Question Cheapest incorporation + maintenance offshore company

[itsmemario123]

Hi,

I'm going to move in a couple of months as a digital nomad.

My income is 100% from my country (Spain) and I would like to create an offshore company so I can create invoices and such without the need to have a permanent tax residence, as I'm going to move each couple of months to another country. From time to time I would like to distribute the profits as dividends to my personal account.

The easiest thing I'm reading is just to create an offshore company with a virtual office address and searching in Google I've found some countries that may be a good start, like UAE, Seychelles, BVI and so on. The thing is that I don't really know what is the government cost of creating and maintaining those companies. All the websites I've seen that offer "company creation" don't say if that includes government fees or not, so maybe one of them is cheap, but the fees are really high.

So, what is the cheapest incorporation + maintenance offshore company to have 0% taxes being an IT digital nomad? I accept references for agents or resellers. I'm close but I don't even make 6 USD figures a year, so I prefer to save money when possible, so no unneeded services.

Thank you.

 

[Sols]

That's a great idea. You will be paying zero tax for years, because you'll be in jail for tax evasion.

Forget it. Focus on growing your business, not on committing tax fraud and money laundering.

Offshore companies used the way you're suggesting is simply not viable anymore. If the hacienda finds out about what you're doing (which they don't always do, to be fair), you're looking at fines and potentially prison time.

If you don't want to pay Spanish tax, stop living in Spain. I'm guessing you're a Spanish citizen. That means you could easily relocate to Malta or Cyprus, where the taxes are much lower. Fees won't be much lower than BVI or Seychelles (might be higher), but it's the easiest way as an EU citizen to lower your tax burden.

 

[itsmemario123]

Hahaha yeah, as I said I'm going to be a digital nomad, moving between countries each couple of months. I mean, I'm going to relocate, but because I'm going to relocate so often, I need a stable entity to make invoices and such, which will be way easier for me and the contract in Spain than changing it each time I relocate. I won't have any permanent address in any country. I'm asking because I want to do all this legally hahaha. I'm even going to get a camper and start going around Europe, and then sell it in a couple of years and buy another one in America and start going around America (moving a vehicle between continents is a pain in the a*s, specially if is your home and you don't have where to live meanwhile that happens), so I'm not even going to have a real address but "the field with trees 123 in this small town", hence the need to have a legal entity for working.

I was thinking about moving to Cyprus, as it seems that has 0% taxes on foreign dividends, and then start moving around the world, having my last residency in a country that will not be a tax problem for me, instead of my last residency being Spain and for whatever reason they asking for my dividends taxes, but don't want to fight with them showing that I'm not a spanish resident anymore.

I thought about the offshore company and is just that I don't want to create my offshore company in a country that is expensive. At first I thought about UAE, but it seems that is more expensive than Seychelles, hence here I am, asking experienced users. But yeah, take into account that I'm going to move from country to country often (not spending more than 6 months and such), until I get tired in some years in the future and I settle somewhere, maybe Spain again, so no illegal tax evasion intended.

Can't edit the post anymore for whatever reason. For clarification, I'm going to be a "permanent tourist".

 

[Sols]

Apologies, I see now I misread some of your original post. I understand your situation now.

Being a digital nomad (once upon time called perpetual traveller) is a concept that doesn't work as well as it once did. These days, you'll want a place to call home, so that when someone asks where you pay tax, you can point to a specific place in the world. Whether it's a bank or the Spanish tax authority asking, being able to show tax returns and tax residence is much better than having nothing (as used to be the case with permanent travellers).

So it's important you pick a good place.

While not strictly required, it can be beneficial to have tax residence and company in the same location.

Cyprus may be a good option in your case. There are different ways to do it, but with their 60-day tax residence scheme, you can travel around the world 305 days per year and spend 60 days in Cyprus. As long as you don't become tax resident anywhere else during those 305 days, it's a very easy and attractive setup. Costs depend on how you set it up.

UAE can also work, but will cost more.

Setting up a company in Seychelles or BVI will be cheaper, but it can be complicated sorting out your own personal tax situation. Banking also tends to be more limited.

The absolutely cheapest is US, in states like Wyoming or New Mexico. Banking can be arranged with Wise, Mercury, and a few others like them. Look. into how your place of tax residence handles income from LLCs.

