnLocke]

Welcome aboard 🙂

As i read you, there are 2 issues here, you want to get a tax friendly enviroment for your business i.e. pay as little tax as possible on the other hand you need payment processors like PayPal which restrict you to only use a company from the same country as you are resident.

What I would do is to keep my setup in the US LLC if that is possible even after you moved to another country and form a offshore company that is invoicing the US LLC so you lower the profits there and get the money tax free transfered into a offshore company for instant in the Seychelles, Belize or even Cyprus!

I don't know how the tax regulations are for a US LLC but you may easeliy find out if this is a viable solution to reduce the tax burden in the LLC by consulting a CPA in the USA, can't cost you much in fee to get an answer to that.

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[Rachitskiy]

Thanks, Admin!

Let's forget about using PayPal, I can rely fully on 2CO. The solution that you provided would not work or would not be 100% legal, since the offshore corp will be CFC and if my LLC pays to my offshore corp, I should pay all taxes on the income of offshore corp derived from US LLC (actually, when you think of it, it's pretty logical, since this would be an awesome way to conduct business in US, but not pay much taxes).

 

[negon]

If you consider to invoice the US company from an foreign country what is wrong with that if I may ask? You should be able to reduce the profits that way in the US corp.

just curious?

 

[Rachitskiy]

auric said:
If you consider to invoice the US company from an foreign country what is wrong with that if I may ask? You should be able to reduce the profits that way in the US corp.

just curious?
Click to expand...

If I fully own offshore (at least 50%), then it is considered as Controlled Foreign Corporation ( CFC).

In the case the CFC has any Subpart F income, such shareholder is required to include the part of this income attributable to his share, even if the company has not yet distributed this income to the shareholders.
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And subpart F income includes:

foreign base company services income, which, in general, means income (whether in the form of compensation, commissions, fees, or otherwise) derived in connection with the performance of technical, managerial, engineering, architectural, scientific, skilled, industrial, commercial, or like services, which are performed for or on behalf of any related person outside the home country of the CFC. This position includes substantial assistance contributing to the performance of services by a CFC that has been furnished by a related person or persons.
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Herewith a related person is a person (individual, corporation, partnership, trust, or estate), which controls or is controlled by the CFC, or a person, which is controlled by the same person, which controls the CFC. Control means direct or indirect ownership of stock possessing more than 50 percent of the total voting power in the legal entity.
Click to expand...

 

[negon]

Rachitskiy said:
If I fully own offshore (at least 50%), then it is considered as Controlled Foreign Corporation ( CFC).
Click to expand...

True but if no one knows that you own the company the story is different.

 

[Rachitskiy]

auric said:
True but if no one knows that you own the company the story is different.
Click to expand...

yeah, agree with that, but I want to be closer to 100% legal and hence as transparent as possible.

Anybody heard abut corporation in New Zealand ? Seems interesting, gotta have office there though, but 0% corp tax on foreign income and PayPal works there fine.

Currently I see my options as:
Cyprus (cheaper 2CO fees, but no PayPal, coinbase supported)
NZ (higher 2Co fees, but PayPal and Stripe are there anyway, no coinbase though. Higher cost of ownership, but stable country)
Belize (2CO fees are same as in NZ, no Coinbase, no PP, no Stripe, but ownership is cheaper and much easier, though the stability is in question for me)

 

[negon]

You can open a personal account in Cyprus with withdrawal to debit card, that will work. Not sure how they will deal with a Cyprus company I will try that.

New Zealand may work better for you. But why not consult a CPA or Attorney to help you with your current setup, they will easily be able to help you setup something that is 100% legal.

 

[Rachitskiy]

auric said:
New Zealand may work better for you. But why not consult a CPA or Attorney to help you with your current setup, they will easily be able to help you setup something that is 100% legal.
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I still have not found CPA/Attorney that has good knowledge in offshore set-up, my current CPA is more knowledgable about US rather than offshore.

 

[negon]

Where are you located, country? maybe I can find some or I can find a CPA or tax lawyer that works in a network.

 

[Rachitskiy]

auric said:
Where are you located, country? maybe I can find some or I can find a CPA or tax lawyer that works in a network.
Click to expand...

Thanks, I'm currently the US. I spoke to some, but they all appeared like citing whatever I read on the sites, not much new and not much answering my questions.
I have another one scheduled for Monday through my current CPA, maybe she'll be able to assist me better.

 

[negon]

I'm sure if you consult someone from deloitte, pwc or similar they can help you to structure something that is 100% legal.