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

[JustAnotherNomad]

Marzio said:
If that was the case you could remit foreign sourced income tax free.
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? 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.

Marzio said:
I've never seen a serious business built on such a fragile foundation.
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Then you haven't been to Dubai. It's very common for people to run US LLCs from there.

Marzio said:
If you do the math you'll discover that OP would pay a whopping 1.75% total taxes without any refund process but paying 35% of the 5% on income left in Malta.
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Not sure what you mean here.

 

[daniels27]

Marzio said:
In Malta you could remit only capital gains tax free, any other foreign sourced income, if remitted, is taxed at income tax rates
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Ok can we then have trading income not remitted?

 

[daniels27]

JustAnotherNomad said:
Singapore e.g. has a similar system.
There is a distinction between local and foreign and remitted and unremitted income.
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They have FSIE which is for passive income. And then, they have foreign income which includes active income.

 

[daniels27]

Marzio said:
I've never seen a serious business built on such a fragile foundation.
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But you are on OCT. This place is full of such guys.

 

[Marzio]

JustAnotherNomad said:
Singapore e.g. has a similar system.
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True, and it's not a territorial taxation system, it's "non-dom" for companies.

JustAnotherNomad said:
It's very common for people to run US LLCs from there.
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I know but we can be smarther than that.

JustAnotherNomad said:
Not sure what you mean here.
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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 app generates $1.000.000.

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

$50.000 are taxed in Malta.

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

17.500*100/1.000.000 = 1.75% total taxes paid

daniels27 said:
But you are on OCT. This place is full of such guys.
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Is 1.75% of taxes worth the risk of getting caught by a bedouin?

 

[JustAnotherNomad]

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

 

[Marzio]

JustAnotherNomad said:
95% royalty fee? Not sure that would pass transfer pricing checks.
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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

JustAnotherNomad said:
And how will he acquire the IP?
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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]

JustAnotherNomad said:
But it might be easier to just use a regular Maltese company with a non-Maltese holding company to just pay the 5%.
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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]

Marzio said:
Book a paid consultation with the guys who wrote the article about resident non domiciled companies describing the propsed setup and report back their answer.
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I really think someone should take one for the team and do that. 😉

 

[Marzio]

JustAnotherNomad said:
I really think someone should take one for the team and do that.
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@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]

littlerabbit said:
Rest assured that I will make an appointment and share the results here.
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Awesome!

 

[saeed]

Any updates ?