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Zero tax option for software development with access to EMI

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@Cloudbanck I do live in such a country at the moment. Would paying a low‌ salary/dividends and apart from that making expenses via company debit card be deemed illegal/grey ?‍
Between US LLC and UAE which is more permissive with company expenses? I know at⁠ least Singapore and Hong Kong a lot of stuff is acceptable even if not tax⁤ deductible.
 
If you include the salary/dividend/expenses in your company accounting /⁠ personal tax return and pay tax on it to your country of residence, it's white.⁤ Otherwise, well, it's black.

It will be the rules︀ for expenses of your country of residence that matter most here. However for the UAE︁ it is not pass through, so if you have a company there, I guess you︂ have to register, do accounting and pay tax in the UAE , as well as︃ in your country of residence, and then maybe offset with a double taxation agreement, I︄ dont know - it gets messy.

Generally if one's country of residence is a high︅ tax western country, one might as well just have a company there - it's cheaper︆ and involves less paperwork. One potential exception is if one lives in Switzerland, where it︇ could be worth the extra paperwork to have a US or non resident UK company,︈ as that would cost less than a Swiss company.
 
Which would be different from capital gains, right?

Also, Cyprus IP Box has only 2.5%⁠ corporate tax, and as a Cyprus resident non-dom, you pay 2.5% on dividends, I think?⁤
 
Yes

The overall taxation will‍ be the same 5%, the difference is that with Polish IP box you don't need⁠ to form a Polish company. You operate through a US LLC that's considered tax transparent⁤ in Poland and you pay 5% PIT so it's more efficient and cost effective.
 
@Marzio , @Asterion these IP box options however seem to be an option if you‌ are selling your own product/IP but not so much if working on a client's product‍ or being paid for developing custom software by a third party since it's not your⁠ IP or am I mistaken?
 
Yes you are, because by definition "‌custom software" it's your IP.
 
Software is a creative idea or process that focuses on solving a problem – meaning‌ it is a form of intellectual property.

If you develop IP for a third party,‍ its also part of IP.

@Roo going back to your OP, the main fact as⁠ stated by @Marzio , the real question is your residency. It doesn't matter where you⁤ register your company the US/UAE/Cyprus, where ever, the issue will be your residency. There are⁣ a lot of EU countries with territorial taxation, but the place of effective management comes⁢ into play, if you reside in a high tax country, chances are, that the company︀ will be taxed at domestic rate in that case. Anything else, we are then dealing︁ with tax evasion. If someone is ok and happy to peddle tax evasion, in the︂ hope IRS or any other country's agencies will give them a free pass. Some people︃ here might have never dealt with IRS.

I just don't believe people in this thread︄ are seriously suggesting and hoping that IRS will look the other way with tax evasion︅ or US doesn't report non-resident LLCs to their Beneficial owner country - Infact they do︆ since 2017.

There are so many variables into play. Lets imagine a scenario, say person︇ A created an US LLC (single member) with an address which is foreign, the LLC︈ may be considered as a branch and get involved with ETOB. The LLC has to︉ provide a physical address and it can't be any virtual address. Also, the EMI you︊ are using, based on their country of registration and prevailing tax rules may share information︋ with the beneficial owner's country.

@Cloudbanck stated FINCEN and IRS are two different organisation, true,︌ but they work for the same department - Treasury. FINCEN has been tasked to maintain︍ the BOI databse. The BOI will be an internal database accessed by Law Enforcement agencies︎ and IRS. People can disagree with me because so called James Baker doesn't acknowledge it,️ as it will hurt his own business.

@Roo Whatever scheme somebosy suggests - the truth‌ post CRS and OECD world - we have to look at residencies and POEM.

People on this forum wrongly assumed there won't be any UAE corporate tax on the Freezones‍ and look where we are. The same thing is about to happen with US LLCs,⁠ and there won't be any James Baker then to admit his mistake.
 
Ah, ok, that's actually interesting,⁠ opens the door for software developers to have zero tax in the UAE.
Yes, indeed.

No, there︁ is no EU country with territorial taxation. See International taxation - Wikipedia
You could argue︂ that non-dom status means territorial taxation, but even that only applies to a few EU︃ countries.

