IT freelance, small incomings in the EU

[pbda2]

Hi, I'd like to ask you about how safe is it to receive regular and relatively small (1000-3000) monthly payments for freelancing being a tax resident of the EU?
Let's assume that I have accounts at Wise (British jurisidction), Paypal (the US), and Paxum (Dominicana).
Which of them are obliged to report to CRS and for what reason?
How safe is it to use theirs cards for online shopping without withdrawing money to my personal "official" bank account?
What should be done to attract attention of tax authorities?

 

[Clank]

You can open a US LLC with Mercury bank and it won’t get reported.

You can get a New Mexico LLC for 50$ one time payment.

 

[pbda2]

Thanks for your tips, I'm in despair and grateful for any help.
Which of⁠ these banks can issue a virtual card?
And the most interesting question - why some⁤ banks report to the CRS but others still do not

 

[Clank]

Mercury bank won’t report CRS as it’s from the US and it’s a corporate account.

They have physical and virtual cards

 

[European]

Are you sure about this? Why wouldn't they report it?

 

[Forester]

Just generally – playing hide and seek︀ with taxmen in the EU tax hell is neither safe nor recommendable. Yes, it is︁ true that in some EU countries the enforcement is relatively weaker than in some other︂ ones but unless you share the country name you cannot expect a different answer. Just︃ either pay your taxes or move your activities to the country with more reasonable taxing.︄
It's pretty simple:
Any bank in an︆ AEOI/CRS country reports (to the country of tax residence), otherwise the regulator would finish them.︇ (For the current list of AEOI/CRS countries check OECD website.) Banks in non-AEOI/CRS countries do︈ not report.
Any another financial institution (EMI, payment processor, ... ) in an AEOI/CRS country︉ either already reports or will report sooner or later; the differences are due to varying︊ level of the enforcement.
Special remark re: USA – it is a non-AEOI/CRS country but︋ having FATCA; it means that US banks can report but in the practice do it︌ only on demand, the main purpose of FATCA is reporting about US citizens from abroad︍ to the feds (that is heavily enforced).

This is the‌ correct answer.

Just a technical remark
– there is not only Mercury bank for⁤ US LLCs; search here at Offshore Bank Accounts & EMI Accounts forum for more options,⁣ it was discussed several times;
– for LLC setup you can use Wyoming as well⁢ as New Mexico.

 

[mrthit]

Sorry for hijacking,
What about if country of citizenship is Italy? despite not being︊ a resident there since 2016. In Thailand since 2019.
I closed my work permit in︋ Thailand since May 2022 but I stayed in the country for more than 180 days︌ in 2022. Then I am moving around SEA and will spend 3 months in Europe︍ for holiday.

 

[European]

@Forester
even if‍ that is the case, the IRS might report the content of form 5472 you're obliged⁠ to file every year, correct?

 

[Marzio]

No one knows.

Maybe they are not doing it‍ right now or not doing it proactively like CRS but this doesn't mean that they⁠ will not do it in the future or report data if a country with which⁤ US has a DTA asks questions.

 

[Forester]

I agree.

 

[OffshorePhantom]

I do not‍ think they will do it since it is not in their interest (they want to⁠ keep money flowing to their offshore system and this would kill it, also the pressure⁤ of Europe and other countries does nothing to US since it is not a small⁣ Caribbean island). The purpose of form 5472 is for internal purposes.

You can also read⁢ some FACTA bilateral agreements between US and other countries like Italy, Germany etc and you︀ will see that it is not that reciprocal and symmetric in the information sent and︁ also in the conditions for the account to be reported 🙂

Also if you do not︂ transfer any money from the US LLC to your personal bank account you do not︃ have to disclose that transaction in form 5472.

 

[European]

But you still have to disclose the LLC assets, i.e. the money it have︃ has in the Mercury corporate bank account, and that could be reported

 

[OffshorePhantom]

It is unlikely this would happen, especially if you keep the money in US⁠ under the LLC name.

 

[Marzio]

You'll never know how‌ the situation will unfold in the future.

"Hey mr. Scholz, IRS here. I see‍ many Germans are profiting from theirs US LLC here, we would be delighted to share⁠ with you that data but first please send some tanks to our Ukrainian friends"

One thing you can bet your a*s on is that US will do everything to⁤ maintain its power.

 

[OffshorePhantom]

I agree, and the billions of dollars‍ that flow to the largest offshore tax even in the world is one thing they⁠ want to maintain for sure 🙂

https://www.jrviola.com/tax-news/fa...on-demands-reciprocity-transparency-from-irs/

I guess I know why US still refuses to adhere to︃ CRS (with that they will still receive all the info about US tax payers worldwide)︄ and still insists on FACTA, probably it is in their interest to do that.

 

[tyrexoid]

hmm, never heard about New Mexico services in this regard, who manages LLC and⁠ 'registered agent' services for foreigners at such a cheap price? (I pay Delaware 450$ annually⁤ and 100$ registered agent services at Stripe lol). What's the yearly franchise tax for New⁣ Mexico LLC?