Possible Offshore Structure Idea

[ciccino]

I'm actually living in Italy with a dropshipping business via Shopify, but I also have Panamanian residency and documents (still not declared in Italy, I have no intention to live half a year in Panama) I'm thinking about alternative solutions, I thought about the following strategy:

1) Open a Delaware LLC
2) Open a corporate and a personal bank account in US using the Panamanian documents, so no CRS to Italy
3) Take a residency in Malta as self-sufficient to be even more protected.

Any weak points about this offshore structure?

Thank you.

 

[Marzio]

ciccino said:
Take a residency in Malta as self-sufficient to be even more protected.
Click to expand...

I would say that's the best option.

 

[legrant]

I may be wrong but:

The US LLC will be a passthrough entity therefore all the profit the company makes will be taxed as personal income in Malta (15% tax under the self-sufficient regime).
About the bank accounts, CRS doesn't apply in the US, they have FATCA instead.

If you don't mind paying the 15% tax in Malta, the structure seems fine I'd say.

 

[Marzio]

legrant said:
The US LLC will be a passthrough entity therefore all the profit the company makes will be taxed as personal income in Malta
Click to expand...

Even if are not remitted to Malta?

If that's the case then he could use his panamian company (i guess he incorporated one to obtain panama residency) to act as single member LLC. In that way he will only pay 5K a year tax in Malta if his income in the Panama corp is over 35K but less than 750K (otherwise if will be a CFC).

 

[legrant]

marzio said:
Even if are not remitted to Malta?

If that's the case then he could use his panamian company (i guess he incorporated one to obtain panama residency) to act as single member LLC. In that way he will only pay 5K a year tax in Malta if his income in the Panama corp is over 35K but less than 750K (otherwise if will be a CFC).
Click to expand...

Unless he wants his LLC to be taxed as a C Corp, it'll be a passthrough entity and will have to pay taxes as personal income wherever he resides. 15% taxes isn't that much though for an EU country so unless his priority is not to pay taxes, 15% shouldn't be a problem.

 

[Marzio]

legrant said:
Unless he wants his LLC to be taxed as a C Corp, it'll be a passthrough entity and will have to pay taxes as personal income wherever he resides
Click to expand...

Because you take for granted that Malta sees the US LLC as a transparent entity but there are some countries where LLC is seen as an opaque entity, for example Italy or Dominican Republic.

In any case interposing a capital company between him and the LLC will help him avoid paying15% tax.

 

[ciccino]

marzio said:
Even if are not remitted to Malta?

If that's the case then he could use his panamian company (i guess he incorporated one to obtain panama residency) to act as single member LLC. In that way he will only pay 5K a year tax in Malta if his income in the Panama corp is over 35K but less than 750K (otherwise if will be a CFC).
Click to expand...

Which bank will open a corporate account to an LLC owned by a Panama corp?

 

[ciccino]

legrant said:
I may be wrong but:

The US LLC will be a passthrough entity therefore all the profit the company makes will be taxed as personal income in Malta (15% tax under the self-sufficient regime).
About the bank accounts, CRS doesn't apply in the US, they have FATCA instead.

If you don't mind paying the 15% tax in Malta, the structure seems fine I'd say.
Click to expand...

I will not remit any money to any bank account in Malta, I will use only the US bank account, also any CFC will be directed to Panama as I will open the company and the bank account with my Panamanian documents, not the Italian or the Malta ones

 

[legrant]

marzio said:
Because you take for granted that Malta sees the US LLC as a transparent entity but there are some countries where LLC is seen as an opaque entity, for example Italy or Dominican Republic.

In any case interposing a capital company between him and the LLC will help him avoid paying15% tax.
Click to expand...

According to this, "income is taxed directly to partners according to their shares of profits/losses and/or other agreement in place." in Italy when it comes to US LLCs.

ciccino said:
I will not remit any money to any bank account in Malta, I will use only the US bank account, also any CFC will be directed to Panama as I will open the company and the bank account with my Panamanian documents, not the Italian or the Malta ones
Click to expand...

If you're going to become a resident of Malta, what you're proposing is probably illegal and you'll be committing tax evasion and most likely fraud too as you're lying to the banks and the US government about your country of residence.

If you don't want to pay taxes, move to a country with a territorial tax system such as Costa Rica, and what you're proposing will work fine and you won't be doing anything illegal.

