Need advice regarding offshore incorporation

[mmtj]

Hey guys,


It is very welcome to see such an active community with a lot of useful information being shared on this rather complicated topic. We would like to use this opportunity to receive advice (and possibly a proposal from the admin) regarding offshore incorporation of our company. We have done a lot of research on the topic, as well as received advice from many companies, but there still remains a lot of conflicting information.


First, a little bit about us. We are an internet business that provides various online inbound marketing services to companies and individual clients from all over the world. Although our personal residence is in EU (Germany and the Netherlands), the vast majority of our clients are non-EU based. As such, we are looking to set up an offshore limited liability corporation (while staying compliant with all international and local laws) for the financial benefits it provides - low corporate tax and no VAT. It bears mentioning that we have no intention of evading taxes and are more than happy to pay local income taxes when withdrawing the money back to our personal bank accounts. The reason for the offshore incorporation is to save money on corporate taxes and avoid VAT complications.


There are however some requirements of our business which need to be met and which are responsible for much of the complication. They are:


- since all of our transactions (payments received and made) are done through PayPal, it is important that the corporation is able to open and make use of a PayPal account without any troubles;


- effortless transactions to and from the corporate bank account to our private bank accounts based in EU;


- low corporate taxes;


- company needs to be preferrably setup in such a way as to avoid having to deal with VAT.


With the abovementioned in mind, we would like to see if anyone has any recommendations and/or advice regarding our requirements. We are also open to receiving proposals from the admin which are able to satisfy our needs.


Looking forward to the replies.


Best regards,


MMTJ

 

[JohnLocke]

Welcome aboard, hope you enjoy your stay 😀 From me you won't get a proposal, but you may request it from our sales team.


The first thing that comes into my mind is a Cyprus company with nominees appointed i.e. director and shareholder, that would make it happen to benefit from the DTA between Cyprus, Germany and Netherlands (have to check them closer to be sure) so if the business activity can be proven to be held in Cyprus the company will be liable to Tax in Cyprus only. Next issue will be PayPal the nominee you choose will need to be able to open a PayPal account and to provide proper DD / KYC docs.


There may be better solutions and also other's may be welcome to supply with additional or different information.

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[offshoremax]

We have done a lot of research on the topic, as well as received advice from many companies, but there still remains a lot of conflicting information.
Click to expand...

You may want to elaborate a little. Posting a possible soltuion would lead to further discussion 😉

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[mmtj]

Admin said:
Welcome aboard, hope you enjoy your stay 😀 From me you won't get a proposal, but you may request it from our sales team.
The first thing that comes into my mind is a Cyprus company with nominees appointed i.e. director and shareholder, that would make it happen to benefit from the DTA between Cyprus, Germany and Netherlands (have to check them closer to be sure) so if the business activity can be proven to be held in Cyprus the company will be liable to Tax in Cyprus only. Next issue will be PayPal the nominee you choose will need to be able to open a PayPal account and to provide proper DD / KYC docs.


There may be better solutions and also other's may be welcome to supply with additional or different information.
Click to expand...

Thank you for your reply. However, it seems that your post only deals with avoiding double taxation? What about PayPal integration and no VAT (some of our clients are still in EU)?

offshoremax said:
You may want to elaborate a little. Posting a possible soltuion would lead to further discussion 😉
Click to expand...

Well, a possible solution which we have discovered is the setting up of a non-resident Cyprus company with a Cyprus bank account, but with a holding company located in the Seychelles. That should allow us to enjoy 0 corporate taxes and no VAT, while still be able to use PayPal. At least in theory. However, since we are not planning to evade personal income taxes and will thus be reporting our activities to the local tax authorities, we are not sure how that kind of setup would sit with them and whether we will be subject to further taxation besides personal income tax once we report our activities/transfer money to our personal EU bank accounts. Can anyone shed some light on this? And is such a setup in general viable?

 

[JohnLocke]

Thank you for your reply. However, it seems that your post only deals with avoiding double taxation? What about PayPal integration and no VAT (some of our clients are still in EU)?
Click to expand...

Avoiding Double Taxation not only, if your Cyprus company is liable to tax in Cyprus it is true it can be registered non resident so you have eliminated the tax, you may want to read the Cyprus Tax reform for more information about this part.. For PayPal I already mentioned a possible scenario!


If you use the search function here on the forum you will see lot's of posts with similar setups and ideas and as well opinions and experience from different users.

Last edited: May 29, 2016
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[lavel]

PayPal seems pretty easy to open with nominee employed in Cyprus company. I will put it in the nominees hiring contract that he must provide ID and utility bill for PayPal if he want the job.

 

[bart]

What if the nominee director already has a PayPal account will this still work then? Because it seems the PayPal is the only issue with all the question asked by OP!

