Offshore company + self employed in EU. How to structure?

[hfs]

Is there a way for an owner of an offshore company to receive payments from his LLC as a self-employed in EU? LLC director is automatically an employee. Has to be self-employed.

Side question: is there a way to structure a company in a way that you don't have to report assets/turnover/profit to an EU tax office? You basically only report what you withdraw (this is not tax evasion, just simplifying reporting). I think there isn't?

 

[uplana]

hfs said:
Is there a way for an owner of an offshore company to receive payments from his LLC as a self-employed in EU? LLC director is automatically an employee. Has to be self-employed.
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you just register your self for tax in the country you live in. Not very complicated.

hfs said:
Side question: is there a way to structure a company in a way that you don't have to report assets/turnover/profit to an EU tax office? You basically only report what you withdraw (this is not tax evasion, just simplifying reporting). I think there isn't?
Click to expand...

If it is inside the EU No- unless you are able to hide UBO and Shareholders of that companies or there are no ties to you!

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[hfs]

uplana said:
you just register your self for tax in the country you live in. Not very complicated.
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You can't just register as self-employed and get paid by a foreign company where you are a director. A director means an employee so you are taxed as an employee as far as I know.

uplana said:
If it is inside the EU No- unless you are able to hide UBO and Shareholders of that companies or there are no ties to you!
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Looking for legal ways to simplify reporting. EU resident, 3rd country citizen.

 

[Marzio]

hfs said:
is there a way to structure a company in a way that you don't have to report assets/turnover/profit to an EU tax office? You basically only report what you withdraw (this is not tax evasion)
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This IS tax evasion because by managing your LLC you are creating a PE in the country you are resident of so you are evading taxes. Simple as that.

 

[hfs]

Marzio said:
This IS tax evasion because by managing your LLC you are creating a PE in the country you are resident of so you are evading taxes. Simple as that.
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But if I don't have to pay taxes on whatever that company is generating within the EU anyway, how is it tax evasion then? Creating foreign structures is a common practice done by big corps, and it's called tax optimization, not evasion.

 

[Marzio]

hfs said:
But if I don't have to pay taxes on whatever that company is generating within the EU anyway, how is it tax evasion then? Creating foreign structures is a common practice done by big corps, and it's called tax optimization, not evasion.
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I explained it in the first line "you are creating a PE in your country"

PE = permanent establishment

A permanent establishent means a fixed place of business through which the business is wholly or partly carried on so you should declare in your country all the foreign income your LLC otherwise is tax evasion.

Especially in EU you are playing with fire.

 

[hfs]

Marzio said:
I explained it in the first line "you are creating a PE in your country"

PE = permanent establishment

A permanent establishent means a fixed place of business through which the business is wholly or partly carried on so you should declare in your country all the foreign income your LLC otherwise is tax evasion.

Especially in EU you are playing with fire.
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Okay, so I do have to report assets and there is no way around it within the EU. Got it.

Do you happen to know if I can legally create an offshore company for just about any remove activity or they might not allow it and make me setup a local LLC? I've read somewhere that in Switzerland, for instance, an online business that's managed from within the country (as in my physical presence), you must setup a local company.

 

[Marzio]

It would be easier to understand your situation if you tell us where are you resident because first you say you are EU resident and now you are talking about Switzerland which is not EU

 

[hfs]

Marzio said:
It would be easier to understand your situation if you tell us where are you resident because first you say you are EU resident and now you are talking about Switzerland which is not EU
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Switzerland was my top choice, but an island corp won't fly there. I'd have to move everything to a Swiss company.

Italy is where I'll likely end up by the looks of it.

I want to keep everything in my offshore entity and only pay myself whatever I need to spend. Taxes are to be paid in a country where I actually live and have residence permit. So it's not just some sort of remote structure, it has to work with the local tax office.

 

[Marzio]

hfs said:
Switzerland was my top choice
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You can form a US LLC, form a Swiss branch so that everything will be taxed in Switzerland with the added benefit that branch profits aren't subject to withholding taxes.

This means that you can keep all the after tax profits in the Swiss branch, pay yourself a salary congruent with Swiss living standard and the day you decide to move to a territorial taxation country or UAE all the branch profits will be tax exempt.

This strategy is 100% legal and doesn't require you to form a Swiss company

 

[hfs]

Marzio said:
You can form a US LLC, form a Swiss branch so that everything will be taxed in Switzerland with the added benefit that branch profits aren't subject to withholding taxes.

This means that you can keep all the after tax profits in the Swiss branch, pay yourself a salary congruent with Swiss living standard and the day you decide to move to a territorial taxation country or UAE all the branch profits will be tax exempt.

This strategy is 100% legal and doesn't require you to form a Swiss company
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Thanks for the suggestion! I'll look into branch structures, but anything US related is out of question.

Edit: F*cking sh*t, Marzio, this is a genius strategy. Need to think of a perfect parent jurisdiction.

Last edited: Mar 7, 2023

 

[Marzio]

hfs said:
but anything US related is out of question
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hfs said:
Need to think of a perfect parent jurisdiction
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Then the solution for you is using a UK LTD treaty non-resident

hfs said:
this is a genius strategy
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😎

 

[hfs]

Marzio,​

would Gibraltar or Isle of Man work? I'd prefer to avoid UK/Australia/China.
Estonia is more liberal imo and could work well for me. Ireland is better too.

But realistically, for the parent company I want to use the lowest tax country + the least amount of hassle/cost to setup & maintain, so I could use it for many years to come regardless of my physical location/residency.

