Best setup for side hustle (consulting business)

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Laurentz

New member
Hi Guys,

There are a lot of posts that go in the direction of what I am about to post, but many of them always have a small factor that varies, so I prefer to create a clean thread.
Hope that's okay

Context:
>> 9-5 jobs as employee in Germany
>> Doing consulting on the side each months (fintech / online marketing). The clients are in western Europe (Germany / Austria / Switzerland)
>> Consulting activities (~15k€ per year)
>> For now I am using a personal holding (UG in German) to invoice for those consulting gigs.

I would like to optimise for the following two goals:
>> I am the UBO of my holding and I could run into trouble if I get fired from my 9-5 job in case I wanna claim unemployment money.
>> I would like to pay 0-5% taxes on my consulting activities. In Germany ~30% go away after costs.

I was thinking about the following setup:
>> Register company in Estonia with their e-residency. Tax free from what I read.
>> Invoice my European clients from Estonia. Won't be a problem for them, still EU, IBAN friendly
>> After the money is paid to my Estonia account, I would loan the money to my German holding that would use this cash to do Angel investments in Startups.
>> There is only 1.5% tax in capital gain in Germany if you hold there shares as a business.

What do you guys think about this setup ?
Any alternative to Estonia ?
If Estonia, any service to recommend to incorporate? Any bank to recommend ?

Have a great rest of the day take care.
 

Sols

Staff member
Mentor Group Gold
This answer will probably not be what you're looking for.

>> Doing consulting on the side each months (fintech / online marketing). The clients are in western Europe (Germany / Austria / Switzerland)
>> Consulting activities (~15k€ per year)
That's an excellent start. You're clearly skilled and valuable on the market in your field. Focus on growing that.

But it's nowhere near enough to make any kind of international tax saving scheme viable. Unless you also relocate.

>> For now I am using a personal holding (UG in German) to invoice for those consulting gigs.
Good.

>> I am the UBO of my holding and I could run into trouble if I get fired from my 9-5 job in case I wanna claim unemployment money.
If you don't like German law, don't live in Germany.

>> I would like to pay 0-5% taxes on my consulting activities. In Germany ~30% go away after costs.
Then move to a place where the tax rate is 0–5%.

>> Register company in Estonia with their e-residency. Tax free from what I read.
It is tax free to register a company but it is not tax free to take profits out of an Estonian company. E-residence is rather pointless.

The Estonian company becomes tax resident in Germany, though, and has to also comply with German tax law.

>> Invoice my European clients from Estonia. Won't be a problem for them, still EU, IBAN friendly
OK.

>> After the money is paid to my Estonia account, I would loan the money to my German holding that would use this cash to do Angel investments in Startups.
I'm not sure if you're triggering CFC, Transfer Pricing, BEPS, or all three here, but this is something tax authorities are prepared for. It would probably be seen as dividends or personal income by the Germans, depending on how closely those transactions mimic salary payments.

What do you guys think about this setup ?
The only way it would work without backfiring is if despite fully automated exchange of information going to the efficient German tax authorities, no one looks into your case.

It would be a walk in the park to prosecute you and win, if you haven't been declaring and paying full German taxes.

Any alternative to Estonia ?
Germany. Or relocate.
 

Jerry1911

Entrepreneur
Alternative is to find a rent a company service like Winglio or Xolo which pays you out in crypto. Not sure if there is one though.
 

GringoPapi

New member
For consulting services a US LLC if your customers are not in the US and for those in the US you can use an UK LLP owned by 2 US LLC
Curious about this. I have a virtual mailbox in the US handling mail and for tax purposes. I’m living in LatAm though and getting paid USD. Why is the UK LLP the best move?
 

Cetme308win

Entrepreneur
Curious about this. I have a virtual mailbox in the US handling mail and for tax purposes. I’m living in LatAm though and getting paid USD. Why is the UK LLP the best move?
If your customers are americans and you wanna remain tax free in your home country it's better not to deal with them through an US LLC because your LLC may be liable for paying US taxes so better to use an UK LLP
 

Laurentz

New member
Thanks everyone - So probably best is to accept the tax and focus on growing the business.

Also use as much costs as I can to reinvest.
 

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