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CBI St. Kitts + Taxes

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eRabbit

eRabbit

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May 3, 2020
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Hi everybody.
I currently work as an affiliate marketer and have a business for that.
If I buy a St. Kitts CBI, and move there, how much taxes would I pay for affiliate marketing/YouTuber work? Would I pay no taxes? Would I need to open a local business? If I did, would I have to pay taxes for that? Otherwise, what would be the best set-up in order to pay 0% tax?
 
you would pay 0 taxes. but be mindful that Youtube/Google will withhold⁤ about 24% of your total revenue if your country of residence doesn't have a tax⁣ treaty with the US. St kitts does have a DTT with the US, but it's⁢ only limited to social security benefits.
Don't. It's 33%. although you can reduce it massively, you still won't be able to︂ get any good transactional bank account for your company
Legally, if you︄ incorporate a company offshore but you still manage it from st kitts, your company will︅ be considered a tax resident in Nevis (PE rules kicks in) and will pay the︆ regular CIT. it's not really enforceable in practice however, but if I would play that︇ card, I would rather stay in a territorial tax country like Malaysia (I have a︈ base there and it's a beautiful country) or Thailand and not staying in an island.︉ The passport is nice a collectible and a good travel option, but staying long-term on︊ the island, however, is not.
But this is just my personal preference. So you do︋ you.
 
Curious, will they simply keep the 24% in their pockets or to whom‌ will they pay this withholding tax?
 
They will pay that 24% to‍ the US government. Governments have withholding tax to block SMEs from shifting their profits to⁠ tax havens
 
I have a Portuguese Passport and am currently in Italy where I get a 90%‌ tax exemption, virtually ending up paying about 2.5% of what I earn in taxes.
So, if I work with various affiliate marketing platforms, and other brands from the EU and‍ the US earning affiliate commissions, I'm assuming they'd also keep 24% of my earnings if⁠ I was residing in St. Kitts?
The thing is that most of these platforms and⁤ brands require an invoice, and if I was residing in St. Kitts, or other tax⁣ free country, how would I provide them an invoice? What would be other options for⁢ eeping my taxes as low as possible on my current situation? The tax benefits I︀ currently have only last five years at 90% exemption and five other years at a︁ 50% exemption.
Maybe opening an LLC and moving to a territorial tax country?
 
brother cmon you are paying peanuts and you get to live⁠ in a nice place, why would you want more than this.

Just by creating one but if you do biz with Europe︀ theres a bunch of jurisdictions that wont accept a st kitts invoice as tax deductible.︁

Rather go︄ live in UAE, a boring island is the Caribbean (careful here cause not only is︅ boring af, shits expensive there) or go live in a mismanaged country where the IRS︆ will leave you alone (Mexico, Thailand, Indonesia, Brazil, etc)

Doable yeah, Thailand is popular︈ for this
 
I'd stay here, no︀ problem! I'm just wondering due to possible changes in the near future. My accountant told︁ me something last week about exceeding a certain threshold and having to switch to a︂ different tax scheme, so I don't know how long I'll have access to the aforementioned︃ benefits...

Yeah, sounds like St. Kitts isn't a great option after all! I'd rather go︄ somewhere that isn't as artificial as UAE. I consider UAE, Dubai, etc. boring for what︅ I like to do in my spare time with my family, I'd rather be somewhere︆ with history and culture.

Also, I can't just be somewhere where the IRS is incompetent,︇ I need to have some sort of set up with a company or freelancing for︈ invoicing the companies I earn commissions from.

What could be the best option for this?︉ Costa Rica? Panama? Uruguay? Thailand? Malaysia? Mexico, maybe? Or setting up a company somewhere that︊ pays 0% tax and settle in a country with territorial tax?

Thanks for the help︋ and tips!
 
If you're not Italian, or if you're Italian but haven't had your residency in Italy for‌ the past 5 years (or 10, can't remember), then you can move to Italy and‍ get a 70% tax exemption regardless of where you move to. If you move to⁠ some specific regions, the exemption is raised to 90% of your income.
For this, you⁤ need to open a sole proprietorship/freelancing (ditta individuale/partita IVA), the income you receive needs to⁣ be invoiced through it, but it goes to your account as regular, and you can⁢ spend it however you like.
The exemption can be extended to 10 years at 90%︀ if you buy a house in your first year, and if you have three children︁ in your first five years.
If you only buy a house in your first year,︂ then the tax exemption still gets extended to 10 years, but after five years it's︃ reduced to 50% instead of 90%.
Meanwhile, I've talked to my accountant and he clarified︄ what he meant. He didn't mean that I'd lose the tax exemption after a certain︅ threshold, he simply meant that after a certain threshold, maybe we could work out a︆ different scheme that could be even more beneficial.

