Most tax efficient EU solution for companies?

[kave3i]

Hi all,
new member here...

Hopefully I can get some guidance on this one:
I'm looking to find out what is the best possible EU solution for setting up an Internet Marketing Business?
Most of the customers are US/CA based ( some are EU too ) 99% of payments come in from Paypal via invoices.

Paying taxes is no problem, but Ideally want the simplest,easiest to manage, and lowest amount taxes structure. No need to be anonymous, no crazy offshore setup.. but a perfectly legit "Small Amount of Taxes" EU setup which will allow me to open a business Paypal account and business bank account.

Business itself is not dodgy or shady, basically selling services online to my clients. Services related to marketing, advertising etc...

I have looked into Estonia E-residency setup and all is fine until I want to pay myself and then I get hit with a 20% flat tax rate, which isnt the smallest in the world...
A situation if I was to pay myself a dividend could be broken down into:

-20% Corp Tax Estonia Country
-13% Personal Income tax in the country where I'm resident

There goes my 33% of profits...

I've looked into Delaware/Wyoming 0% tax setup and the fact they dont publicly publish managers/directors/shareholders etc.. but opening a bank account becomes a problem then...or does it ? If someone has more info on this one I would be much obliged.

After reading posts here on the forum, I've also seen that there could be a possibility to have a Malta/Cyprus company as well?

Biggest obstacle I can see here, is that even if I do succeed to find a Low Tax EU country, I would be managing that company from an EU country and we all know the EU rules that say

"that if a company is managed and run from
Country B it becomes the same as it was incorporated in Country B regardless of the actual company being incorporated in Country A" which would be the case for me as my setup is ran entirely online, so effectively not accomplishing much.

Or if there is a way to cheaply prove/make work that the company is actually being ran from Country A as per above?


Anyone able to chime in on this one ?
What kind of setup am I looking at here? someone with a client/themselves in a similar situation based in EU?

Finally, what setup costs am I looking at here?

 

[Vince]

it's Malta at the moment, I believe.

approx. 5% tax rate for companies.

then for personal taxes, if you change your tax residency there under the Global Residence program, it's 0% personal tax for income not remitted to a Malta bank, 15% for income remitted to Malta banks, however they have a minimum of 15000€ you must pay per year (+ the rental costs).

they do not even have a minimum period of stay in the country per year, they just forbid you to stay in a single other country for over 6 months per year (but they dont check this), so in reality you would have to have a house there, but wouldn't ever actually have to go to Malta.


For US LLC, usually europeans forget the fact than when they talk about 0%, they are referring to State tax, but there is federal tax that you may be liable for. You should check this with a US tax laywer if you want to go that route.

 

[Vince]

kave3i said:
Hi all,

"that if a company is managed and run from
Country B it becomes the same as it was incorporated in Country B regardless of the actual company being incorporated in Country A" which would be the case for me as my setup is ran entirely online, so effectively not accomplishing much.
Click to expand...

changing residency is the best option if possible then it will be very hard for them to prove where you are actually spending your time, unless they audit you, look at bank records, etc.

if you're paranoid still, as a second layer of protection you can also close bank accounts in your home country, so they can't track where you are spending money.

 

[kave3i]

That's interesting Vince, thank you.
My brother has been living in Malta for the past 8 years, how can I leverage that?

 

[Vince]

kave3i said:
That's interesting Vince, thank you.
My brother has been living in Malta for the past 8 years, how can I leverage that?
Click to expand...

I'm sure there are ways, I wish I had a brother there 😀

Maybe he can put your name in the lease or setup a dummy rental to you of his house, so you wouldn't even have to get your own place to have your tax residence there.

He can also take care of the applications for you.

always best to check with a Malta business/immigration lawyer and see which is your best route for your particular case.

 

[kave3i]

Haha 😀
mind if I PM you @Vince ?

 

[Spinat]

This is interesting read, may take advantage of your service Vince if it's okay?

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Specialized in advisory service for tailor made Offshore setups with banking and payment processing. Privacy and Anonymity is my priority.
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[Vince]

I don't have a service, I'm actually just have been checking out the same and decided to move tax residence to Malta until the end of this year 😀

my advice is to contact a Malta lawyer specialized in setting up companies and helping you with the residence application process. I found these guys: Malta Global Residence Programme | Chetcuti Cauchi Malta

I have no relation with them, so use at your own risk!

 

[kave3i]

Bump.

 

[KJK]

Vince said:
changing residency is the best option if possible then it will be very hard for them to prove where you are actually spending your time, unless they audit you, look at bank records, etc.

if you're paranoid still, as a second layer of protection you can also close bank accounts in your home country, so they can't track where you are spending money.
Click to expand...

Cool Vince!

Do you have experience with this? Like someone spying on you, where you spend your time, where you use bank accounts/cards, what flights you took?

Maybe I'm a bit too paranoid but if it were so easy (claiming to live in Malta), I imagine more people would be doing it. I can see regulations, laws and oversight getting tighter and tighter inside the European Union... Faking residency seems like a temporary solution for me, it may work for a while but not sure how long that while will be.

Also I think this is a two-way issue, Malta may not care about where you spent most of the time but your home country may. And then you're in this gray state of being a "perpetual traveller", resident nowhere but everywhere.

