EU LTD/Bank Account Advice

[Hincapie]

I am about to move country in the EU - and need a new setup for a sidebusiness I have. It isnt massive in income, but I´d like to have it separated from where I am - and minimize administrative obligations. First and foremost I´d like to be able to spend my time on the biz side of things, and not worry too much about accounting, tax reports etc (but happy enough to pay some, pay someone a bit to do the reporting etc...what Im not happy with is the Scandinavian style where you need a fulltime accountant for the privilidge of paying 50% tax).

So what I am thinking is: Setting up a LTD (or similar) within the EU - with accompanying bank account.
The corporate tax rate does not have to be 0 - but I would prefer it to be pretty low & primarily I dont want alot of reporting/accounting requirements, I simply hate the administrative side of things.
I will be residing elsewhere in the EU - and any money "pulled home" will be reported as income, not trying to hide in that sense.
The business does SEO work, some coding/programming jobs, some adult commission incomes (it can be kept discreet and not said directly in the descriptions, other front websites can be shown etc, but the bank does need to be ok with getting payments from adult processers like ccbill.com, epoch.com etc).

I will need access to netbanking/wire transfers in&out+a debit card (visa or mastercard)

Now, my first thought was Cyprus - for both the company and the bank. Say a Cypriot LTD and Hellenic Bank or Bank of Cyprus.

Is that a good/possible choice?
Are there better choices than Cyprus for it?
Who is a good solid agent who could set it up there and what would be the cost initially+ongoingly?
Am I missing something in my planning?

Hoping this is the correct forum for such a question & grateful for advice.

 

[Fred]

Hi,

if you require something in the EU you can take a look at Malta and Cyprus.

Keep in mind that if you live in an EU country with strong CFC rules - your country of residence will simply consider the company on Malta or Cyprus as a local one and tax it with local tax rates. To avoid this you need a physical office and minimum 1 employeed company director on Malta or Cyprus to create substance and really only pay tax in your local home country on the money that will be paid out from the Malta or Cyprus company.

You are now facing costs of minimum 1000+ EUR per month even more beside of the accountant and bookkeeping + complex company structure with 2 companies on Malta for the 5% tax or 12.5% tax on cyprus.

Well that's it if you need the company inside the EU. As you can see it's not affordable for a side business.

If you can take a look outside the EU you have some more joice.

 

[Hincapie]

Thank you very much Fred.

Those are good considerations. My problem is though that at least the bank account needs to be in the EU (as some of the commission payments, Epoch for instance, will only send to the region in which you registered). In theory the company could be located elsewhere but not sure if that is doable.

The business could finance the 1000/mo etc, despite being a side-biz, but a setup needing that level of maintenance, administration and reporting would defy the purpose. The ideal scenario is to find a setup for it with minimal administration, basic reporting and taxes paid based on that. Basically, I want to be able to focus solely on working - and not having to worry about bookkeeping, audits, calculations etc etc.

I was under the impression that Cyprus for instance doesnt necessarily reveal the ownership of a llc, thus assuming it would cut out some of the problem with showing substance to the home country. But I may have read that wrong (and the downside to Cyprus is the full accounts, annual audit etc demands - that means as much headache with the saved taxes potentially being eaten by expenses to having those things carried out)

 

[Fred]

Thank you very much Fred.

Those are good considerations. My problem is though that at least the bank account needs to be in the EU (as some of the commission payments, Epoch for instance, will only send to the region in which you registered). In theory the company could be located elsewhere but not sure if that is doable.

The business could finance the 1000/mo etc, despite being a side-biz, but a setup needing that level of maintenance, administration and reporting would defy the purpose. The ideal scenario is to find a setup for it with minimal administration, basic reporting and taxes paid based on that. Basically, I want to be able to focus solely on working - and not having to worry about bookkeeping, audits, calculations etc etc.

I was under the impression that Cyprus for instance doesnt necessarily reveal the ownership of a llc, thus assuming it would cut out some of the problem with showing substance to the home country. But I may have read that wrong (and the downside to Cyprus is the full accounts, annual audit etc demands - that means as much headache with the saved taxes potentially being eaten by expenses to having those things carried out)

I assume you are in the adult industry if you use Epoch Payment.

