Service company in the US. How to optimize taxes?

[offcorp]

Hi I have a Service company in the US. I want to be able to have "expenses" so I can decrease the taxable income. Any ideas how to do it the proper way?

I also have another country's citizenship non-EU. Can I use it somehow?

I was thinking about Georgia/Bulgaria/Cyprus etc., but in the very end they will know who is the owner of the bank account. So what's the point of all those nominee directors and share holders?
For example: I have invoice issued by a Bulgarian company to my US company. I pay as a wire transfer and yes this is between firms, but they (IRS, US Bank, Fed) will know who is the owner of the bank account for the Bulgarian company. Is it correct? Especially if the account is in USD?

Would appreciate your advice!

 

[neweraoffshore]

Then I suggest the following. Transfer your profits from your US service company to an EU company (could also be somewhere else of course) and then back again to a US company with a Nominee. Maybe you can find someone in this forum who already has EU companies and can invoice you with IT stuff. Because forming an EU company will not be so safe as in 2020 the new 5AMLD will be active and it is very likely that your name will be published in the upcoming UBO register.

 

[offcorp]

Thank you @neweraoffshore for your reply.
But what is the point of sending it back to the US? This income would be taxable in the US.
Could you please elaborate on your idea?

 

[neweraoffshore]

As your Nominee wouldn't be a US person and the business was done with a non-US entity the money is tax free. This is a better solution than going into a non reporting country, because 1. You don't know for how long they won't report and 2. non reporting countries are normally small countries without a stable banking system and mostly small shady banks, as you may read in this forum you will hear some stories where banks didn't pay out money, funds gone missing, whole bank went bankrupt or they lost their banking license and 3. you again have your home currency and 4. you will have quick transaction like for example Zelle and 5. in case you don't trust your nominee anymore you can quickly take over ownership, pay tax but safe your money and 6. I wouldn't trust nominees in non reporting countries. Not the first time one took the money and ran.
Of course, as already said in the post before, this would only work as you find someone who will invoice you, because making your own EU company will have you listed in the UBO reg, and therefore IRS would know when you get and invoice from your own EU company.

As you have an US passport you are taxed on your world income, so legally it won't make any difference if you have your offshore company in a non reporting country or your offshore company back in the US. Therefore I would rather chose the option where I could go into the "safest" tax haven.
But still, in my opinion I wouldn't recommend an US person to go offshore at all. Please think about it clearly, we EU passport holders have a lot more legal vehicles because we are taxed on our residence/center of life, we have much better escape routes if we got caught, you don't. However the risk to get caught if you chose a good provider without leaks is very very low, but I still want you to fully understand your risk-benefit ratio!

Last edited: Sep 5, 2019

 

[JohnLocke]

neweraoffshore said:
However the risk to get caught if you chose a good provider without leaks is very very low, but I still want you to fully understand your risk-benefit ratio!
Click to expand...

It's a very good point but I would not say it like this because it's a risk factor which is unmanageable and unpredictable for everyone. No one knows what will come the next day if you step out and into the grey area of applicable laws.

We speak US government which obvious is not stupid even people think so.

Otherwise I think you have some good points here.

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[neweraoffshore]

And 7. as US guy you know that they have a big problem with identity theft, so the banks have good security guidelines if someone (for example even your real nominee) comes to the bank and wants to transfer money because he says he is not able to login into his online account. Even if he shows his passport and can tell his SSN and company EIN, they first notify the mail and sms number in the account where he has to accept the transfer. As you hopefully are the only one who can login to the mail account which is connected with the bank account (same with sms number) you immediately know that something is happening and therefore decline the transaction, sign the blanco purchase agreement and take complete ownership.

As from my experience all this documents, like declaration of trust, beneficial owner structure, power of attorney etc, you normally get from the common offshore providers are useless.... the only thing which makes sense to me is a blanco signed purchase agreement. But you normally don't get this. When I started in the offshore scene no offshore provider gave me this document.
Cut a long story short: Blanco signed purchase agreement + good bank with security guidelines against identity theft is the best combo to secure your money.

 

[offcorp]

Thank you for your advices. After many considerations I decided to go a legal path. After smart legal tax planning it's possible to decrease taxes to 17-22% effective rate using deductions and tax credits