eCommerce + Hong Kong Setup
- Thread starter mardz
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If you have a 9 to 5 job in Germany your "Lebensmittelpunkt" is Germany, so you are taxable with your world wide income in Germany and this means all of it. Your income from the UK LLP is taxed with your personal income tax rate. I don't understand why someone would recommend such a structure, plus the banking issues of course.
If you make at least 100.000 EUR profit a year (and hopefully much more) the best option is to open a company in Bulgaria or Cyprus and implement substance there. Dividends are taxable in Germany with 26,357%.
Little advise from me: Choose your country︀ of residence and your country of business not by the tax rates, but by the︁ mentality. This is the smarter way to do business ;-) And be prepared to pay︂ something around 5 to 10%, even in low tax jurisdictions.
If you make at least 100.000 EUR profit a year (and hopefully much more) the best option is to open a company in Bulgaria or Cyprus and implement substance there. Dividends are taxable in Germany with 26,357%.
Little advise from me: Choose your country︀ of residence and your country of business not by the tax rates, but by the︁ mentality. This is the smarter way to do business ;-) And be prepared to pay︂ something around 5 to 10%, even in low tax jurisdictions.
Thanks for the detailed info 🙂
What do you mean by "banking issues" I thought doing︄ business through a Limited in the UK would be simple ?
I am not sure︅ about Bulgaria and Cyprus as both countries are not supported by Stripe. Also the UK︆ is one the few countries where Shopify Payments is available (Shopify payment is much more︇ tolerant towards dropshippers than Stripe)
Please tell me if I am wrong. I booked an︈ appointment tomorrow with another tax planner in the UK
What do you mean by "banking issues" I thought doing︄ business through a Limited in the UK would be simple ?
I am not sure︅ about Bulgaria and Cyprus as both countries are not supported by Stripe. Also the UK︆ is one the few countries where Shopify Payments is available (Shopify payment is much more︇ tolerant towards dropshippers than Stripe)
Please tell me if I am wrong. I booked an︈ appointment tomorrow with another tax planner in the UK
I've had a couple of companies in HK and now just checking prices for another one but is indeed a bit messy - to open (including virtual office and accounting for 1 year will cost you around 2K Eur.) than on maintenance expect at least 1.5K Eur every year, indeed with possibility of auditors etc (please note the numbers i shared are from my specific provider - you might find cheaper or more expensive than that).
But question (cause I'm in the same situation as you are with ecommerce business) - why not incorporate in New Mexico or Wyoming or even Delaware ? Did you︀ check that ? Waht was the outcome ?
But question (cause I'm in the same situation as you are with ecommerce business) - why not incorporate in New Mexico or Wyoming or even Delaware ? Did you︀ check that ? Waht was the outcome ?
I talked to a tax planner yesterday and he actually recommended to create a Inc. in the US and move to Malta for the tax residency. What do you think about this advice? Why an inc. instead of a LLC ?
Regarding Wyoming/Delaware the advantage is that there is no corporate taxe is that correct ?
Regarding Wyoming/Delaware the advantage is that there is no corporate taxe is that correct ?
Corporations (Inc.) are taxed as entitites of their own, like a German GmbH.
Single-member US LLCs (you being the only shareholder) are tax-transparent, i.e. taxed as if you yourself had earned the income personally (like a sole proprietor).
With a US corporation + Malta residency, his thinking is probably that you will be paying US corporate income tax on the profits (granted, it seems like there are some states without CIT or where CIT is low) in the US and then only pay income tax in Malta on profits that are remitted to Malta. Delaware does have corporate and franchise tax, you could have easily︀ googled that.
There is a small risk that when you work from Malta, they will︁ not treat the income as foreign-sourced and will claim you have a permanent establishment in︂ Malta, for which you would have to pay Maltese taxes. They could probably even claim︃ your US company is really tax resident in Malta - but that's also unlikely. Cyprus︄ might be a better choice as I think they don't tax foreign dividends at all,︅ but there's a lot of uncertainty as well. Some people say it works, others say︆ it doesn't. Note that you will - at least officially - have to spend at︇ least 60 days in Cyprus to be considered tax resident there, I believe the requirement︈ is even higher for Malta.
German law probably requires you to report all companies that︉ you own abroad in your tax return, like most high-tax countries. If you "forget" to︊ report the foreign company, they can charge you with tax evasion. But if you don't︋ make millions and will leave the country in a few months anyway, it seems highly︌ unlikely that anyone would go after a small fish who doesn't even live in the︍ country anymore, even if they found out later. Just be aware that it's no
Single-member US LLCs (you being the only shareholder) are tax-transparent, i.e. taxed as if you yourself had earned the income personally (like a sole proprietor).