 

[itsmemario123]

Oh, that's really insightful. Thank you! Going to read about all that.

 

[withouthause]

That's a great idea. You will be paying zero tax for years, because you'll be in jail for tax evasion.

Forget it. Focus on growing your business, not on committing tax fraud and money laundering.

Offshore companies used the way you're suggesting is simply not viable anymore. If the hacienda finds out about what you're doing (which they don't always do, to be fair), you're looking at fines and potentially prison time.

If you don't want to pay Spanish tax, stop living in Spain. I'm guessing you're a Spanish citizen. That means you could easily relocate to Malta or Cyprus, where the taxes are much lower. Fees won't be much lower than BVI or Seychelles (might be higher), but it's the easiest way as an EU citizen to lower your tax burden.

Did you try Estonian company, you will not pay taxes if don't get not the money. Your salary is extent for taxes in Estonia. and you will pay taxes in the country you live only. As nomadad any place. the cost of maintenance is 80 euros months with adres, billing etc. i have that figure for my business. and I am in similar situation to you

 

[scooterguy]

That's a great idea. You will be paying zero tax for years, because you'll be in jail for tax evasion.

Forget it. Focus on growing your business, not on committing tax fraud and money laundering.

Offshore companies used the way you're suggesting is simply not viable anymore. If the hacienda finds out about what you're doing (which they don't always do, to be fair), you're looking at fines and potentially prison time.

If you don't want to pay Spanish tax, stop living in Spain. I'm guessing you're a Spanish citizen. That means you could easily relocate to Malta or Cyprus, where the taxes are much lower. Fees won't be much lower than BVI or Seychelles (might be higher), but it's the easiest way as an EU citizen to lower your tax burden.

There is no prison time in Spain for tax evasion unless the amount evaded is over 120K EUR, which is far from OP's reality. However, it is true that it will be a walk in the park for Hacienda to fine him if his structure and tax residency are not properly set up.

OP: First word of advice is to get an actual tax residency somewhere, even if you are moving around, otherwise Spain will still consider you a Spanish resident.

An easy option if your income is not that high is Romania. It's cheap to rent and spend time there, and you can pay 1% corporate tax and 8% on distribution of dividends.

I suggest that during the first year you do spend at least 6 months in Romania, to get off Hacienda's hook for good, and to be able to provide a tax residency certificate if challenged. Also, cut as many ties as possible with Spain, change address in the Spanish consulate in Romania, etc.

If you are willing to travel further, setting up residency in a country with a territorial tax regime in SEA or the Caribbean can also work, though these setups are usually not beginner-friendly and are more costly, hence sticking with a low-cost/low-tax EU country might be a better start.

By the way, I'm assuming that this income from Spain comes from services provided as a freelancer? Otherwise, if it's formal employment, you'll still have to pay Spanish tax.

 

[itsmemario123]

There is no prison time in Spain for tax evasion unless the amount evaded is over 120K EUR, which is far from OP's reality. However, it is true that it will be a walk in the park for Hacienda to fine him if his structure and tax residency are not properly set up.

OP: First word of advice is to get an actual tax residency somewhere, even if you are moving around, otherwise Spain will still consider you a Spanish resident.

An easy option if your income is not that high is Romania. It's cheap to rent and spend time there, and you can pay 1% corporate tax and 8% on distribution of dividends.

I suggest that during the first year you do spend at least 6 months in Romania, to get off Hacienda's hook for good, and to be able to provide a tax residency certificate if challenged. Also, cut as many ties as possible with Spain, change address in the Spanish consulate in Romania, etc.

If you are willing to travel further, setting up residency in a country with a territorial tax regime in SEA or the Caribbean can also work, though these setups are usually not beginner-friendly and are more costly, hence sticking with a low-cost/low-tax EU country might be a better start.

By the way, I'm assuming that this income from Spain comes from services provided as a freelancer? Otherwise, if it's formal employment, you'll still have to pay Spanish tax.

Yes, I currently work as a freelance in Spain, not employed.

I'm really thankful for your input. Romania is the country I'm studying these days, and yes, I think that for me is the 100% legal and easier solution without not much trouble. I would pay about 11% expenses in total (I have to employ myself in my romanian company to get the 1% benefit, which increases expenses. 2023 requirement). 11% is not that bad. And if I reinvest the money in the company, I would pay even less.

