Digital Nomad / Perpetual Traveller - 0% tax with US LLC

[JustAnotherNomad]

Yes, I am aware of⁤ that. Thus my question if one wouldn't need to register it as a branch or⁣ get some other sort of license.
For example, say you have your own mainland company⁢ as a plumber. But now you also want to do affiliate marketing.
Or you're sponsored︀ by your spouse and now you want to start doing graphics design.
In such cases,︁ you would need some sort of license (in the UAE, you even need a license︂ to sell things on platforms like eBay!). If you could avoid that by simply registering︃ a US LLC, it would be a massive loophole.
The UAE is tax free, but︄ there are a lot of "government fees" - just a different name for taxes.

That, too, would be a massive loophole and I can't imagine that's correct. If you︈ have a local free zone company working for a local customer, you have to pay︉ VAT, but if you simply register your company in the US instead, you can avoid︊ that?
I can understand if they don't enforce that for businesses that are actually managed︋ abroad, but for locally managed companies? You even said yourself that it would be considered︌ a PE, and PE's would usually fall under local VAT regulations, in other countries at︍ least.

That's good to know,⁠ thanks.

 

[JustAnotherNomad]

I hate that guy and I also agree that⁤ not having tax residency anywhere is a bad idea. However, I have spoken to a⁣ top tier US tax lawyer (hourly rates of $800 or more if I recall correctly)⁢ who told me that he has HNWI clients who successfully use such a "trifecta" setup︀ to not pay tax.
Then again, they were probably Americans, so they would have US︁ tax residency by citizenship. But also, Andre Henderson only sells his services to US citizens,︂ so maybe that's why.

No, not really. That completely depends on your home country. For example, the UK has︅ very clear rules for when you're no longer considered tax resident.

That's the bigger issue. But you wouldn't be able︉ to avoid the PE issue by having tax residency elsewhere. And regarding "work performed from︊ within that country", many countries probably wouldn't consider it local income if there is no︋ PE. And many countries wouldn't necessarily claim there's a PE if you only work from︌ home for your foreign company and there are no local customers, meetings etc.

But I︍ still agree that it's just an unnecessary risk because there are a lot of if's.︎ It's better to have a proper tax residency, so things become very clear.

 

[Marzio]

Which is?

 

[JustAnotherNomad]

Having 3 homes and spending so little time‌ in each of them that none of the countries considers you tax resident.

 

[Marzio]

Have you ever heard the phrase‌ "perception is projection" by Carl Jung? Basically you can perceive some "negative" aspects of mr.‍ Henderson because those aspects are under developed parts of you but since it would be⁠ painful for your subconscious to aknowledge that, you project those aspects on other people (so⁤ you can safely blame those idiots, right?). So after all there's a little mr. Henderson⁣ in you 😀

 

[backpacker]

Even for somebody who fancy the⁠ idea of perpetual travel, Georgia with its HNWI program is not ideal. Look into the⁤ details: You still need a residence permit which means -under the new rules- significant investment⁣ in a rather shaky country. Since you invest you have to file a return. You⁢ will have to have a certain minimum income which you generate in Georgia.
Taxes aside,︀ this is far to complicated for a perpetual traveller or a person who wants to︁ make a long-term voyage.

Moreover, this program is about to be phased out and the︂ tax advantages of GE will also be put in-line with Northen EU standards. As already︃ mentioned, I give it one to two more years and Georgia is -taxwise- quite similar︄ to Estonia (that's the country they admire). Until then the perpetual traveler can not do︅ much perpetual traveling ....

More serious: The Philippines, if the person is >50 years of︆ age. The Tax Reform for Acceleration and Inclusion (TRAIN) is pretty clear cut, thoughtful and︇ preserves the status of non-citizens and OFW's for tax-free foreign sourced income. Add to it︈ the SRRV and you can come/go/stay as often as you want. No questions asked. Tax-ID︉ is a straight forward process as is a Driver's License.
So, if somebody really wants︊ to be a perpetual traveler with some sort of legitimate residency then the Philippines is︋ a much better option.

 

[JustAnotherNomad]

Haha, I⁣ was actually a big fan of Jung in my teenage years. But enough off-topic talk.⁢ 😀

 

[orangekangaroo]

I will look into the Philippines option.

 

[backpacker]

Good idea. Do‌ not get turned off by phrases like "duly accomplished", "apostilled", "double checked" and "NBI certificate"‍ (NBI=National Bureau of Investigation). It is routine wording in the Philippines and the guys at⁠ PRA (Philippine Retirement Authority) know how to guide you comfortably through the process. If you⁤ are >50years and do have a US/CA/AU/EU/EEA-passport the time from your first application till receiving⁣ your SRRV will take a mere month. If certain documents are missing they give you⁢ a grace period of 6 months to complete your documents. Do take note that this︀ is the Philippines; e-mail correspondence is not their thing. You best apply in person at︁ the PRA office in Makati (no need for an agent!).

 

[stevy777]

I also really agree about applying in person at Makati office ..︂ i was going through the process but had to leave country suddenly before completing. They︃ are really helpful and it's something easier to do by yourself rather than hiring someone︄

 

[MiddleEuroAsia]

you really can't combine all of︂ these situations in a one thing, since the laws for every situation you mentioned is︃ pretty different than the other.

you own a mainland company as a plumber? great. Now︄ you want to open an affiliate marketing business? do you want to register as a︅ freelancer then? no? then do you want to open a mainland company? no? so you︆ want to open an offshore company? no? or do you want to open a FZ?︇ if so, which FZ? is it in a designated zone or not? who is your︈ main clientele? is it only within the FZ? or do you do business in the︉ mainland? do you offer your services for GCC residents? or do you mainly serve foreign︊ clients?.