With a US corporation + Malta residency, his thinking is probably that you will be paying US corporate income tax on the profits (granted, it seems like there are some states without CIT or where CIT is low) in the US and then only pay income tax in Malta on profits that are remitted to Malta. Delaware does have corporate and franchise tax, you could have easily︀ googled that.
There is a small risk that when you work from Malta, they will︁ not treat the income as foreign-sourced and will claim you have a permanent establishment in︂ Malta, for which you would have to pay Maltese taxes. They could probably even claim︃ your US company is really tax resident in Malta - but that's also unlikely. Cyprus︄ might be a better choice as I think they don't tax foreign dividends at all,︅ but there's a lot of uncertainty as well. Some people say it works, others say︆ it doesn't. Note that you will - at least officially - have to spend at︇ least 60 days in Cyprus to be considered tax resident there, I believe the requirement︈ is even higher for Malta.
German law probably requires you to report all companies that︉ you own abroad in your tax return, like most high-tax countries. If you "forget" to︊ report the foreign company, they can charge you with tax evasion. But if you don't︋ make millions and will leave the country in a few months anyway, it seems highly︌ unlikely that anyone would go after a small fish who doesn't even live in the︍ country anymore, even if they found out later. Just be aware that it's no
From what I've read the C-Corp in the US is more complex since they are taxed as normal companies (and S-Corp a non US citizen cannot be part of). In New Mexico/Delaware and Wyoming there are no taxes on a LLC if you don't have business (employee, or someone that works or provides a service exclusively to you).
But to be hones I'm quite overwhelmed.....i want to have a company with a proper bank account to my ecommerce that is "tax efficient" and there are so many contradictory informations......so honestly...im a bit lost.....
But to be hones I'm quite overwhelmed.....i want to have a company with a proper bank account to my ecommerce that is "tax efficient" and there are so many contradictory informations......so honestly...im a bit lost.....
No, it doesn’t have anything to do with where you form the LLC. It applies to all US states.
How “tax efficient” and legal a setup is, depends massively on where you live and work.
If you feel overwhelmed, it will be a good idea to talk to an experienced tax lawyer, or at least a CPA. And not put your fate in the hands of random people on the internet.
How “tax efficient” and legal a setup is, depends massively on where you live and work.
If you feel overwhelmed, it will be a good idea to talk to an experienced tax lawyer, or at least a CPA. And not put your fate in the hands of random people on the internet.
There is still federal tax when there is no state income tax. A corporation always pays federal income tax.
In some cases it can depend where you form a llc as some stayed have a gross income tax on all revenue for a llc. It's my understanding that this also applies to non resident members.
In some cases it can depend where you form a llc as some stayed have a gross income tax on all revenue for a llc. It's my understanding that this also applies to non resident members.
Just saw this thread.
I am from Germany myself and want to setup a company in HK. I have been in HK myself a few times already, but never opened a business there before or anything related.
NEAT is offering incorporation + their business bank account for 650 USD, which seems quite cheap to me. Check this (i am not affiliated and didnt use them so far)
At the moment my residency is in Germany, but I am not staying there. I am less than 2 months per year in Germany, so I think I will just give up my residency there and incorporate in︀ HK.
To OP: Did you incorporate? What did you decide? Its been many months already.︁
I am from Germany myself and want to setup a company in HK. I have been in HK myself a few times already, but never opened a business there before or anything related.
NEAT is offering incorporation + their business bank account for 650 USD, which seems quite cheap to me. Check this (i am not affiliated and didnt use them so far)
At the moment my residency is in Germany, but I am not staying there. I am less than 2 months per year in Germany, so I think I will just give up my residency there and incorporate in︀ HK.
To OP: Did you incorporate? What did you decide? Its been many months already.︁
Normally after a couple years they will review if you're eligible for the offshore status. You have to provide lots of information about your suppliers, customers, where you are located, if you've been to HK during the year, where payment was made, shipping documents, emails etc etc.
Agents can help with this, they might charge from 5k to 50k hkd for this (I've seen prices in this range). The process can take 6 to 12 months. Often the agents recommends to pay tax instead of going the offshore route, as the tax you pay might be less than the fees for getting offshore status. Depends︀ on your profit of course.
Agents can help with this, they might charge from 5k to 50k hkd for this (I've seen prices in this range). The process can take 6 to 12 months. Often the agents recommends to pay tax instead of going the offshore route, as the tax you pay might be less than the fees for getting offshore status. Depends︀ on your profit of course.
Wise only has the option to create an account for a Hong Kong business account money transfers, you don't get any bank account nor can keep any money. So they are only useful for faster payments with better exchange rates.
The incoming funds have to come from your company bank account, which would be a Hong Kong or offshore account in the name of your Hong Kong company.
The incoming funds have to come from your company bank account, which would be a Hong Kong or offshore account in the name of your Hong Kong company.
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