Dropshipping from Italy

[ciccino]

Hello, I creared a dropshipping business, I live in Italy actually, my customers are private individuals only, 80% from US, 5% from UK, 5% from Canada, 5% from Australia and 5% from EU, the suppliers that manufacture and ship the products are two private individuals (they don't have a company or a fiscal position open in their countries, one from Russia (he likes to be paid via bank transfer to Russian banks with accounts in EUR or USD), one from Turkey (he wants to be paid in crypto). I'm actually selling via Shopify, my website is in English and the customer think they're dealing with a Russian company, so my intermediary position is hidden to the customer's eyes, if this info could have any relevance in this topic.
What's the best offshore structure I can create for my business? I have been advised to open a Delaware or Wyoming LLC and a bank account for the LLC in US, do you think there may be better solutions?
Shopify payments doesn't allow me to send money to US bank accounts without a SSN, they can send money only to a bank in EU considering I'm from Italy, so this is a problem, I tried payment processors like Stripe but they are too unstable, they block accounts for nothing.
If necessary, I'm open to change my fiscal residency into a more convenient country like Cyprus or Malta.

Any advice would be highly appreciated,
Thank you for any suggestion.

 

[sdip]

I recommend using stripe and I would link it with a bank account through payonner, I have used stripe for 5 months, they are fussy media, but after several operations, the claims go down.
My ideal configuration is LLC in New Mexico + Stripe + Payonner, with this you will not declare tax as a non-resident foreinger in the USA, you will only declare if you present your LLC in the country of residence.

question: do you have a good level of sales? Can you tell what kind of profit there is with dropshipping, do you use a particular niche, lifetime of your store?

Hope you don't bother, I've heard a lot about dropshipping, but I don't know if it really works.

Cheers

 

[ciccino]

Store 1 year old, 150k this years, margin 40%, top reputation in my niche (very particular) I was thinking about doing everything in Panama, bank account, business and fiscal residency, Delaware many say I'd have to pay taxes anyway if I open an US bank account and if I sell to US customers

 

[LoveMyLife]

I recommend using stripe and I would link it with a bank account through payonner, I have used stripe for 5 months, they are fussy media, but after several operations, the claims go down.
My ideal configuration is LLC in New Mexico + Stripe + Payonner, with this you will not declare tax as a non-resident foreinger in the USA, you will only declare if you present your LLC in the country of residence.

question: do you have a good level of sales? Can you tell what kind of profit there is with dropshipping, do you use a particular niche, lifetime of your store?

Hope you don't bother, I've heard a lot about dropshipping, but I don't know if it really works.

Cheers

You are not right.
Based on opinion of IRS from the last year, if the biggest or any reasonable amount of customers of LLC is from USA, all profits from US customers of this LLC are considered to be sourced in the USA. He has 80 % of his customers from the USA. In this case, he will have to apply for ITIN and pay taxes in the USA as individual base on all US sourced profit which has flown to him viac LLC, which is tax transparent.
So, this solution is unusable.

 

[LoveMyLife]

Store 1 year old, 150k this years, margin 40%, top reputation in my niche (very particular) I was thinking about doing everything in Panama, bank account, business and fiscal residency, Delaware many say I'd have to pay taxes anyway if I open an US bank account and if I sell to US customers

Panama is good choise. But be prepared to travel there 3-4 time to have everything set up. You can obtain residence permit in Panama as Italian easily. You can set up company there. You can open a corporate bank account there. And there is one great alternative to Stripe in Panama. It is PayU. And it works with Shopify.

 

[PaulKruger]

In this case, he will have to apply for ITIN and pay taxes in the USA as individual base on all US sourced profit which has flown to him viac LLC, which is tax transparent.

So he has to pay tax in the USA and in his own country?

 

[Sols]

So he has to pay tax in the USA and in his own country?

If so, that's where a double taxation agreement comes in handy, if there is one, to prevent paying double tax.

 

[ciccino]

Thanks everyone, in the doubt I will avoid LLC in US considering there are to many opposite information, better safe than sorry, I'll go with Panama, cheers.

 

[Nomad Dropshipper]

Hey guys, I also have a similar problem

I'm from brazil and i'm the owner form a Dropshipping business.

In the next 3 year am going to be traveling around the world, and i'm also planning to expand my operations to other countries.

For these reason I'm serching for the best offshore structures for me.

The idea is to be a non tax residence from Brazil (just stay 184 day outisde from Brazil), and becme a tax residence form Cyprus.

We are also planning to incorporate the company in Cyprus because of the 0% tax for forgein income, and because stripes works there.

Do you think it is a good idea?

 

[Fred]

Hey guys, I also have a similar problem

I'm from brazil and i'm the owner form a Dropshipping business.

In the next 3 year am going to be traveling around the world, and i'm also planning to expand my operations to other countries.

For these reason I'm serching for the best offshore structures for me.

The idea is to be a non tax residence from Brazil (just stay 184 day outisde from Brazil), and becme a tax residence form Cyprus.

We are also planning to incorporate the company in Cyprus because of the 0% tax for forgein income, and because stripes works there.

Do you think it is a good idea?

If you are really travelling around the world you will face issues in Cyprus when it comes to banks. To become a Tax resident you need to stay 60 days at least in Cyprus. You will need a cyprus real bank account if you want to go with stripe. If you hit 6 figure sales monthly they will be picky and shut you down if you just use a payoneer account for example.

The bookkeeping in Cyprus will kill you for drops hopping you easily face 10.000€ yearly costs.

Go with a UAE company, residence visa and company bank account. You have 0% tax and just need to be in UAE all 180 days for 1 day.

For the merchants use a UK LLP with reliable EMI.

It could be the case you need to photoshop utilit bills for the merchant accounts because they will block you if they realize you travel around the whole year. Always make sure to use a dedicated vpn better a Vps if you don't want to see your merchants and ads managers get blocked.

 

[ciccino]

You are not right.
Based on opinion of IRS from the last year, if the biggest or any reasonable amount of customers of LLC is from USA, all profits from US customers of this LLC are considered to be sourced in the USA. He has 80 % of his customers from the USA. In this case, he will have to apply for ITIN and pay taxes in the USA as individual base on all US sourced profit which has flown to him viac LLC, which is tax transparent.
So, this solution is unusable.

Do you have a link to the IRS opinion about that? In this guide is explained with many details that if I manufacture and ship from outside the US I cannot be considered an ETOB Ultimate US LLC Guide for [NON-RESIDENTS] in 2020