In your case I would go with a UK Ltd. and a Paxum account.

Paxum provides local bank account details with Barclays so Epoch should be able to payout.

This setup would cost you initial below 100EUR and the running cost with the accountig etc. would be small as well due to the low turnover. Later you can go with a Cyprus Ltd that is setup with nominee and BoC account.

But be careful if somebody is claiming it's easy to achieve in Cyprus we had already several clients that even after 1 year didn't received a bank account. You need to have some economic link to Cyprus or really need a good introducer to the bank. And even then you can expect something around 10.000 EUR one time setup and 5.000 EUR yearly running cost.

 

[Hincapie]

As stated in the original - some part of it is adult, and thats where Epoch comes in indeed.

I actually still have a private account with Hellenic in Cyprus after living there some years ago ... and things might have gotten a lot more complex since then - but back then local companies offered redtape services including biz registration for a few hundred euros (I assume it was aimed mainly at residents...so that´d usually make it easier too of course). But again, not so sure about Cyprus now after reading further - not because of the expense, that might be fine and/or doable in cheaper ways but because it sounds like they actually have more reporting requirements than in other European jurisdictions, making it counterproductive when the aim isnt to save money on tax or find the cheapest solution, but to cut administration/headaches to a minimum

Paxum...I have heard a lot of bad stories about them, frozen accounts, lack of customer service etc ... i have a paxum account with a bit in it - never used it for anything other than accepting a few payments though.

 

[Alex Fr]

as for "I was under the impression that Cyprus for instance doesnt necessarily reveal the ownership of a llc" - actually CYPRUS in on the way to show companies UBOs online.

Plus you have to pay EU VAT through that complicated system.

 

[Hincapie]

Thank you for the information. That rules out Cyprus I guess.

I dont mind paying the VAT - its the complicated bureaucracy and spending half the too-little-time on reporting, accounts etc I really want to avoid. But, it seems such options do not really exist from what I can gather. So I guess the only options are either simply shutting down and forgetting about it - or go full time and move someplace with simpler rules (whilst economically feasible not really an option as I do like the fulltime job locally)

 

[Don]

Thank you for the information. That rules out Cyprus I guess.

I dont mind paying the VAT - its the complicated bureaucracy and spending half the too-little-time on reporting, accounts etc I really want to avoid. But, it seems such options do not really exist from what I can gather. So I guess the only options are either simply shutting down and forgetting about it - or go full time and move someplace with simpler rules (whilst economically feasible not really an option as I do like the fulltime job locally)

Would you be ok with an unlimited company?

 

[Hincapie]

Would you be ok with an unlimited company?

Yes. What did you have in mind?

 

[Don]

Yes. What did you have in mind?

There is a type of partnership form, which is a separate legal entity between two or more natural persons (one of them having unlimited liability).
The main benefit is that no annual reports need to be submitted. It is easy to convert to limited liability company at any time which will trigger the reporting requirement. CIT 20% is payable only on withdrawal of dividends.
PM if interested. I can arrange everything with cheap substance: local director, office rental, website, banking, etc.

 

[JohnLocke]

what Im not happy with is the Scandinavian style where you need a fulltime accountant for the privilidge of paying 50% tax).

I can imagine it's not very comfortable.

You will also consider that if your local tax advisor (if used to file your tax report) will have to require some trusted person filing the tax return for your offshore company, most often the requirement is a recognized tax firm.

There is a type of partnership form, which is a separate legal entity between two or more natural persons (one of them having unlimited liability).

You want to elaborate what it is, otherwise I will have to remove this post!

 

[Hincapie]

It sounds interesting, though obviously I would need more information on the security and nature of such a solution. I have sent you a pm

 

[CyprusLaw]

As stated in the original - some part of it is adult, and thats where Epoch comes in indeed.

I actually still have a private account with Hellenic in Cyprus after living there some years ago ... and things might have gotten a lot more complex since then - but back then local companies offered redtape services including biz registration for a few hundred euros (I assume it was aimed mainly at residents...so that´d usually make it easier too of course). But again, not so sure about Cyprus now after reading further - not because of the expense, that might be fine and/or doable in cheaper ways but because it sounds like they actually have more reporting requirements than in other European jurisdictions, making it counterproductive when the aim isnt to save money on tax or find the cheapest solution, but to cut administration/headaches to a minimum

Paxum...I have heard a lot of bad stories about them, frozen accounts, lack of customer service etc ... i have a paxum account with a bit in it - never used it for anything other than accepting a few payments though.

