Is this TAX-FREE setup good?

[Marzio]

I still‍ don't see why they should do a KYC on a client? The LLC is not⁠ receiving any money. But for some reason, even if they'll start requesting additional informations the⁤ only thing that they will discover is that the LLC's owner is the foundation and⁣ the foundation doesn't have any UBO.

Those are all the information that Codeable is requesting.⁢

I'm registered with them since 2018 and nobody ever started any KYC on me.

 

[NicolasMaduro]

I guess you’re right. Probaly only do kyc on⁢ the freelancer

 

[Gediminas]

Hi, I would say that your plan has the following issues:

• First, US︋ single-member LLC (I believe you are considering this form) is a pass-through entity in the︌ US, it means that as soon as your tax residency country is aware that you︍ are the ultimate beneficial owner of such company they will tax you under local CFC︎ (controlled foreign corporation) rules. Even the US does not participate in CRS your local tax️ authority might find out this because your plan is that your EU company will issue‌ invoices to US company, so they might ask more information about this US company which‍ is the main client and source of income. Who will act as a director of⁠ this company..?
  
• Moreover, if a US company is effectively managed from your home country, it⁤ would have a permanent establishment for tax purposes in your home country (it is clearly⁣ stated in the Treaty for the avoidance of double taxation concluded between the US and⁢ your country). So there is more than one way to tax US income in your︀ residency country. The only question is if local tax authorities have this information or not.︁
  
• Second, in the long run, it would be difficult to operate a US company without︂ a local partner. When turnover reaches particular amounts payment gateways (whatever they are) will start︃ asking questions and freezing accounts. But mainly it depends on turnover and goods/services.
  

There are︄ plenty of possible modifications to this structure, which includes a change of personal residency, intermediate︅ companies, local US partners.

Hope this helps 😉

 

[JohnLocke]

Well, the guy⁣ suggesting UpWork also said you may find other platforms, so if someone figure out what⁢ you have found then hopefully he switch to something more trustable.

It may be well required to have a tax consultant to look into it︄ in order to find a solution that will work, if it is possible at all.︅ So far I can see a partial solution that would work for some projects I'm︆ engaged into.

 

[Ryanab]

thank you Marzio you provided a lot of in-deth⁢ value! Doing the transactions via a freelancing platform is interesting (only drawback is the 20%︀ or more comission you have to pay to the platform)
I mean I don’t see︁ huge danger in billing my llc directly, if there’s like a complete well-writen contract and︂ proof of my work ( example: managing an e-commerce store: I am the actual owner︃ of the ecom store via the llc, but here I play the role as the︄ “technical manager: code customization and platform management” freelancer ). That’s true that “Wyoming” is a︅ lil sketchy but it’s one of the only states that keeps the llc owner name︆ anonymous (out of the registries etc) that’s why it’s interesting from that perspective for me.︇ Yea maybe could choose another state and go with the “foundation” route as you said.︈
( can you setup the bank account under the llc which itself under the foundation?︉ So the bank won’t ask any owner personal detail...? Well that would be interesting for︊ complete anonymity )

 

[CaptK]

I'm sure you have to file a 5...... something form on your tax return stating‌ who you paid abroad. An intermediate company is required.

This wont work.

 

[JustAnotherNomad]

You think your local⁠ tax office doesn’t know that? Personally I think people who insult the taxman’s intelligence deserve⁤ to go to jail.

 

[Marzio]

Well i‍ don't see why it shouldn't be possibile to do that.
If you refer to form 5472 it's not a tax return,⁣ it's an information return with transactions occurred with a foreign or domestic related party. The⁢ LLC is not transferring money to anybody, the money are left in a US corporate︀ bank account. The LLC is only paying a monthly fee for a freelancing service, like︁ you pay for Zapier, or hosting.
Don't play with fire or you'll get︃ burned.

 

[JohnLocke]

What do‌ you mean by that, I'm curious can you elaborate please?

 

[descente]

Where have you seen that ?

 

[Dandyline]

This is a really smart solution. The risk of⁢ gettin caught are zero to none.