Left UK, now Looking for Ideal Jurisdiction to Incorporate Consulting Company
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Now you've gone and done it! My dad was actually raised in Guernsey and my wife fell in love with it when i took for her for our honeymoon - it seemed quite opaque a system to get your head around, but I was confusing this maybe with residency requirements.
Checking now it's 0% tax on foreign sourced income, but I'm seeing a lot of chatter about how economic substance requirements, which consulting would absolutely fall within:
But this could definitely be a contender for not going back to england long term! Won't tell my wife as it would become a certainty!!
Checking now it's 0% tax on foreign sourced income, but I'm seeing a lot of chatter about how economic substance requirements, which consulting would absolutely fall within:
a. Substance Requirements
- Guernsey has implemented economic substance requirements to comply with international tax standards (e.g., OECD and EU rules).
- If your Guernsey company is considered a relevant entity (e.g., it conducts certain types of business activities), it must demonstrate economic substance in Guernsey. This may involve:
- Having a physical office.
- Employing staff in Guernsey.
- Conducting management and control activities in Guernsey.
- If your company does not meet these requirements, it could face penalties or be deemed non-compliant.
But this could definitely be a contender for not going back to england long term! Won't tell my wife as it would become a certainty!!
I lived in Cyprus in 2012 and that bail-in indeed caused issues, BUT keep one thing in mind; having a company there is one thing. It doesnt mean that you have to bank there. All companies that had non-cyprus banks were not affected. It's in that sense always better to never bet on one horse 😉
Re substance and presence; just keep in mind that those requirements are everywhere and if they are not yet enforced that will change over the next couple of years.
Pick a place where you would be able to fulfil the substance / presence requirements yourself. Especially if your numbers are not high enough.
Wow
I guess i need to do a lot more research as I was only starting to get my head around personal taxation, now companies add all sorts of nuance!
My only concern is whether another country would allow a bank account for a foreign company without a presence in that country too... which again starts to get very complex
Other option, like i said is to just ensure that the Cypriot account pays out dividends rather swiftly. Kind of in the same way one uses a crypto exchange intermittently, and in full knowledge it might blow up tomorrow!
very good point - when you start to look into moving abroad and optimising strategies, you often do an all or nothing approach, whereas both the US suggestion and Cyprus show that you can potentially pick what works.
I guess i need to do a lot more research as I was only starting to get my head around personal taxation, now companies add all sorts of nuance!
My only concern is whether another country would allow a bank account for a foreign company without a presence in that country too... which again starts to get very complex
Other option, like i said is to just ensure that the Cypriot account pays out dividends rather swiftly. Kind of in the same way one uses a crypto exchange intermittently, and in full knowledge it might blow up tomorrow!
No. Unless you explicitly want your company to pay tax in the US as a corporation, but why would you want that?
You pay zero tax in the US if the LLC is tax-transparent.
See my detailed explanation here:
[COLOR=#b388ff] J [/COLOR]
Post in thread 'Wyoming LLC vs UK LLP'
Mar 3, 2025A transparent single-member US LLC pays tax in the US as if it was the member that had provided the service/sold the goods.
So if you or your Montenegran company owns the US LLC, the US will "look through" the US LLC and decide if you/the Montenegran company should pay tax in the US.
If you sold to a US client under your own name from Montenegro, or your company did, would there be tax in the US? No. Therefore, there would be no tax with a US LLC either.
But if anything was happening physically in the US (employees, freelancers, an office or warehouse, ...), the situation could be...
I don't think this will change. If you don't work physically in the US, it should work well.
Be careful with excessive dividend payments. I mean with that on a monthly basis.
It is a clear sign that something shady is going on.
Normal dividend intervals are quarterly, bi annually or annually. If paying more than once a year after finishing your accounts it is often an interim dividend. From legal perspective that means it's not a final payment and that means that in the case of investigations it could be clawed back. If you then cannot pay it immediately extends liability to you as a person as well.
Dividend are NOT the holy grail when you operate in a shady area.
thanks - I've had a look at your very detailed post and it's very intriguing (actually, I fell down the non-resident UK company rabbit hole, but I don't trust HMRC one bit haha). Will pick through it properly this week but just wanted to say I appreciate it - makes the US very interesting.
You're very welcome.
US LLCs are super simple to set up. You can use a service like Northwest Registered Agent or IncFile, it's about $150 or so.
If nothing happens in the US, the annual paperwork is usually minimal, so you can either do it yourself or pay someone $300-500 a year to handle it.
If you live in a country that doesn't have taxes (Caribbean, Bahrain, ...) or that doesn't really care (LatAm, Southeast Asia, Africa, ...), it's a simple, cheap and tax-free setup with relatively easy access to banking.
Salary / Management fee.
Excessive dividends, which happens in sme's, are always scrutinised because of dodging taxes.
Owh and keep in mind that consulting companies in general struggle to quickly and easy open a bankaccount. Have a proper business plan available when applying. It's likely the first question you receive.
Thanks again for the recommendations. I suppose my wife will want me to ask, what happens when we move back to the UK? Is there a way to pass this through to another company perhaps in a favourable jurisdiction and leave it to accrue for the next time I'm based somewhere more favourably?
Thanks so much for this! Shouldn't be an issue only taking a salary when I'm in a favourable residency location! Great advice about the consultancy too! I imagine this will be even harder given that I'm not a US citizen / resident? They normally ask for social security or ITN but I did manage to get a personal bank account sorted without!
I guess the main problem is how to avoid that company to become tax resident where you live. Hence you would need substance somewhere to avoid the problems. Maybe Malta 5% option with local substance would be an option? Or you use Hong Kong / Singapore / UAE with a resident director and pay taxes there. Still a bit risky.
Last edited: Apr 23, 2025
Doesnt flat tax solves that issue? Like just pay 100k eur yearly for foreign income then you wont have trouble regarding company becomes tax resident where you live?
The problem is that if you perform the work from the country where you live, it will be considered a permanent establishment which will be taxable there. Then, the problem is that the flat tax is only for foreign income which is no longer the case if you have a permanent establishment. Hence, you would have to incorporate in a low / no tax jurisdiction with a director and minimal substance there and then draw dividends. In that case, it would work.
There is waay more variables that this depends on besides what you said.
Number one would IMO be the question WHY you want to cash out? Where is the money going - both currency and then what you want to use the money for, what are you planning to buy or is it just that you want to keep it in fiat - then which one?
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