I wish I had a brother living for 8 years in Malta as kave3i has, at least I'd have some proof of ties to a/the country. 😀

 

[kave3i]

What would you then?

 

[Vince]

KJK said:
Cool Vince!

Do you have experience with this? Like someone spying on you, where you spend your time, where you use bank accounts/cards, what flights you took?

Maybe I'm a bit too paranoid but if it were so easy (claiming to live in Malta), I imagine more people would be doing it. I can see regulations, laws and oversight getting tighter and tighter inside the European Union... Faking residency seems like a temporary solution for me, it may work for a while but not sure how long that while will be.

Also I think this is a two-way issue, Malta may not care about where you spent most of the time but your home country may. And then you're in this gray state of being a "perpetual traveller", resident nowhere but everywhere.

I wish I had a brother living for 8 years in Malta as kave3i has, at least I'd have some proof of ties to a/the country. 😀
Click to expand...

there's a lot of people doing it, but this Global Residence program is still relatively unknown and new. I have a friend that already went through the process and his lawyers told him not to worry about it, and to just stay there a few weeks of the year. Also know some people in Malta that told me the same.

regarding your home country if you close down all your bank accounts in that country, they have no easy way of tracking you, and regarding the flights the EU has no borders so that doesnt really prove anything. I mean if you're super paranoid about it, you can just buy some refundable flights so you have the proof of travel, and then refund them.

Remember it's not illegal to stay in your home country, you just cannot stay there legally for longer than 183 days per year to avoid being a tax resident, and they would have to prove that.

since laws change all the time, every solution is a temporary solution. Even offshore bank accounts seem mostly useless now with AOEI reporting.

 

[KJK]

Thanks Vince, appreciate your point of view! I'm playing the devil's advocate here.
If a lawyer tells me not to worry, I worry even more.

Please go on with me:

Let's say you will spend 122 days in Malta, 122 days in your home country and 122 travelling the world.

What if: your home country doesn't need to prove you spend 183+ days there, on the contrary you must prove that you spend 183+ days somewhere else.
My logic is:

I've read some of the bilateral double tax treaties and the rules are usually the same - the treaties kinda always follow the same template, like two countries get together, Ctrl+C and Ctrl+V and sign this treaty with some rules. But they still differ, some countries have them very light and flexible (Balkans), some not that clear (Poland) and some very difficult to avoid (Finland). For USA nothing will really help you and you are screwed anyways.

You can find many examples online. The treaties determine your residency in the order of importance - where you have a "habitual abode", where you usually physically stay, where is your "center of vital interests". If none of these can be determined, then the last rule applies and that is your nationality (name of the country on your passport).

In your case you don't really stay anywhere most of the year, you don't have important ties to a country so it can all end up with the home country wanting to tax you because you are still their citizen. Kinda what USA is doing, only USA is declaring it clearly and in advance; in other countries it may depend on the benevolence/malevolence of some officer.

Vince said:
they have no easy way of tracking you, and regarding the flights the EU has no borders so that doesnt really prove anything. I mean if you're super paranoid about it, you can just buy some refundable flights so you have the proof of travel, and then refund them.
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This is actually another thing I was wondering about. Sure you can fly from e.g. France to Germany without the need for a passport, I even managed to fly inside Schengen zone once without any valid document whatsoever, no passport, no ID, nothing. Just noone at the airport didn't want to see anything. 😀

What about when you're returning from another country - can be Russia, USA, or even UK or basically any non-EU country. The passport guys at the airport want to see your document (or you can go through e-gates that scan your passport and compare the biometric data). My real question is - is this information somehow stored and shared? Like some paneuropean big brother system that tracks all people entering and leaving? I imagine the USA have something like it.

 

[Vince]

KJK said:
Thanks Vince, appreciate your point of view! I'm playing the devil's advocate here.
What if: your home country doesn't need to prove you spend 183+ days there, on the contrary, you must prove that you spend 183+ days somewhere else.
My logic is:
Click to expand...

that would be an inversion of the burden of proof. That's not how most western legal systems work.

if you are that paranoid and/or your risk tolerance is that low, I don't recommend you even thinking of offshore or trying any of this because you won't sleep well at night, so you should just pay your taxes in your home country like the vast majority of the people. As with everything, there is always a risk associated with it, that's why everyone else isn't doing it.

What I'm saying is if you open a business in Malta, get a residence in Malta, open bank accounts in Malta, go there periodically, for all legal purposes, you will be a tax resident there and you won't be breaking any law, and you won't get into any trouble with the local authorities.

Then it's up to you if you want to take your chances and stay more than 6 months in another country. I can't offer any advice if it will work or not because every country legal system is different, and they all enforce their laws in a different away. What I can tell you is my friend is german and he is doing this after cutting all practical ties to Germany such as bank accounts, utility bills, etc (which I believe you don't have to as MOST immigrants will keep their house and accounts in their origin country while working in another country). Germany has probably one of the most advanced if not the most advanced tax enforcing systems in Europe.

 

[happyjohn]

KJK said:
What if: your home country doesn't need to prove you spend 183+ days there, on the contrary you must prove that you spend 183+ days somewhere else.
My logic is:
Click to expand...

you need to proof it with bills you get from GAS stations, Hotels, food you buy and stuff like this. Without bills from such you will lose the case towards the ta auth.