 

[mmtj]

Hi again and thanks for all the answers,


however, with the proposed structure(s) I can't see how we would be exempt from corporate taxes and VAT, while staying within local laws.


Hypothetically:


We (located in Germany and Netherlands) would incorporate a cyprus company with a cyprus bank account. In addition we would employ a nominee director + a nominee shareholder (who exactly would that be in our case, so we won't have to pay VAT and corporate tax, i.e. a non-resident company)? We read about the possibility to appoint a Seychelles Holding as the nominee, but then there's the problem with Paypal again, I think?


We are just not sure how we can successfully set-up a business model with PayPal Integration?


What if we would switch to 2Checkout as the payment processor instead of PayPal?

 

[JohnLocke]

What if we would switch to 2Checkout as the payment processor instead of PayPal?
Click to expand...

That would properly solve your issues since (you can search on this forum as well) we have been informed that 2co.com does not have any issues with Seychelles corps nor Cyprus corps. You may check the by contacting them directly and get this information confirmed.

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[henrick]

I contacted 2co for some time ago while I made my researcjh on Seychelles corps. they accept Seychelles and many other offshore jurisdiction, this may solve the main issue to accept credit card payments.

 

[clemens]

Indeed 2o.com is offering payment processing for Seychelles and other offshore companies. They also have PayPal options.

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[mmtj]

Thanks for all the answers. A truely great forum.


Just to clarify and get final approval of our propsed structure.


We (located in Europe (NL/Germ.)) would set up the following comp. structure:


1.) File for a cypr. company with a Cypr. bank account


2.) Get a physical office with a phone line, mail forwarding, secretary and employ a local nominee director of the cyprus company to sign contracts, manage etc. ->> as proof that our company is actually managed from abroad.


3.) File for a seych. comp. as a holding of the cyprus company, so the cyprus company can be filed as non-resident and thus be free of the 10% corp. taxes and VAT.


4.) Dividends will be transferred from the cyprus bank acc. to our local bank acc. in NL.


5.) Use 2CO as the payment processor instead of paypal


Given the structure above, is it fairly safe to assume, that we would have no legal/tax complications with our local tax offices as long as we file the dividends as personal income and pay income tax for those?


Thanks again

 

[steffano]

I join the thread this could proparly work for me in Spain too I think.

 

[JohnLocke]

mmtj said:
Thanks for all the answers. A truely great forum.
Just to clarify and get final approval of our propsed structure.


We (located in Europe (NL/Germ.)) would set up the following comp. structure:


1.) File for a cypr. company with a Cypr. bank account


2.) Get a physical office with a phone line, mail forwarding, secretary and employ a local nominee director of the cyprus company to sign contracts, manage etc. ->> as proof that our company is actually managed from abroad.


3.) File for a seych. comp. as a holding of the cyprus company, so the cyprus company can be filed as non-resident and thus be free of the 10% corp. taxes and VAT.


4.) Dividends will be transferred from the cyprus bank acc. to our local bank acc. in NL.


5.) Use 2CO as the payment processor instead of paypal


Given the structure above, is it fairly safe to assume, that we would have no legal/tax complications with our local tax offices as long as we file the dividends as personal income and pay income tax for those?


Thanks again
Click to expand...

Yes it is fairly safe to assume that this structure won't make you any troubles. To safe guard this setup further I would recommend as well taking a local tax adviser into consideration and invite him in your plans so he may back this up additionally.

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[trisstann]

mmtj said:
Thanks for all the answers. A truely great forum.
Just to clarify and get final approval of our propsed structure.


We (located in Europe (NL/Germ.)) would set up the following comp. structure:


1.) File for a cypr. company with a Cypr. bank account


2.) Get a physical office with a phone line, mail forwarding, secretary and employ a local nominee director of the cyprus company to sign contracts, manage etc. ->> as proof that our company is actually managed from abroad.


3.) File for a seych. comp. as a holding of the cyprus company, so the cyprus company can be filed as non-resident and thus be free of the 10% corp. taxes and VAT.


4.) Dividends will be transferred from the cyprus bank acc. to our local bank acc. in NL.


5.) Use 2CO as the payment processor instead of paypal


Given the structure above, is it fairly safe to assume, that we would have no legal/tax complications with our local tax offices as long as we file the dividends as personal income and pay income tax for those?


Thanks again
Click to expand...

Why not doing something else. Do the cyprus company with director, shareholder, secretary and office in cyprus and open a company bank account, as the company is actually managed in cyprus. When you do that apply for paypal account (or other merchant account). When you get the approval make the Seychelles company and buy the cyprus company. So you will have paypal or other merchant account and will have not Tax and VAT... i m saying that because i can't understand why you don't make only a company in seychelles with bank account in cyprus????

Last edited by a moderator: Nov 4, 2012