Digital Products EU Company going offshore

[Gpt1987]

Hey,

I currently am living in the Netherlands. I have subsidiary company which is owned by the holding company, both registered in the Netherlands.

Subsidiary company: all work and sales is done within this company. I am selling digital goods. Everything is done online. I buy and sell goods compared to websites. Since selling a website has been considered as a digital service (according to local tax authorities), I have to pay EU VAT to clients without EU VAT number. Since I mostly buy websites from individuals, the VAT makes margins too low and it's not interesting for me to sell to individuals in the EU. Therefor I don't focus on EU clients.

In addition, I often work with escrow companies. Which make it very hard for me to comply with accounting standards, since I often don't know the personal details of the person I'm dealing with.

Holding company: personal finance company -> stores wealth & pays me as director-major shareholder

Every 1st of the months, I pay a consulting fee from my subsidiary company to my hodling company. I get paid a salary by my holding company.

Why do I want to move offshore:
- Nature of my digital products -> makes it nearly impossible to comply with accounting standards
- VAT issue. With current tax rules, I have to rule out an audience as I need to add around 20% on every transaction for EU clients
- Possible restrictions for my business

I personally don't have plans to move out of the Netherlands. I'm not sure if that's an issue.

What options do I have?
I have been thinking about moving my subsidiary company offshore and keep the holding company in the Netherlands. I will still pay a monthly consulting fee from my subsidiary (offshore) company to my holding company & get a salary from my holding company. Currently I have thought about Dubai and open a Freezone company there.

My preferences for an offshore company:
- No or as least as possible physical presence
- Low costs

I have the following questions
Is this business structure legally allowed?
What countries are interesting for this structure?
What would the setup & yearly costs be?
What should I take into considering?

Thank you!

 

[ShillGates]

Nature of my digital products -> makes it nearly impossible to comply with accounting standards = dont think that would be the case. You mean you dont want to keep accounting records at all?

- VAT issue. With current tax rules, I have to rule out an audience as I need to add around 20% on every transaction for EU clients = doesnt matter , vat is due as client is in eu. however you say you dont focus on eu clients anyway so there is no vat issue?

- Possible restrictions for my business - you got a biz that works and banking that works and you make money

not sure what the problem is

 

[Gpt1987]

Nature of my digital products -> makes it nearly impossible to comply with accounting standards = dont think that would be the case. You mean you dont want to keep accounting records at all?

- VAT issue. With current tax rules, I have to rule out an audience as I need to add around 20% on every transaction for EU clients = doesnt matter , vat is due as client is in eu. however you say you dont focus on eu clients anyway so there is no vat issue?

- Possible restrictions for my business - you got a biz that works and banking that works and you make money

not sure what the problem is

A potential tax audit, may bring problems as I can’t collect the addresses of buyers.

VAT issue -> I don’t focus on EU clients as it’s not interesting VAT wise to sell to them. While in a perfect world, I will be able to sell to EU clients without increasing prices with 20%, which highly decreases interest.

 

[ShillGates]

you dont need the addresses, if you asked your accountants? either ip or payment card/bank account detail is enough if end users. if b2b, then no issue with vat or getting the info. is this b2b or b2c

 

[Gpt1987]

you dont need the addresses, if you asked your accountants? either ip or payment card/bank account detail is enough if end users. if b2b, then no issue with vat or getting the info

I deal through platforms such as Telegram, Escrow.com, etc. I can’t collect IP, Bank account data, etc. In addition, I’m also getting payments through cryptocurrency.

 

[NicolasMaduro]

I personally don't have plans to move out of the Netherlands. I'm not sure if that's an issue.

Here is your issue. If you dont want to move then stay and enjoy. If you want to move you have options like UAE.

 

[Gpt1987]

Here is your issue. If you dont want to move then stay and enjoy. If you want to move you have options like UAE.

Even if my company in UAE pays a consulting fee to my EU company & I get a salary from EU company?

 

[chrisgerth]

Even if my company in UAE pays a consulting fee to my EU company & I get a salary from EU company?

You have to create substance abroad in order for the Dutch authorities to leave you alone. That means real office, real manager/employees etc., that way the foreign entity could operate at its own and conduct business based on local laws (UAE laws). It can be done and is fairly common but you need to set it up bullet proof, especially the Dutch pay attention.