But one thing that pushes me back is the obligation to live 6 months each year in Romania. I'm a summer guy and Romania is way colder than my cold tolerance, but now you say that I can travel further. Can you throw me a bit of light here? Can I keep my romanian company without living 6 months there each year, as long as I don't live 6 months elsewhere? Or I will need to create other setups? Living 6 months per year in the Caribbean is way more appealing than Romania, weather talking.

 

[Clank]

If you are not a US resident a US LLC would be the cheapest option.

 

[itsmemario123]

If you are not a US resident a US LLC would be the cheapest option.

I know, but I'm not sure about the law. Over time I would like to buy real state, for example. If when I finish my adventure I transfer from my LLC bank account a noticeable sum of money to a random person in Spain to buy a flat, I guess that the tax entity here (Hacienda) is going to ask questions. Maybe I'm mistaken btw. I also would appreciate some light here.

 

[scooterguy]

But one thing that pushes me back is the obligation to live 6 months each year in Romania. I'm a summer guy and Romania is way colder than my cold tolerance, but now you say that I can travel further. Can you throw me a bit of light here? Can I keep my romanian company without living 6 months there each year, as long as I don't live 6 months elsewhere? Or I will need to create other setups? Living 6 months per year in the Caribbean is way more appealing than Romania, weather talking.

Yes, you can keep your company in Romania even if you stop living there.

You are not obliged to live in Romania for more than 6 months, this is just a suggestion so that you can provide a tax certificate to Hacienda if they challenge your residency. Hacienda has a rule that states that Spanish citizens that move to a tax haven will continue being considered tax residents of Spain for 5 years (Agencia Tributaria: La residencia de las personas físicas).

In the past, Hacienda has used the aforementioned rule against those that went back to Spain after a few years without having really been a resident anywhere else, hence you need to tread carefully here. If you can stay for more than 6 months in Romania during the first year, you'll be able to get a tax residency certificate from a country that is not a tax haven, and Hacienda will most likely leave you alone, and if you ever go back to Spain or buy property there this will help you answer any questions immensely.

For the Caribbean or SEA, you'd usually have to maintain an offshore company somewhere else, and this can be costly. You will also need your own private health insurance, won't get social benefits, etc. If you are not making 6 figures, it would be a waste of money and you'd be better off just paying tax in Spain. Also, again, remember that you cannot live in a tax haven.

But if you are really interested, you can look into countries such as Thailand, Laos, Cambodia, Dominican Republic, and setups such as UAE freezones or US LLCs, among others.

 

[Clank]

I know, but I'm not sure about the law. Over time I would like to buy real state, for example. If when I finish my adventure I transfer from my LLC bank account a noticeable sum of money to a random person in Spain to buy a flat, I guess that the tax entity here (Hacienda) is going to ask questions. Maybe I'm mistaken btw. I also would appreciate some light here.

If you are planning to commit tax fraud, forget about buying property in Spain.

US corporate bank accounts don't get reported and US LLC doesn't have a UBO.

For a NM LLC maintenance fee 0$ set-up fee 50$

 

[itsmemario123]

If you are planning to commit tax fraud, forget about buying property in Spain.

US corporate bank accounts don't get reported and US LLC doesn't have a UBO.

For a NM LLC maintenance fee 0$ set-up fee 50$

No no, I'm looking for a legal way to optimize my taxes, taking into account that I'm going to leave Spain this year. Spain is really tax expensive and it would be dumb to keep on paying taxes here if I'm leaving.

Yes, you can keep your company in Romania even if you stop living there.

You are not obliged to live in Romania for more than 6 months, this is just a suggestion so that you can provide a tax certificate to Hacienda if they challenge your residency. Hacienda has a rule that states that Spanish citizens that move to a tax haven will continue being considered tax residents of Spain for 5 years (Agencia Tributaria: La residencia de las personas físicas).

In the past, Hacienda has used the aforementioned rule against those that went back to Spain after a few years without having really been a resident anywhere else, hence you need to tread carefully here. If you can stay for more than 6 months in Romania during the first year, you'll be able to get a tax residency certificate from a country that is not a tax haven, and Hacienda will most likely leave you alone, and if you ever go back to Spain or buy property there this will help you answer any questions immensely.