What US shares is determined by the tax treaties, and information sharing agreements the︇ US has signed. The largest list of countries the US has signed agreements with is︈ for FATCA. There is some bidirectionality in FATCA, but it depends on the type of︉ agreement, and the focus of FATCA is very much getting the rest of the world︊ to share with the US, not the other way round.
Current list of FATCA agreements:︋ https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act

Then you have Tax Treaties, and Tax Information Exchange Agreements which are typically signed︌ with OECD countries and some tax havens. Lists here: https://home.treasury.gov/policy-issues/tax-policy/treaties, https://home.treasury.gov/policy-issues/tax-policy/tax-information-exchange-agreements-tieas

Basically you can︍ count on a reasonable likelihood that the US is sharing information with your country of︎ residence if you live in a rich OECD country or one of the listed tax️ havens. But then the US treats many countries as too unstable/corrupt/hostile/untrustworthy/badly organised, that they do‌ not want to share information with them. If your country of residence doesn't even have‍ a FATCA agreement with the US, yeah then it is unlikely the US (or US⁠ banks/EMIs) will share information.

Im not sure it is possible to create a US LLC with︀ a foreign address. The IRS and the state you form it in require a US︁ address for mail correspondance.

I do not think this is︃ correct. There is no requirement for a physical address - or even definition of what︄ a "physical address" is, in the various required forms by US authorities.

Not disagreeing, the IRS might very well access the BOI database.︉ But if you have a single member LLC, and you personally are the single member,︊ you have already given your personal address and your LLC:s US address to the IRS︋ at creation of the US LLC, and every year in form 5472. So the IRS︌ already has all this.
It's a different story if your US LLC is owned by︍ another company that in turn is owned by another company - that's where the BOI︎ registry comes in.
 
I would think that any EU or European country has the same rules by⁤ now, regardless of which company you hide behind and where you do not live in⁣ the same country- or have a full-fledged office with employees- as where the company is⁢ registered.

The rules are now clear, you pay taxes where you live, unless you can︀ prove that you have a business (as already mentioned above) with employees and otherwise a︁ fully functional office, and this office also works locally, at least 10%.
 
Thanks @sinos I don't live in a country with territorial taxation (spain) at the moment,‌ is there a list of such countries in the EU and worldwide on this forum‍ or somewhere.
 
See all countries with No in the second⁠ column, with "territorial taxation" as note on wikipedia here: International taxation - Wikipedia

Other useful⁤ lists of territorial tax countries:
https://www.expatintelligence.com/territorial-tax-systems.shtmlhttps://pro-mauritius.com/home/taxes/taxation-systems/
Note that it isnt as simple as a⁣ binary territorial taxation yes or no. There are many nuances in how territorial tax systems⁢ work, and significant differences between territorial systems, so one has to dig into the details︀ of each country. The above is just a starting pointer.
 
As I wrote in another thread I have︁ a SVG LLC and a Virtual Work Visa in the UAE ( the company needs︂ to exist by at least a year I think ). This means 1000$ for the︃ LLC and 1000$ for the Visa + a health insurance which is something you need︄ anyway. The LLC is a passthrough entity and UAE has no personal tax. I have︅ Wise business although I think now it's probably going to be harder to open it,︆ you can always try talking to Wise.
As service provider I use BBCIncorp and have︇ had no issues.
 
@karishi how did you get Wise business for SVG? Right now almost all carribean︁ countries have a waitlist on Wise. Not sure if any EMI will accept SVG now︂ sadly.
 
@JohnLocke I'm set up in Singapore and I'm paying around 4K for the corporate service‌ provider (nominee, accounting, etc) + yearly tax. So far tax has been quite low due‍ to writing off a lot of stuff as company expense and a temporary tax deduction⁠ but that will go away.
 
Moved away in the mean time for a few reasons, I am aware of CFC,‌ local accountants where I lived couldn't even tell me what those were, one didn't even‍ want to deal with me because it was out of his comfort zone/expertise so it⁠ is what it is, I tried to figure things out locally and abandoned it due⁤ to the level of incompetence I came across. Another accountant told me of basically a⁣ CFC from his description of it but it was for which he was declaring income⁢ and the owner paying personal tax in Spain although again not by CFC rules. My︀ company is however tax resident in Singapore and paying tax in Singapore, maybe CFC would︁ have burnt me eventually but haven't stayed to find out.
 
Thank you for the information.⁤ And what about accounting and annual tax report, how much do you pay there and⁣ how much accounting work would you say there is for your company ?
 
I paid around 4k tax becaus I wrote off bucket loads of expenses but that‌ will double next year due to the end of the startup tax exemption. There is‍ some accounting work since I am doing my best to expense everything I can .⁠
I am pretty much decided on a US LLC unless you have a better option.⁤
 
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