Bank Account for eCommerce Business

[joshuarex]

Hello All!

First and foremost - I've read the forum for the past 3-5 days and the information I've gathered is insane! It really changed my way of thinking of the whole privacy thing, as well as taxes, etc.

Nonetheless, I live in one of the Baltic countries, and have an eCommerce business (Shopify -> PayPal + Stripe) which is generating some good income. Basically, what I'm looking for, is a bank account to hold my income from this business, and that it will not be seen by my own country (yes, because of taxes), or at least it minimize as much as possible.

I feel really stupid in these things still, but I'm in no interest of paying taxes in my own country and would be looking for a bank account, with which I would be able to receive funds from PayPal or Stripe, as well as withdraw money from ATM (preferable).

As of for now Im using Revolut, and I believe this is one of the worst solutions because Revolut already has a bank licence in my country (?). At least as far as I know. So now sure if it's secured from my own country or not.

Do let me know in case you have any suggestions in my case! Appreciate any help and apologies, in case this kind of question has already been answered/asked!

 

[John Andrews]

What is your average monthly revenue?

If you can move to Cyprus and open a company there, you're eligible for non-dom tax residence (forms MEU1 and TD 126). This way you will only pay 12,5% tax on your profits. So company pays 12,5% corp tax and you are free to withdraw it to your bank account basically.

I assume you haven't incorporated your business in your home country yet (or anywhere else for that matter). You're in a very bad position right now. Baltic countries have one of the highest tax rates in the European Union, do you really think they will not figure this one out? Even if they don't see your bank account, they can still figure out you're up to something if you buy expensive stuff.

 

[John Andrews]

And finally, do you want to invest this income, just spend it on stuff or both? If you want to invest, I think incorporating in Estonia would be a good option because you don't have to pay any tax that way. However, even if you incorporate there you might have to pay social contributions since you'll be the director. Maybe @Martin Everson can help on this one, I think he has a company there.

 

[John Dee]

If you dont want to pay taxes in country of your company incorporation, you must relocate your company to jurisdiction, which is not taxing that kind of income your company is generating. Or you can raise your company expenses to declare no-profit in accounting, but that's pain in the a*s. Same will apply on you as a person, if you dont want to be taxed, move your residency to country, which is not taxing that kind of income you are receiving.

 

[joshuarex]

Hello, and thank you for your answers! Really appreciate!

@mange38 , I do have opened a "Sole entrepreneurship" business in my own country, but we probably cannot even call it a company. I'm not really looking into investing so Estonia might not work for me.

I really do think right now of opening a company in my own country (it's Lithuania, by the way), as it's seems just too much work on my side. I've tried to do my research on Georgian bank account as well as starting a company there, but not quite sure if that's a viable option for me.

I would pay 15% for taxes (out of net profit) every year if I decide to have a company here. One issue with that for me - 21% VAT for Facebook Ads expenses which I would like to avoid as much as possible (my primary expenses are Facebook Ads and 21% can become quite a lot)... Maybe any ideas on this one?

@John Dee Thank you for your answer! Yeah. I'm actually not really looking into mowing to another country as per my answer to mange... Though of opening a bank account in other country or just continue using Revolut, but I do think that an EMI like Revolut in my country is the same as having a local bank account... In other words - government sees everything.

 

[John Andrews]

In regards to Facebook and VAT - can't your company apply for a VAT ID and deduct this as an expense? This should be possible without any problems as this is a legitimate business expense.

Btw, I thought you were from Norway/Sweden/Denmark when you mentioned "baltic", I guess Lithuania is a bit less strict but better to be safe than sorry...

 

[John Andrews]

@John Dee Thank you for your answer! Yeah. I'm actually not really looking into mowing to another country as per my answer to mange... Though of opening a bank account in other country or just continue using Revolut, but I do think that an EMI like Revolut in my country is the same as having a local bank account... In other words - government sees everything.

Yes. Even if they (currently) don't, assume they do.

 

[John Dee]

You know, what you want to do is illegal. Why doing so, if there is legal way-around, be smart Btw, there are still 13 non-CRS countries on this planet, soon to be 9, google it and good luck

 

[John Andrews]

He will get in trouble sooner or later by doing business in his own name through a bank account established in a non-CRS country.

The only option is to establish a private limited company in a country with low corporate income tax and to change his residence to a country which does not tax distribution of dividends. Which is obviously Cyprus, if possible.

 

[Spinat]

You know, what you want to do is illegal. Why doing so, if there is legal way-around, be smart Btw, there are still 13 non-CRS countries on this planet, soon to be 9, google it and good luck

You may post the list of the 9 countries here. Never mind I did it for you here The list of non CRS countries 2019 - 2020

 

[joshuarex]

Thank you for your answers, all! Really, really appreciate those!

One more question though in this manner - what if I would open up a Bank Account in US (as per @<<snippet>> post on non-CRS countries) via Stripe Atlas (https://stripe.com/atlas)? It seems that they're offering one with Stripe itself, which could be really beneficial for me (since I'm selling 95% of my product to US customers). Basically, it's opening up a Bank Account in Delaware.

Nevertheless - thank you for shedding the light! knew nothing about these things a couple of days before!

 

[John Dee]

You will still need to pay taxes in your country of residence from your personal income and/or country of incorporation of your company, doesn't matter in which jurisdiction you'll open your bank accounts. You can play "catch me if you can" with tax man, but I would not risk it in today's world.