For the Caribbean or SEA, you'd usually have to maintain an offshore company somewhere else, and this can be costly. You will also need your own private health insurance, won't get social benefits, etc. If you are not making 6 figures, it would be a waste of money and you'd be better off just paying tax in Spain. Also, again, remember that you cannot live in a tax haven.

But if you are really interested, you can look into countries such as Thailand, Laos, Cambodia, Dominican Republic, and setups such as UAE freezones or US LLCs, among others.

The US LLC setup is one I've also seen. To have a US LLC and get a tax residence in a country with no tax burden like UAE. Or to directly get a UAE freezone company that the yearly renovation would be about 6% of my income. But still, if I stop living in the UAE, I would loss my tax residency? and I will not be able to fill tax documents to show to Hacienda when I come back that my money is clean, right?

What I fear here is when I buy properties with my money, if the tax entity in the country I buy the property is going to ask too much questions, or if Hacienda is going to ask too much questions when I return to Spain forever.

Romania is the one I see not being in a gray area, but the same as before, I need to be a tax resident there each year to be able to fill my tax documents to get 100% clean money, and I fear that they erase me from the tax residents database when I'm too much time without touching the country.

I know that the perfect setup does not exist. Just want to know for sure what to do to live without fear of being in a gray area that maybe bites me back in the future. If I have to pay 11% instead of 6% or 1% to be sure of what I'm doing, I'm going to do so.

I mean, maybe I'm overthinking everything. Maybe there's this easy UAE solution for what I'm asking. I mean, a lot of people here talk about UAE, USA LLC and whatever and I'm pretty sure that they are also buying real state with that money. How are they achieving that?

 

[joffreylol]

UAE is in a strange place now with CIT introduced and no one knowing for sure what the obligations will be. If you need a really clean record maybe go Romanian path or wait a bit to see what are the implications of the new rules in the UAE.

 

[JustAnotherNomad]

Did you try Estonian company, you will not pay taxes if don't get not the money. Your salary is extent for taxes in Estonia. and you will pay taxes in the country you live only. As nomadad any place. the cost of maintenance is 80 euros months with adres, billing etc. i have that figure for my business. and I am in similar situation to you

Almost everything you wrote here is wrong.

@itsmemario123
It depends on what the Spanish tax authorities want to see from you to "let you go". Do you need a new tax residency certificate? Or is it enough to show new residency? Do they want to see a rental contract for a full year? A full overview of how many days you spent in which country? Etc.

If you only need residency (no tax residency certificate), Paraguay is a popular option. You only have to visit once every 10 years or so to keep your residency active. Then you can say you live there, but not spend time there and keep traveling. Just make sure you don't become tax resident anywhere else.
This would be residency only, not tax residency. I believe if you need some tax documents you could try to find some local work or to have rental income, then you could get a tax return for that. But in general, even if you become tax resident, if you don't work from Paraguay, there shouldn't be any tax under their territorial tax regime.
It's a cheap option.

Otherwise Cyprus is also popular, but you have to spend 60 days there to get a tax residency certificate.
Some nomads use Portugal's NHR system with a company in Malta/Cyprus, but it's not 100% safe and the structure is rather expensive.
The UAE is also very popular, you just have to visit at least once every 6 months to keep your residency active. Under the new rules, you have to spend 90 days per year in the UAE to get a tax residency certificate, but I would imagine that even spending fewer days should be OK.
Lastly, Thailand is also an option many nomads use. I'm not sure about residency options though - seems like a student visa (yoga classes allegedly count for this) is the cheapest/simplest way, but it won't work forever. You can typically live tax free, as long as you don't bring the money into Thailand for at least a year after it's earned.

In any case, like @Sols explained, it's good to have some official address to show to banks and the taxman, even if you don't spend time there since you travel full time.
The concept "I don't live anywhere" simply raises too many questions.

All of those options can typically be combined with a US LLC or a UAE or Hong Kong company, or a something similar. You should make that choice after you have decided where you want to have your own personal address.
I would stay clear of Estonia - they have 25% tax on the money you pay out. Only salaries are tax free, and only under certain circumstances, and it's not clear what the limit on salaries is - you probably cannot take 100% of the profits as a salary. It's also not that cheap.

