Best Tax free Countries to Incorporate Your Remote-Based Business (Digital Nomad)

[troubled soul]

Which are the best country to register your tax free business as Digital nomad....
Where you can open bank account and run whole operation remotely...
Do anyone have Best idea for this ?
Which are the best overall ?
Generally which countries are used among the Digital nomad ?

Thanks

 

[Sols]

You need to consider what type of banking you need and your clients' expectations and requirements. If you're working as a consultant and you have corporate clients in for example EU or UK, your client may be unable or unwilling to work with you if you show up with a dodgy offshore company.

Or do you run a business which requires access to payment processors? Then that affects your choice.

Base choice of jurisdiction on more than just being someone who works from home and travels a lot.

 

[JohnnyDoe]

Assuming you are properly setup with you personal tax situation, a U.S. single member LLC is good.

 

[blizz]

a U.S. single member LLC is good.

why would that be the best option for him ?

 

[JohnnyDoe]

why would that be the best option for him ?

Assuming he is properly setup for his personal taxation, as a pass-through entity is tax efficient, easy to maintain and well accepted worldwide.

 

[MiltonStone]

True US LLC's are widely used in tax optimizing plans.

 

[TheCryptoAnt]

Assuming you are properly setup with you personal tax situation, a U.S. single member LLC is good.

This.

Cheap, great banking options, nobody raises an eyebrow.
Cumbersome for crypto but doable

 

[Barney2201]

Would the US LLC potentially give substance issues? If you are a Digital Nomad and therefore not working from the US how do you prove substance?

 

[TheCryptoAnt]

Would the US LLC potentially give substance issues? If you are a Digital Nomad and therefore not working from the US how do you prove substance?

US LLCs are tax transparent, they are not 'proper' corporations unless you file for S-Corp or C-Corp

 

[tyrexoid]

+1 for US LLC, just don't forget to file taxes properly (you don't really have to pay any tax, if you're not resident and so on, but still need to file taxes with all in/out transactions summarized).

 

[FixieHartmann]

If you have clients that require a “proper” company with normal invoices that don’t come from a typical offshore jurisdictions like Seychelles then my impression is that in 2023 you have the following options:
- US LLC and personal tax residency in a zero tax haven
- Cyprus LTD with personal tax residency in Cyprus (not tax free but less than 10% total tax plus good banking, EU company etc.)
- Dubai free zone company with personal residency in UAE (also apparently not completely tax free anymore but very little total tax)

Please feel free to correct me but in my opinion all other options are either
- quite shady and rely on secrecy
- cause problems with clients in EU / US for instance because invoices from your Panama LTD are not recognized
- hard to impossible to get decent banking for
- easy to attack by tax authorities in your home country

So if I were to start my DN journey today I’d either get a residency in a zero tax haven and work with a US LLC or get Cyprus residency and LTD and spend at least 2 months there and not more that 6 months in another country.

Depending on your citizenship and current tax residency you can also try the “Perpetual Traveller” route, but I think this only works in the long-term if you
- are constantly traveling (e.g. max 30 days in a country at a time)
- are comfortable lying on all your visa applications concerning doing “work”
- do not have any investments in high tax / aggressive tax countries
- do not have any substance anywhere

As I don’t think that most people would want to travel all the time they should get a tax residence and proper setup somewhere.

 

[Barney2201]

I am a resident of Sark (zero personal tax) and have been trying to fathom the best solution for profit extraction from a UK company, would the US LLC be a suitable vehicle?

I live by the UK's SRT 90 day test and don't spend more than 90 days anywhere else throughout the year.

However, I am still a director and 50% owner of the UK company which works mainly in the UK. Would this be a risk staying as a director / shareholder or can I do both. I.e. Own 50% of UK company then own 100% os US LLC and invoice for my services to the UK company?

 

[AndyAresa]

FixieHartmann, hi, how does one achieve less than 10% total tax with a Cyprus Ltd? afaik, it is 12.5% plus 2.65%​

 

[Don]

FixieHartmann, hi, how does one achieve less than 10% total tax with a Cyprus Ltd? afaik, it is 12.5% plus 2.65%​

he referred to north Cyprus maybe where you have 10% CIT, and ibc tax is 1% only

 

[FixieHartmann]

FixieHartmann, hi, how does one achieve less than 10% total tax with a Cyprus Ltd? afaik, it is 12.5% plus 2.65%​

Well, it is 12.5% + 2.65% however apparently the tax office is very lenient when it comes to putting expenses through your company, meaning that for a typical digital nomad you'd have an effective tax rate of less than 10%.

 

[CyprusLawyer101]

Set up tax residency in Cyprus and operate through an offshore entity.

 

[FixieHartmann]

he referred to north Cyprus maybe where you have 10% CIT, and ibc tax is 1% only

No, I am referring to the Republic of Cyprus, see Best Tax free Countries to Incorporate Your Remote-Based Business (Digital Nomad)

Set up tax residency in Cyprus and operate through an offshore entity.

Well, the offshore entity would become taxable in Cyprus if it is managed and controlled from Cyprus and doesn't have substance in its jurisdiction, right?

 

[CyprusLawyer101]

In theory yes. In practice if you have a non Cyprus person as director in the offshore entity and you do not perform large transations the Cyprus tax authorities would not question it. If you anticipate transactions above 750k , then more compliance work may be required as well as more substance.

 

[FixieHartmann]

In theory yes. In practice if you have a non Cyprus person as director in the offshore entity and you do not perform large transations the Cyprus tax authorities would not question it. If you anticipate transactions above 750k , then more compliance work may be required as well as more substance.

This is what I would then categorize under “not 100% by the books”

 

[BlackJack]

- US LLC and personal tax residency in a zero tax haven
- Cyprus LTD with personal tax residency in Cyprus (not tax free but less than 10% total tax plus good banking, EU company etc.)
- Dubai free zone company with personal residency in UAE (also apparently not completely tax free anymore but very little total tax)

Well, correct me if I'm wrong...

Those 3 options are overall valid, I'm no expert and I don't dare to doubt, but maybe right choice depends on standards..there's nomad and nomad...
Majority of nomads aren't cryptostars or company owners, but just employees or average freelancers, so to simplify I could assume "that majority" could fall in a 40\50k € yearly\rate more or less.

Given that, those three options are still suitable?
For example, I've heard many people saying that Dubai could be a good fit only for professionals with at least >100k yearly income.

Cyprus scares me because it's EU...and between the 3 is the less convenient (10% taxes...the other 2 none...so far...)

"US LLC and personal tax residency in a tax heaven"...so you should get residency ...let's say... in Saint Kitts and open an US LLC?
Seems quite hard and expensive...Is still doable for a "standard nomad"?

I apologize in advance for any mistake, I'm not an expert...just a curious passenger..