Offshore Structure for Crypto Trading with Three Partners in Three different Jurisdictions

[pelias]

Hi! I am new here and would really like to get some feedback from the experts and sorry if this sounds naive 🙂

Myself and two of my partners are crypto traders and are living in three different countries (UK, Spain and Montenegro). We would like to setup a 100% legal company structure to minimize our taxes. Would it be possible to setup a company in an offshore jurisdiction (each of us owning a third of the company) and fulfilling following CFC requirements which I found on the forum (we are flexible regarding directorship structure):

• Hold at least six board meetings a year (Although three or four should be acceptable).
• Keep full minutes which show the directors exercising central management and control.
• Hold meetings in a fixed place (at least usually).
• Do not hold any board meetings in their home countries

My questions are:

• Is it possible to have the offshore firm pay out a minimal salary to each of us (on which we pay income tax in our home countries)
• Can we avoid our home countries claiming corporate tax for the offshore company. What about personal capital gains taxes?
• What are the pitfalls and if this is possible which offshore jurisdiction would be suitable for this?

Thanks!

 

[erni]

pelias said:

• Can we avoid our home countries claiming corporate tax for the offshore company. What about personal capital gains taxes?

Click to expand...

if you setup a company with substance wherever you are going to incorporate your business it is well possible.

 

[Mr Gus]

Will you all be putting your own funds together into the company? What if one off the partners decides to screw you over? Or will start doing illegal stuff on behalf of the companies name or w/e?

The person from montenegro is paying only 9% anyways, and with some planning could lower it even more. As far as I know Montenegrin tax authorities aren't so advanced and aggressive.

And with a structure like this you will be possibly only avoiding the corporate tax, not PIT, CGT. Imagine you wanna cash out in 5 years, you will still have to pay PIT on that amount.

In my opinion just move out of the UK and Spain if you think taxes are to high.

 

[Fulton Abraham Sanchez]

pelias said:
My questions are:

• Is it possible to have the offshore firm pay out a minimal salary to each of us (on which we pay income tax in our home countries)

Click to expand...

P, hi. You can defer income tax in home countries if the domestic tax structure does not require a declaration of profits earned from foreign entities.

pelias said:

• Can we avoid our home countries claiming corporate tax for the offshore company. What about personal capital gains taxes?

Click to expand...

But it will be deferral tax only because at one point the foreign company will distribute dividends and the owners will have to pay taxes then. Capital gains are only for sale of long-term assets such as the sale of the company at a gain.

pelias said:

• What are the pitfalls and if this is possible which offshore jurisdiction would be suitable for this?

Click to expand...

Nevis is a good jurisdiction for confidentiality.

Last edited: Mar 2, 2021

 

[CaptK]

You dont need to worry so much for the start up bit that can easily be done via many jurisdictions. Its your exit that will cause you issues.
As @wie7se said CT is 9% Montenegro, subject to how the capital was contributed so can be mitigated. They are also happy for people to pay so if you do pay something they leave you alone.
Going forward pay yourself a salary if you want or just reinvest profits back into the business.

In 5 years time when you want to cash out, you are gonna have to move to a tax free country for minimum 6 months then cash out.

 

[Fred]

Like @CaptK already mentioned - tax free country is the way to go.

For significant amount of money in Crypto it's affordable to setup a Dubai company together with 2-3 business bank accounts in local retail banks within the UAE.
We have established some good working schemes that the Crypto funds looking like business earnings. The key is that the whole process of the setup is done right. Starting with matching business plan over to the right choice of business license and working with the right banks is the way to go.

As the UAE lifestyle and the "average joe" is a little bit different in Dubai - there are no questions about 100.000 EUR transfers.
The sums you plan to move from Crypto need to fit the economy and society of the chosen country. Things changing fast so better go with a long lasting and reliable setup to gain significant wealth and not loosing money to bulls**t banks in Belize or Dominica.

Think big - after the cash out with the Dubai Company setup you make appointments with big Banks located in the DIFC here in Dubai. Starting from 1-2m+ they will be happy to onboard you. Next step is getting into some passive managed ETF's like other user here is suggesting all the time and enjoying life.

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