I'm just trying to understand how they define a shady jurisdiction vs the legit ones.

Malta is legit I think, but wouldn't work for my particular case. Andorra has a 2% tax with minimum capital requirement of €3,000, but I haven't looked much into setup & maintenance costs yet.

 

[Marzio]

hfs said:
I want to use the lowest tax country
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Regardless of the parent's company country you will be taxed at Swiss rates (if the strategy is to form a branch in Switzerland).

 

[hfs]

Marzio said:
Regardless of the parent's company country you will be taxed at Swiss rates (if the strategy is to form a branch in Switzerland).
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Yes I know, assuming I decide to live there forever.

 

[Don]

hfs said:

Marzio,​

would Gibraltar or Isle of Man work? I'd prefer to avoid UK/Australia/China.
Estonia is more liberal imo and could work well for me. Ireland is better too.

But realistically, for the parent company I want to use the lowest tax country + the least amount of hassle/cost to setup & maintain, so I could use it for many years to come regardless of my physical location/residency.

I'm just trying to understand how they define a shady jurisdiction vs the legit ones.

Malta is legit I think, but wouldn't work for my particular case. Andorra has a 2% tax with minimum capital requirement of €3,000, but I haven't looked much into setup & maintenance costs yet.
Click to expand...

In Estonia, you are not obliged to establish a branch when you operate a foreign company in Estonia. You can just register a foreign PE to benefit from the tax system, where you only pay tax when you distribute the profits. In the case of PE, you don't even need to follow local accounting regulations.
There is no management and control test for the purpose of determining corporate residency, so the company will not become a tax resident in Estonia in most cases.

hfs said:
Is there a way for an owner of an offshore company to receive payments from his LLC as a self-employed in EU? LLC director is automatically an employee. Has to be self-employed.

Side question: is there a way to structure a company in a way that you don't have to report assets/turnover/profit to an EU tax office? You basically only report what you withdraw (this is not tax evasion, just simplifying reporting). I think there isn't?
Click to expand...

This is quite a classic aggressive tax planning strategy that seems to work well for guys who are in the range of 200-400k turnover/profit range while being able to stay under the radar.

 

[Marzio]

hfs said:
Yes I know, assuming I decide to live there forever.
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Even if you will decide to move later it's a smart decision to have a company tax resident there:

- low taxes: comparable to Ireland and even lower in Meggen (actyally CIT is 11.2%)
- reputation: can you get more credibile juristiction than Switzerland?
- solid banks: Switzerland is on par with Singapore with the most solid banks in the world
- pro business jurisdiction: you can always count on the fact that tax incentives will not be temporary
- no part of EU: this means that they are not obliged to follow stupid EU reporting laws

 

[hfs]

Marzio said:
Even if you will decide to move later it's a smart decision to have a company tax resident there:

- low taxes: comparable to Ireland and even lower in Meggen (actyally CIT is 11.2%)
- reputation: can you get more credibile juristiction than Switzerland?
- solid banks: Switzerland is on par with Singapore with the most solid banks in the world
- pro business jurisdiction: you can always count on the fact that tax incentives will not be temporary
- no part of EU: this means that they are not obliged to follow stupid EU reporting laws
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I understand, but if I leave CH, the branch will become irrelevant as I won't be able to claim PE tax benefits. So the whole Ireland+CH branch setup will get messy and I will probably change again.

Don said:
while being able to stay under the radar
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That's exactly the point. Only problem is that I don't see how you can be LLC owner while also being self-employed AND not report LLC revenue.

Don said:
In Estonia, you are not obliged to establish a branch when you operate a foreign company in Estonia. You can just register a foreign PE to benefit from the tax system, where you only pay tax when you distribute the profits. In the case of PE, you don't even need to follow local accounting regulations.
There is no management and control test for the purpose of determining corporate residency, so the company will not become a tax resident in Estonia in most cases.
Click to expand...

Wait what???

 

[Marzio]

hfs said:
but if I leave CH, the branch will become irrelevant as I won't be able to claim PE tax benefits.
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This is not true because a branch will always need to have a Swiss resident director so it will always be resident in Switzerland but putting aside that, are you planning to be a one man show forever?

Don said:
In Estonia, you are not obliged to establish a branch when you operate a foreign company in Estonia. You can just register a foreign PE to benefit from the tax system, where you only pay tax when you distribute the profits. In the case of PE, you don't even need to follow local accounting regulations.
There is no management and control test for the purpose of determining corporate residency, so the company will not become a tax resident in Estonia in most cases.
Click to expand...

That's indeed interesting.

So by registering the foreign company with EMTA i don't have to do accounting in Estonia?

 

[Don]

hfs said:
That's exactly the point. Only problem is that I don't see how you can be LLC owner while also being self-employed AND not report LLC revenue.
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You must avoid tax residency.
Technically you can do business as a private individual by registering as sole proprietor and even get a VAT number on your own name, yet avoid tax residency. Tax is high this way, but you can deduct your expenses.
It sure is possible, however Im not sure what you want to achieve this way.

Marzio said:
This is not true because a branch will always need to have a Swiss resident director so it will always be resident in Switzerland but putting aside that, are you planning to be a one man show forever?



That's indeed interesting.

So by registering the foreign company with EMTA i don't have to do accounting in Estonia?
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Yes, you just submit the accounts once per year, but you don't have to follow the local rules when compiling the annual report. Accounts must be submitted to tax office and not business register in such case.

Last edited: Mar 10, 2023