 

[itsmemario123]

UAE is in a strange place now with CIT introduced and no one knowing for sure what the obligations will be. If you need a really clean record maybe go Romanian path or wait a bit to see what are the implications of the new rules in the UAE.

That's true. I'm pretty sure I'm going to start the romanian way and live 6 months this year there then. And lets see how the future evolves. At least I'm going to relieve of the 35% expenses that I'm paying right now in Spain. By the way I need a bridge country to get the tax residency before going to tax heavens and such, and Romania looks like the perfect country for that (at least for me).

I'm really grateful for all the info received

 

[itsmemario123]

Lastly, Thailand is also an option many nomads use. I'm not sure about residency options though - seems like a student visa (yoga classes allegedly count for this) is the cheapest/simplest way, but it won't work forever. You can typically live tax free, as long as you don't bring the money into Thailand for at least a year after it's earned.

Yes, that's another option I'm not sure about. If I bring money to thailand a year after it has been earned or it will be taxed, that means that Thailand is managing this somehow. I mean, maybe I have to fill some tax documents, although they may be 0. I'm missing something?

 

[scooterguy]

I mean, maybe I'm overthinking everything. Maybe there's this easy UAE solution for what I'm asking. I mean, a lot of people here talk about UAE, USA LLC and whatever and I'm pretty sure that they are also buying real state with that money. How are they achieving that?

Each situation is different.

Your particular situation is that you are a Spanish citizen with Spanish income, you want to reduce or not pay taxes on that income, and your plan is to return to Spain in a few years and buy property. That is exactly how you get back taxed by Hacienda if you don't have a convincing story when you're back.

You need to be conservative with your setups, at least during the first few years, and also diversify your income as much as you can.

 

[itsmemario123]

Each situation is different.

Your particular situation is that you are a Spanish citizen with Spanish income, you want to reduce or not pay taxes on that income, and your plan is to return to Spain in a few years and buy property. That is exactly how you get back taxed by Hacienda if you don't have a convincing story when you're back.

You need to be conservative with your setups, at least during the first few years, and also diversify your income as much as you can.

Yeah, just what I thought then. Just stick to the cleanest way in my possibilities and live with peace of mind.

 

[Cons Mark]

Hi,

I'm going to move in a couple of months as a digital nomad.

My income is 100% from my country (Spain) and I would like to create an offshore company so I can create invoices and such without the need to have a permanent tax residence, as I'm going to move each couple of months to another country. From time to time I would like to distribute the profits as dividends to my personal account.

The easiest thing I'm reading is just to create an offshore company with a virtual office address and searching in Google I've found some countries that may be a good start, like UAE, Seychelles, BVI and so on. The thing is that I don't really know what is the government cost of creating and maintaining those companies. All the websites I've seen that offer "company creation" don't say if that includes government fees or not, so maybe one of them is cheap, but the fees are really high.

So, what is the cheapest incorporation + maintenance offshore company to have 0% taxes being an IT digital nomad? I accept references for agents or resellers. I'm close but I don't even make 6 USD figures a year, so I prefer to save money when possible, so no unneeded services.

Thank you.

Dear,

Generally speaking, in your case, you need to consider personal income and corporate income taxes.

In terms of personal income, it seems you are a tax resident in Spain, accordingly, first, you need to lose your tax residency in Spain.

You can lose tax residency in Spain if you no longer meet the requirements to be considered a tax resident in the country. Here are some common situations that can result in loss of tax residency in Spain:

1. Leaving Spain: If you leave Spain and do not spend more than 183 days in the country during a calendar year, you will no longer be considered a tax resident in Spain.

2. Losing your main center of economic or professional interests in Spain: If you move your economic or professional interests outside of Spain and your main center of activity is no longer in Spain, you may lose your tax residency status in the country.

3. Acquiring tax residency in another country: If you become a tax resident in another country and meet the tax residency requirements of that country, you may lose your tax residency in Spain (But consider it is possible to lose tax residency in Spain and not become a tax resident in any other country. This situation is commonly referred to as being "stateless" for tax purposes).

In relation to corporate tax, you need to find a place that has good prestige, is welcoming for Banks, and has 0$ Corporate Tax.

I can suggest BVI, Hong Kong, and the Isle of Man.

Sincerely,