Seeking Expert Advice on Structuring US App Companies for Tax-Efficient Global Revenue Transfers

[JustAnotherNomad]

? Not sure what you mean. Singapore e.g. has a similar system.‍
There is a distinction between local and foreign and remitted and unremitted income.
Still, the⁠ source of the income is relevant.

Then you haven't been to Dubai. It's⁣ very common for people to run US LLCs from there.

Not sure what you mean here.

 

[daniels27]

Ok can‍ we then have trading income not remitted?

 

[daniels27]

They have FSIE which is for‍ passive income. And then, they have foreign income which includes active income.

 

[daniels27]

But you are on OCT. This place is full of such guys.

 

[Marzio]

True, and it's not‌ a territorial taxation system, it's "non-dom" for companies.

I know but we can be⁠ smarther than that.

I mean that if @littlerabbit as owner of IP licenses that IP to a company resident⁤ non domiciled in Malta he could get 95% of the income generated by the maltese⁣ company as royalty payment tax free in UAE.

The remaining 5% will be taxed in⁢ Malta and who cares about the full imputation system if even at highest tax bracket,︀ which is 35%, in the end you will pay 1.75% total taxes?

Imagine one app︁ generates $1.000.000.

95% of that $1mil goes to UAE as a royalty payment.

$50.000 are︂ taxed in Malta.

For the sake of semplicity lets assume that all $50.000 will be︃ taxed at 35% and this isn't obviusly the case but 50.000 * 35% = $17.500︄ of taxes

17.500*100/1.000.000 = 1.75% total taxes paid

Is 1.75% of taxes worth︆ the risk of getting caught by a bedouin?

 

[JustAnotherNomad]

95% royalty fee? Not sure that would pass transfer pricing checks.
And how will he acquire⁠ the IP?

 

[Marzio]

Which transfer pricing checks are you talking about? 😎

https://taxsummaries.pwc.com/malta/corporate/group-taxation

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0651

If he develops his own apps then the IP is⁢ internally developed.

 

[JustAnotherNomad]

Lol, unbelievable that they basically don't have transfer pricing rules.
I guess it could work.‌
But it might be easier to just use a regular Maltese company with a non-Maltese‍ holding company to just pay the 5%.

 

[Marzio]

I wouldn't do‍ that, using the resident non domiciled setup allows you to stay flexible and move in⁠ the event Malta will update its tax regime as they already planned to do.

 

[JustAnotherNomad]

I really think someone should take one for the team and do that. 😉

 

[Marzio]

@littlerabbit it's your turn now 🙂

 

[littlerabbit]

@Marzio @JustAnotherNomad You had a very nice discussion and I really learned a lot. Thank‌ you so much for everything. Rest assured that I will make an appointment and share‍ the results here.

 

[Marzio]

Awesome!

 

[saeed]

Any updates ?