See, it can get real complicated real quick. Each situation is different and I︋ can't just make blank statements for situations like that, you really need to talk to︌ a tax accountant that understand your situation and can help you with what you need.︍
I "somewhat" agree, yeah if you are️ an SME, then these government fees can feel like taxes, but once you grow big‌ enough, these fees would be peanuts for you, you really can't compare that to any‍ form of taxes, specially progressive taxes.
No, I think you misunderstood︂ me, if you have any company whether mainland, FZ, foreign and it serves UAE persons︃ or any GCC persons, then you have to register and pay for VAT.

But for︄ me, I have foreign companies (in HK and other jurisdictions) and I don't deal within︅ the UAE nor any of the GCC member states and I don't have any "branch"︆ that serves them, So, I didn't have to register for VAT.

So, I'm pretty sure︇ that as long as you don't need do business within the UAE nor any of︈ the GCC states, it doesn't matter if your company is FZ or foreign, If it's︉ a FZ then your services are treated as "export" services so your VAT is 0%︊ and you have to register for VAT but you can file for VAT registration exemption︋ via your agent. and if it's a foreign company that only deal with foreign clients︌ then you don't need to register for VAT.

But ask a local tax accountant just︍ to make sure that you're on the safe side.

 

[backpacker]

The application fee is quite a chunk of money just to‍ forgo it.

It is possible to put an application on hold for up to three⁠ years if the application fee has already been paid. Or did you abandon the entire⁤ process?

 

[JustAnotherNomad]

I've heard that view before, but I've also heard the opposite: That any⁢ activity exercised within the UAE, even if only for foreign clients, requires a license...

 

[rowena]

I believe UK LTD(or any company type) and LLP are︂ different for foreign tax perspectives. LLP is a partnership, not a company and you have︃ tax obligations at the personal level. That's why UK LLP + UAE residency works well.︄ I only have a client in the USA and I didn't register for VAT in︅ UAE and UK. Even I'm 100% sure that I don't need to pay any VAT︆ to UAE since my business is considered as export in both UAE and UK.

I don't think you need a license/branch in UAE for your UK LLP. Who︉ told this?

 

[daxbr]

One has to recognize the strengths and weaknesses of each country. In this case we︊ are talking about a very large place with a very large population that mostly does︋ nothing and therefore is not a target and is left alone.

Once you sign up︌ for such a program, you immediately become a target for the government and some other︍ entrepreneurial individuals connected with the government as a source of wealth and that is not︎ good.

 

[JustAnotherNomad]

US LLC is the same. I didn't write UK Ltd.

Yes, we completely agree that no VAT has to be paid. I was only talking about︀ formal registration requirements.

Some guy I spoke to who︂ has his own company here in Dubai. To be honest, I find it quite strange︃ that you need a license to even sell things on eBay, but you can avoid︄ any UAE company registration by simply registering your company in another country?
I'm not talking︅ about a case where the company is clearly managed from abroad, i.e. you're just a︆ passive investor. But when you manage everything from the UAE, you still don't need a︇ license? I'm trying to get some reliable information from a lawyer, but it's not so︈ easy.

 

[MiddleEuroAsia]

this is the︀ first time I hear of such a thing, like If I were in the US︁ or any other country, and I have a foreign company, I wouldn't need a license︂ from the US to manage my foreign company, the only thing that will affect me︃ is the PE rules, and the IRS would simply tell me that "yep, your foreign︄ company is a US company from a tax perspective" but that won't matter in the︅ UAE because of 0% personal income and corporate tax.

I confirmed with my tax accountants︆ again (they are pretty damn reputable, they are the best of the best in Dubai,︇ well maybe I'm a little biased as I've been working with them for quite some︈ time 🙂 ) and they simply told me that what are you talking about @JustAnotherNomad doesn't exist, like imagine if a serial entrepreneur from the US that reside in Dubai needs︉ licenses from Dubai to manage his US businesses, that's pretty bizarre, they told me that︊ if that was true, this would effectively kill the businesses in Dubai lol.

So no,︋ there is no such a thing as needing a license from Dubai for your foreign︌ companies unless these foreign companies serve UAE persons or any other GCC persons.

 

[derpderp]

Are you saying to get a Georgian Virtual Zone LLC and have tax residency⁣ in Cyprus? So that would be around 1000usd to set up the llc, then your⁢ are tax free except the 5% on dividend income. But then you would also need︀ to own or rent a place in Cyprus? That sounds like a decent set up.︁ Please let me know if there is something that I am missing.

 

[orangekangaroo]

There are some ifs and buts.

• The Virtual IT zone has strict requirements to⁢ apply for, I am in SEO and that did not qualify.
  
• Virtual IT zone profits︀ are 5% but there seems to be a double taxation treaty in place with Cyprus︁ allowing you to get a refund of the 5%. If this works only on the︂ Corporate level, link holding company or on a personal level, I don't know. So in︃ Cyprus, there would only be the 2.65% health Tax on distributed dividends as a non-Dom.︄
  
• Cyprus for now turns a blind I where effective management takes place. This might change︅ and you would need serious substance in Georgia.
  

But yes you could have a 2.65%︆ health tax and setup cost plus the cost of renting an apartment in Cyprus. Check︇ the double tax treaty, Check if you can apply for Virtual IT Zone and check︈ with the Cyprus tax office if the construction flies.

 

[derpderp]

Yes this︄ seems to be the big thing. I am a blogger, now what exactly qualifies? Is︅ the creation of a website considered "supplying software" the wording is basically "do sth to︆ obtain software" so of course I now I wonder if I qualify. I tend to︇ think the answer is no however lawyers here tell me yes. Then the whole thing︈ about substance and the authorities demanding corporate tax retrospectively there are some huge red flags.︉

I appreciate your answer, I will let everyone know how it went