Where to open an offshore company for consulting/programming consultancy

[blaupunkt]

I'm a EU resident, looking where to open offshore company + bank account for consultancy/ programming consultancy company. I work mostly in Europe, getting income from normal companies (right now from Germany). I was thinking about Seychelles. But what about bank account is it ok to open it there?

- Low initial deposit
- Online banking
- Debit card
- Supports Euro currency
- No Personal visit required
- No problem with sending money to exchange accounts

 

[James Blake]

Hi blaupunkt, I am also an EU resident and programmer as well. So your question is quite common.

I think going offshore won't work for you. I had the same problem. German companies (most European...) will have troubles to pay an offshore. They will ask questions... and then more questions. Avoid it -as you don't have to hide something.

I would suggest you 2 options:
a) Bulgaria
b) Cyprus


I have tried both.
So a quick analysis:

Bulgaria

- has the cheapest incorporation within EU (1/10 compared to Cyprus)
- 10% tax
- 5% dividends
- monthly cost (address + accounting) ~ 70e, depends on no. of invoices
- local banks will accept your company
- debit cards

Pros:
Stable, almost the lowest tax rate, cheap and easy

Cons:
dividends. A long story.


Cyprus

- prestige
- not cheap
- 12.5% tax
- 0% dividends
- local banks need a crystal clear description, then will accept (its not so easy like it was...)

Pros:
Stable, tax rate, dividends, easy

Cons:
Initial cost

-
for both options you can have an account though transferwise (a great fintech startup), EMIs, etc

Third, extra option:

Estonia
(A very interesting option)

- Great prestige
- low cost
- e-residency (100e)
- 0% tax (* please search about it)
- 20% dividends
- cheap running costs: Leapin.eu ~70e / month (all included 🙂 )
- physical bank options / EMIs

Cons:
dividends


I hope you find this useful and it saves you time.

Cheers.

 

[Mr Magoo]

what about Romania: 3% tax on corporate revenues, (as programmer you have low or no costs), 5% on dividends, quick, cheap incorporation.

 

[JohnLocke]

You can add to Cyprus that if the company is registered non resident the corporate tax is 0% - it can help in some setups.

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[blaupunkt]

Thanks.

I don't think that company which will pay me will ask questions why I'm offshore. My doubts are in German (European) banks. Will they send money to an offshore account without problem? And willl the money get there. What is your expierience?

 

[jackfrost]

blaupunkt said:
Thanks.

I don't think that company which will pay me will ask questions why I'm offshore. My doubts are in German (European) banks. Will they send money to an offshore account without problem? And willl the money get there. What is your expierience?
Click to expand...

They will as Finanzamt will not accept certain kinds of invoices, invoices from certain countries (especially all blacklisted ones) etc as deductible / VAT excluded etc just like that. The companies will care as the Finanzamt will -make- them care 🙂

Also CFC rules will kick in here big time: Hinzurechnungsbesteuerung ”“ Wikipedia

You are committing tax fraud if you don't declare it in your resident country. In case of Germany good luck...

PS:

- Cyprus 12.5%
- Malta 5-6% + 5000

Both no Finanzamt issues + VAT ID etc pp.

Last edited by a moderator: Nov 23, 2018

 

[blizz]

In this case you will need to pay tax somewhere in order to make use of double tax treaties. What you say @jackfrost is that the German tax office is accepting the use of double tax treties with Malta or Cyprus right?

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[jackfrost]

blizz said:
In this case you will need to pay tax somewhere in order to make use of double tax treaties. What you say @jackfrost is that the German tax office is accepting the use of double tax treties with Malta or Cyprus right?
Click to expand...

My answer was kind of split as in first part being that his German clients will have a big issue with trying to deduct his BVI, VAE etc invoices and most will simply flat out decline or will in the future after they showed those invoices to a German tax inspector. This becomes particularly problematic with those special countries that are blacklisted.
Second part was that he should incorporate his company(s) in either of those two places (including moving there and going through all the "Lebensmittelpunkt" tests that Germany does (i suppose he is from Germany) to let him off the income tax hook. (183 days doesnt matter s**t in Germany it is much more complicated) because it sounds to me that he is planning to just open up an offshore and thinks he can save taxes this way. This does not fly in Germany at all. He will be taxed on the company income in his private income tax see above link as well as Hinzurechnungsbesteuerung & Außensteuergesetz - Steuerkanzlei St Matthew London . And no you dont fuckin do a stupid thing like just not declaring this stuff in Germany especially if you have German clients 🙂 Germany is not the rest of the EU when it comes to tax. The cross checks will get you.
Cyprus and Malta will enable him to have the lowest rate along with proper jurisdictions for this, VAT IDs for proper invoices to his B2B clients in the EU without any problem etc pp.