Opening Stripe Atlas it's same as opening TransferWise account, but you'll have also APIs for payment gateway included.

 

[joshuarex]

Thank you, @John Dee !

I did quite a research just recently, and I realise that I really don't have much issues paying for my 15% tax off of my withdrawals for my personal use, even though I was just realised that I have another issue/thing to think about - >

Since I'm running a dropshipping business, my biggest expense is Facebook Ads. Now, I live Lithuania and Facebook does not add VAT to the bill because they're located in Ireland for this reason. This means, that I need to pay 21% (in Lithuania) for VAT off of every transaction bill to my local authorities. For this reason, I was thinking of opening a bank account in Andorra (if possible, of course) which has the lowest VAT rate in EU (4.5%), or any other country, which has lower VAT... But not quite sure if that would work either... Just thinking out loud.

 

[John Andrews]

First of all VAT rates have nothing to do with your bank account. You can have an account on Mars if you want but you still have to pay taxes in Lithuania. If you think you can get away with it because your bank doesn't report your transactions to your home country, you will get fucked hard.

I need to pay 21% (in Lithuania) for VAT off of every transaction bill to my local authorities.

Can you provide a source for this? Facebook is based in Ireland (EU) and your company is based in Lithuania (also EU). This is a simple B2B transaction, no VAT will be applied here if you have a VAT ID.

 

[Marc Jacob]

@jashuarex, i assume that you are living in Latvia, right ? Latvia, as one of the best taxation system in europe for limited companies, why don't you open a normal SIA and optimize your taxation through your company, that would be much wiser than trying to operate a foreign business to save a few point s of VAT...

 

[joshuarex]

First of all VAT rates have nothing to do with your bank account. You can have an account on Mars if you want but you still have to pay taxes in Lithuania. If you think you can get away with it because your bank doesn't report your transactions to your home country, you will get fucked hard.



Can you provide a source for this? Facebook is based in Ireland (EU) and your company is based in Lithuania (also EU). This is a simple B2B transaction, no VAT will be applied here if you have a VAT ID.

Mhmm, I don't have a VAT ID as I'm not registered as a VAT payer (yet). So if I do get a VAT ID from my local country, I would input to Facebook and all my transactions will have that 21% VAT? Or is it working differently?

Because how I understand this is that if I do register myself as a VAT payer, add my VAT ID, and my payments to Facebook will include that 21% VAT?

I believe I'm asking questions that are dependant on my local country, though... Nevertheless, thank you for your help!

 

[joshuarex]

@jashuarex, i assume that you are living in Latvia, right ? Latvia, as one of the best taxation system in europe for limited companies, why don't you open a normal SIA and optimize your taxation through your company, that would be much wiser than trying to operate a foreign business to save a few point s of VAT...

Hey! I'm actually based in Lithuania, but we're neighbours here (living next to each other). I believe so as well, since it might be a bit too complicated as well as "my head would explode" of everything, it's just I'm trying to look in case I have some options here to, i.e., get around this VAT thing.

 

[Marc Jacob]

That's a question that my customers use to raise to me, the easiest thing you can do is to register a business outside of EU for handling your activity and they transfer funds over to your company - I assume that you have a micro company, the turnover is probably taxed at 15%, which is still very decent and at least you pay some taxes and you'll be more or less in compliance with local authorities.

 

[John Morris]

@joshuarex open a UAB company. register it for VAT and obtain a VAT ID. add it to your facebook account (Hinzufügen deiner Umsatzsteueridentifikationsnummer und weiterer relevanter Unternehmensinformationen zu deinem Facebook-Werbekonto | Hilfebereich für Facebook-Werbeanzeigen ).

When running ads on FB, Facebook Ireland Ltd will send you an invoice WITHOUT Irish VAT, since you sent them you rVAT ID. You can then use this invoice to deduct ads as a business expense of your company.

Now, in regards to selling, yes you will have to charge 21% VAT to your customers (Lithuanian VAT rates and VAT compliance ).

Remember: VAT is paid by the BUYER... to your company, but generally you will mostly "forward" it to Lithuania gov, unless you have local business expenses (office costs, internet, etc.).

Please contact a Lithuanian accountant, they will explain how VAT works. See this image for more info:

 

[joshuarex]

@joshuarex open a UAB company. register it for VAT and obtain a VAT ID. add it to your facebook account (Hinzufügen deiner Umsatzsteueridentifikationsnummer und weiterer relevanter Unternehmensinformationen zu deinem Facebook-Werbekonto | Hilfebereich für Facebook-Werbeanzeigen ).

When running ads on FB, Facebook Ireland Ltd will send you an invoice WITHOUT Irish VAT, since you sent them you rVAT ID. You can then use this invoice to deduct ads as a business expense of your company.

Now, in regards to selling, yes you will have to charge 21% VAT to your customers (Lithuanian VAT rates and VAT compliance ).

Remember: VAT is paid by the BUYER... to your company, but generally you will mostly "forward" it to Lithuania gov, unless you have local business expenses (office costs, internet, etc.).

Please contact a Lithuanian accountant, they will explain how VAT works. See this image for more info:

Would it be possible to give me a bit more info on the generally you will mostly "forward" it to Lithuania gov ? Do you refer to just getting VAT returns in a tax season?