As a simple example:
You make €100,000 per⁢ year
90% is exempt (€90,000)
You are taxed on €10,000
The tax rate for someone︀ making 10K per year is 23%
You pay €2,300 in annual taxes, which is 2.3%︁ of what you really made
It's quite silly how they don't promote this more, and︂ how not many people know about it, I'm glad I found out about it.
 
Thanks.
I found more details in here:
https://taxing.it/tax-break-to-attract-human-capital-to-italy/
Found this part
"The exemption applies only‌ to income taxes. It does not apply to statutory social security contributions (pension and healthcare)‍ which will be calculated on 100% of salary."
So it only applies to tax, not⁠ to the social contributions. Can you share more details on these as well?

This is⁤ probably a good for freelancers or professional looking to stay in Italy.
Also, not sure⁣ if you can use public healthcare (how good is it) or pension (once they move⁢ out after 5 or 10 years or so).
 
I've never used the public healthcare, or school system anywhere in the world and intend‌ to keep it that way, anything coming from the government I skip apart from giving‍ me back my money in the form of a pension or something, I have a⁠ private insurance here for €2000/year which covers everything around the world for myself and my⁤ family.
Regarding the pension, yes, I'll get it in some years (if the whole system⁣ doesn't collapse in the meantime), and I won't reject them giving me back my money.⁢
I'd heard about the healthcare being calculated on the entire salary, but so far, I︀ only had to pay something like €3000/year for close to €200K annual income, so the︁ total tax + social security still amounts to a very low number, can't complain! I'll︂ let you know how much I pay this year.
Additionally, I also bought two apartments︃ in my first year, and I am making renovations now to turn them into Airbnbs.︄
50% of the money spent on renovations is given back to you as government credits︅ split by 10 years.
So, if you spend €100,000 in renovations, you get an additional︆ €5000 yearly credit for a 10-year period that you can use for paying for taxes,︇ social security, and other government-related expenses.
If you have an excess of credits, you can︈ also sell them to someone else discounted (sell €1000 in government credits for €700 as︉ an example, or for whatever you can sell them for).
This year I'm probably going︊ to buy credits from a friend who offered to sell them to me at a︋ 25% discount, furthering the savings.
 
I guess there is some "cap" for both healthcare and pension. 3k/year is really nothing.
How much do you pay for pension?

I know that some regions will give you tax credit for︂ renovations that include the works on the facades of the buildings or some other things︃ like fixing land slides etc.
Do you get 50% tax credit on 10 years on︄ all the works? In what region are you?

You can transfer your︇ tax credit to a third person!?!? LOL
Not like your wife or parents - than︈ to a totally unknown person?
Can you also "buy" the tax credit at about the︉ same rate?
 
Social security includes‍ both healthcare and pension
Right now⁢ it's everywhere, until some months ago they even had a 110% bonus called Superbonus, but︀ I think that's gone now, needless to say, that it was a complete debacle with︁ constructors charging ridiculous amounts of money since the bill was on the government (people's taxes),driving︂ to crazy inflation in prices for renovations
Yes! The friend I'm referring to is actually my accountant, who told︆ me he had about €10K extra in credits that I could buy from him
 
Could you confirm that the tax rate is like this, applying to 10%⁢ of total income? From what you said your total income is almost 200k and has︀ 2.5% effective tax rate...then the income tax you paid is EUR 3450 + 25% on︁ income exceeding 15k and up to 28k, right? Assuming your total income is 190k then︂ per my calculation your income tax is EUR 4450 (2.34% of 190k)

For social security contribution 3000/190000 aka︆ about 1.6% of total income. Calculating upon a base taxable amount of 10% total income︇ then the real SS contribution rate is about 16%. I saw a US. person on︈ this regime on Reddit with similar SS rate like this.

That means that in your︉ case, income tax + social security amount to 2.34%+1.6% aka 3.9% (7450) of total income︊ (assumed 190k)? Can you confirm this? If only 4% then this is better than many︋ European countries which all amount to 10% or more. Only Georgia 1% tax of up︌ to 165k USD income is cheaper than this Italian rate.

And also with this special︍ regime, can the freelancer have the path to Italian citizenship after X years?
 
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