 

[jackfrost]

blizz said:
In this case you will need to pay tax somewhere in order to make use of double tax treaties. What you say @jackfrost is that the German tax office is accepting the use of double tax treties with Malta or Cyprus right?
Click to expand...

PS: Germany does not apply DBAs in (a lot of) these cases and as outlined in the article will indeed "approximate" the profits of the foreign corporation for your German income tax.

 

[Mr Magoo]

@Admin

Admin said:
You can add to Cyprus that if the company is registered non resident the corporate tax is 0% - it can help in some setups.
Click to expand...

So with a non resident Cyprus corp I have to pay taxes elsewhere (e.g. my country of residence). How easy can I get a bank account for a non res Cyprus corp in Cyprus or elsewhere?

 

[negon]

Mr Magoo said:
@Admin
So with a non resident Cyprus corp I have to pay taxes elsewhere (e.g. my country of residence). How easy can I get a bank account for a non res Cyprus corp in Cyprus or elsewhere?
Click to expand...

With a non resident CYP country you may not be able to make use of any DTA! Since you won't pay tax in Cyprus so you have to pay locally. Anyway, it's very difficult to get the acceptance from the tax office using DTA!

 

[Mr Magoo]

OK, and what about getting a decent bank account with a non res CYP corp? So you say setting up a res CYP corp and paying the 12.5% will be difficult to convince the local taxman of?

 

[JohnLocke]

You can still open a Cyprus bank account for your company if you setup the company non resident but business must be transparent.

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[jackfrost]

Mr Magoo said:
OK, and what about getting a decent bank account with a non res CYP corp? So you say setting up a res CYP corp and paying the 12.5% will be difficult to convince the local taxman of?
Click to expand...

Non-resident = non taxed & non DTA. You will almost surely be taxed in your home country and usually in a very shitty way.

PS: Yes if you register resident you pay the 12.5 but will have an issue with your local tax agency.

 

[negon]

jackfrost said:
Non-resident = non taxed & non DTA. You will almost surely be taxed in your home country and usually in a very shitty way.
Click to expand...

bulls**t, you will get taxed in your home country like any other profits you take home. IF you try to cheat it's going to be a "shitty way" true! If you file your tax return including the profits from your non resident Cyprus company everyone is happy! What's the deal here!

 

[jackfrost]

Think you misunderstood me - non taxed as in not corporate taxed in Cyprus! NOT at all positive as you are going to be taxed in your home country.

Shitty deal here is depending on where your tax residency country is you are going to be taxed in different ways and not necessarily on the real profits but possibly estimated profits / revenue.

 

[negon]

jackfrost said:
Shitty deal here is depending on where your tax residency
Click to expand...

Seems indeed to depend very much on where you live. I had 0% issues with the tax office for the last 7 years. I have a professional and certified accountant to do and file all the paperwork. The income is tax at the same rate and conditions like my local income.

 

[Macky]

James Blake: whether Cyprus or Bulgaria, the OP will have to relocate there, as running a company abroad without a substance in that country is tax evasion I think.

 

[cyprus123]

I suggest Georgia. As an IT company you pay 5% tax only and you can easily open account in EU and Georgia, without CRS.

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[devnull]

Hi guys, i am also an german citizen., i have incorporated my company in Malta, as they are 35% corporate tax rate. But after 1-2 years, you can apply for 6/7th refund, so the tax will become effictive 5% tax rate and there is no "Gewerbesteuer"/business tax, if the construct are a Holding. I would recommend you a lawyer office, but they are very busy atm.

The cons in Malta are simlear to Cyprus but the Banking in Malta are hard to open, due to many bad news about Malta, but Revolut.com, Transferwise, etc are very easy.

When doing Malta, the "Finanzamt" will see that you pay 35% corporate tax and they think Malta are not cheap tax country at first look, but you can claim the tax refunds later.