Biz solutions for digital nomads 2020

[pierino]

Hi, so I live in a EU CRS country, A. I'm in the process of starting my own freelancing business that will take me to work in an office in country B, EU, for many days a year. In total i could manage to stay < 180 days/year in either country, by working remotely from some country C.
Clearly it's not easy to become resident in some Monaco, even given these premises, due to the involved costs (would be nice, so all would be neat and clean).
So i probably will keep my residency in A.

Invoice payments will come from USA.
So the question is, what scheme would be most advisable given these premises?
I have read a bit in here, many recommend Wyoming LLC companies these days. So i wonder, if such a company invoices a CA company, does it have to charge VAT on invoices?
And i suppose the associated bank account in Wyoming wouldn't be affected by CRS?
Alternative would be a company somewhere else with 0% taxes and some TransferWise i suppose ? Estonia?

 

[user9823671]

Legally, your company will be taxed where you have residency (in either of the two EU countries) regardless of where you get it incorporated.

How much profit you expect to generate, if significant you can lower the tax bill, but it will cost and increase headaches. But if the tax saving is significant then it may be something to look into

 

[pierino]

I would expect to generate between 10 and 20k$ per month

 

[John Andrews]

I would pick cyprus (non-dom) as the third country. minimum stay is 2 months. 365 - 60 = 305/2 = around 150 days for A & B countries.

There is no VAT in USA and since you won't have an office you aren't liable for any US taxes (check ustax.bz).

That being said, I'd incorporate somewhere else. Cyprus might be a good option - even though it has 12.5% corporate tax you can probably lower your tax base with expenses (travel, "office" rent, etc.)

 

[pierino]

so with cyprus, would i have to change my residency to cyprus, right?

 

[John Andrews]

so with cyprus, would i have to change my residency to cyprus, right?

Yes, TD126 form (and MEU1)

 

[pierino]

Thanks, something to consider as soon as i can do it. Even though, as it seems, the country where i live has a quite evil law that if a resident expatriates, he or she has to continue paying taxes in the country for 3 years, if the other country has a lower taxation. Something along these lines at least, with few exceptions for bilateral agreements, or countries where the taxation is higher.

 

[John Andrews]

you might wanna check if this applies to EU countries. as far as I know, it doesn't.

https://globalisationguide.org/residency/cyprus-non-dom/

 

[pierino]

Thank you! i will check your guide. Thinking about it, this sounds a quite interesting idea. I wonder how the 60days are counted though. Does Cyprus complain if one such resident happens to stay there for only 30 days, for example? do they require yearly proofs of stays?

 

[John Andrews]

Thank you! i will check your guide. Thinking about it, this sounds a quite interesting idea. I wonder how the 60days are counted though. Does Cyprus complain if one such resident happens to stay there for only 30 days, for example? do they require yearly proofs of stays?

You may want to check this post: Offshore or low-tax solution for software developer

TL;DR just stay 2 months, it's not that long and Cyprus is decent.

 

[fshore]

Hi, so I live in a EU CRS country, A. I'm in the process of starting my own freelancing business that will take me to work in an office in country B, EU, for many days a year. In total i could manage to stay < 180 days/year in either country, by working remotely from some country C.
Clearly it's not easy to become resident in some Monaco, even given these premises, due to the involved costs (would be nice, so all would be neat and clean).
So i probably will keep my residency in A.

Invoice payments will come from USA.
So the question is, what scheme would be most advisable given these premises?
I have read a bit in here, many recommend Wyoming LLC companies these days. So i wonder, if such a company invoices a CA company, does it have to charge VAT on invoices?
And i suppose the associated bank account in Wyoming wouldn't be affected by CRS?
Alternative would be a company somewhere else with 0% taxes and some TransferWise i suppose ? Estonia?

You probably have to pay tax in country b because you work there.
If you are tax resident in another country that has a tax treaty with country b then you might be able to use that tax treaty to avoid paying tax to country b, especially if the employer is not in country b, and if you can produce a certificate of tax resident from the other country.

 

[John Andrews]

You probably have to pay tax in country b because you work there.
If you are tax resident in another country that has a tax treaty with country b then you might be able to use that tax treaty to avoid paying tax to country b, especially if the employer is not in country b, and if you can produce a certificate of tax resident from the other country.

He can work as an independent contractor through the Cyprus Ltd.

 

[fshore]

He can work as an independent contractor through the Cyprus Ltd.

When you work in a country the income is generally taxable in that country.

 

[noticojaru]

When you work in a country the income is generally taxable in that country.

what does this mean - "work in a country"?

 

[fshore]

what does this mean - "work in a country"?

When you are physically in a country and working in that country. If you are required to be in that country to perform the work then probably the income is taxable there, even if you stay less than 183 days. Sometimes tax treaties can be used to avoid having to pay taxes there.

 

[JohnLocke]

I don't see where the title match what you are doing OP! As mentioned in this thread already a few times you will have to pay taxes where you live. and if you live in a country for more then 180 days you will have to pay taxes there.

Digital nomads as you put in the title normally covers that you move around all the time and never stay anywhere more than a few months or so.

 

[pierino]

i will have to read the provided docs, but i think in my case cyprus might work. i would stay in B to work for convenience, but it's not a necessity. So it the question matches the title

 

[Gediminas]

Hi,

US does not participate in CRS, so if you open an account in the US for Wyoming LLC most likely this information will not be shared with your tax residency country in the EU. Since you are traveling a lot, you are quite flexible with choosing a tax residency country. So I recommend first to consider tax residency options and second to decide about the company you need. Ideally, the company would not apply corporate income tax and your tax residency country would tax dividends also would not apply CFC or similar rules.

As regards VAT - Wyoming LLC would issue invoices without VAT (the US does not have it), but your customer in Europe most likely should have to calculate “reverse charge VAT”. It depends on the services. You need to check with your customers.

 

[pierino]

Hi,

US does not participate in CRS, so if you open an account in the US for Wyoming LLC most likely this information will not be shared with your tax residency country in the EU. Since you are traveling a lot, you are quite flexible with choosing a tax residency country. So I recommend first to consider tax residency options and second to decide about the company you need. Ideally, the company would not apply corporate income tax and your tax residency country would tax dividends also would not apply CFC or similar rules.

As regards VAT - Wyoming LLC would issue invoices without VAT (the US does not have it), but your customer in Europe most likely should have to calculate “reverse charge VAT”. It depends on the services. You need to check with your customers.

Thanks for the clarification! In my case the customer is actually american, the EU part is only a local office where i would work for convenience.
How acceptable normally is to move the residency to another place without canceling the previous one, so that it's much easier to have a business going in a biz-friendly country but temporarily work around possibly attachments that keep people bound to the previous country of residency (family matters, burocratic affairs, real estate, etc)?

 

[Gediminas]

Thanks for the clarification! In my case the customer is actually american, the EU part is only a local office where i would work for convenience.
How acceptable normally is to move the residency to another place without canceling the previous one, so that it's much easier to have a business going in a biz-friendly country but temporarily work around possibly attachments that keep people bound to the previous country of residency (family matters, burocratic affairs, real estate, etc)?

You can consider having a tax residency in Cyprus. Other counties as long as you will not spend a significant part of your time and do not have enough economic and social interest most likely will not challenge your tax residency. Then you can have a company almost everywhere because Cyprus does not have CFC rules and does not tax received dividends.

Hopefully you are not US citizen? If yes, almost none of the tax residency solution works for you, since the US apply citizenship-based taxation model (different from the rest of the world).