 

[uplana]

legrant said:
If you don't want to pay taxes, move to a country with a territorial tax system such as Costa Rica, and what you're proposing will work fine and you won't be doing anything illegal.
Click to expand...

That's the best suggested solution for you OP!

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[Marzio]

ciccino said:
I'm thinking about alternative solutions,
Click to expand...

I almost forgot! This is probably the best option for Italian residents. It's worth investigating IMHO.

 

[ciccino]

legrant said:
If you're going to become a resident of Malta, what you're proposing is probably illegal and you'll be committing tax evasion and most likely fraud too as you're lying to the banks and the US government about your country of residence.

If you don't want to pay taxes, move to a country with a territorial tax system such as Costa Rica, and what you're proposing will work fine and you won't be doing anything illegal.
Click to expand...

1) I'm not committing tax evasion because under self-sufficient residency Malta doesn't tax foreign income sources not remitted in Malta, that's why I choose Malta in particular.
2) No fraud as I'm actually resident in Panama as well according to the Panamanian rules (enter the country at least once every 2 years, I pay rent there, so I'm a Panamanian resident 100% with all the documents, where is the fraud?

Last edited: Jul 31, 2021

 

[ciccino]

marzio said:
I almost forgot! This is probably the best option for Italian residents. It's worth investigating IMHO.
Click to expand...

The risk of esterovestizione in San Marino for an Italian citizen it's very high, do you really stay there without crossing the borders for more than 183 days a year? Also, it's still not clear if you'll administer your foreign company from San Marino that they will consider the income foreign income, most likely not, so it will be a problem.

Last thing, only 100 people a year can get the residency, it seems like a lottery to me

 

[legrant]

ciccino said:
1) I'm not committing tax evasion because under self-sufficient residency Malta doesn't tax foreign income sources not remitted in Malta, that's why I choose Malta in particular.
2) No fraud as I'm actually resident in Panama as well according to the Panamanian rules (enter the country at least once every 2 years, I pay rent there, so I'm a Panamanian resident 100% with all the documents, where is the fraud?
Click to expand...

1) How are you going to prove you're self-sufficient if you don't remit any of the money to Malta? How are you going to rent/buy a place to live? And if you remit any money to Malta, according to this, "the minimum annual tax liability is EUR 15,000."
2) Are you sure you're able to have both Panama and Maltese residency and comply with both country's laws? (It may be possible, I just find it strange)

Anyways, your "structure" seems to be in a grey/dark area and may generate problems, maybe not in the short term, but it'll most likely do in the future. As I said, move to a country with a territorial tax system and you'll be good and 100% legal. And if you're making a lot, you could move to UAE too.

 

[Marzio]

ciccino said:
The risk of esterovestizione in San Marino for an Italian citizen it's very high, do you really stay there without crossing the borders for more than 183 days a year? Also, it's still not clear if you'll administer your foreign company from San Marino that they will consider the income foreign income, most likely not, so it will be a problem.

Last thing, only 100 people a year can get the residency, it seems like a lottery to me
Click to expand...

I don't think you have to be resident for more than 183 days under this program. A friend of mine asked the administration and they replyied that you could manage a foreign company from there. It's like Panama. As far as i know few people know about this program and with all the digital nomad competition from other countries you could try.

 

[Marzio]

legrant said:
And if you remit any money to Malta, according to this, "the minimum annual tax liability is EUR 15,000."
Click to expand...

He is talking about becoming non-dom in Malta and has nothing to do with the scheme you linked. A non-dom pays 5K a year flat tax if the foreign income not remitted to Malta is more than 35K.

 

[legrant]

marzio said:
He is talking about becoming non-dom in Malta and has nothing to do with the scheme you linked. A non-dom pays 5K a year flat tax if the foreign income not remitted to Malta is more than 35K.
Click to expand...

Then why did he say self sufficient and not non dom?

 

[Marzio]

legrant said:
Then why did he say self sufficient and not non dom?
Click to expand...

Because afaik you can become non-dom in Malta by proving self sufficiency

 

[ernestdezoe]

Can somebody explain once and for all what does "remitted" mean?

It's like one of those words from the 1600s that only a beurocrat would know what it means

 

[Marzio]

ernestdezoe said:
what does "remitted" mean?
Click to expand...

transferred