I believe the comments made by Cyprus are not really correct or representative of the true framework in Cyprus. To begin with, as an EU country it follows EU regulations and directives in the same way as any other EU country, the costs of setting up and running a company are low compared to other jurisdictions. Cyprus is one of the best business hubs in the EU, banks may be a bit difficult, but that's mainly with respect to clients that are deemed to be 'high risk'.

 

[Hincapie]

I believe the comments made by Cyprus are not really correct or representative of the true framework in Cyprus. To begin with, as an EU country it follows EU regulations and directives in the same way as any other EU country, the costs of setting up and running a company are low compared to other jurisdictions. Cyprus is one of the best business hubs in the EU, banks may be a bit difficult, but that's mainly with respect to clients that are deemed to be 'high risk'.

I was referring to things like the annual audit requirement which Cyprus has - but which does not exist in many other European jurisdictions. I agree Cyprus is fairly cheap to do business in - i did so when living there - and found Hellenic Bank very easy to work with.

It might be that Cyprus works for the purpose if like Fred suggests the setup is not LTD and thus avoiding some of the reporting menace - as that is what drives up the time needed on admin and/or running expenses

 

[CyprusLaw]

I was referring to things like the annual audit requirement which Cyprus has - but which does not exist in many other European jurisdictions. I agree Cyprus is fairly cheap to do business in - i did so when living there - and found Hellenic Bank very easy to work with.

It might be that Cyprus works for the purpose if like Fred suggests the setup is not LTD and thus avoiding some of the reporting menace - as that is what drives up the time needed on admin and/or running expenses

The audit requirement is not actually a problem considering that your will have accountants/auditors from the beginning who will be dealing with this, and I assume you could agree on a fixed fee per annum for all services included, which as noted will probably be lower than in any other jurisdiction. Not structuring as a company will mean that you are losing the tax benefits eg. corp tax 12.5%, also potentially no tax on dividend, and there are a number of other tax incentives that a tax advisor could assist you with benefitting from.

 

[Don]

There is a type of partnership form, which is a separate legal entity between two or more natural persons (one of them having unlimited liability).
The main benefit is that no annual reports need to be submitted. It is easy to convert to limited liability company at any time which will trigger the reporting requirement. CIT 20% is payable only on withdrawal of dividends.
PM if interested. I can arrange everything with cheap substance: local director, office rental, website, banking, etc.

I can't figure out the way to edit the post, but this relates to a limited partnership form in Estonia, which by default is a local tax resident so CIT 20% only payable when distributing dividends.

 

[Hincapie]

The audit requirement is not actually a problem considering that your will have accountants/auditors from the beginning who will be dealing with this, and I assume you could agree on a fixed fee per annum for all services included, which as noted will probably be lower than in any other jurisdiction. Not structuring as a company will mean that you are losing the tax benefits eg. corp tax 12.5%, also potentially no tax on dividend, and there are a number of other tax incentives that a tax advisor could assist you with benefitting from.

Indeed. In terms of expenses it is possible that a Cyprus setup would save a bit - though lower %s would have to be offset against the expense of hiring auditors, nominal directors, business address rental etc. It could well result in savings - and I´d love to have the setup in Cyprus as I love the island and consider moving back there in future if/when work commitments allow.

However, the mission here isnt to save tax/expenses - but to cut down time/effort/headaches needed for administration, reporting, bookkeeping etc (as I work fulltime aside from this business & as such the sidebusiness is hard enough to get time for without such non-productive activities which on top I hate doing).

And this is where im struggling to see Cyprus helping - of course I can hire accountants, bookkeepers etc, but that is exactly the same as here (potentially with added complications from audits and banking there) meaning that I dont see how it helps with the mission of cutting my time spent on admin/bureaucracy to setup in Cyprus?

 

[CyprusLaw]

Indeed. In terms of expenses it is possible that a Cyprus setup would save a bit - though lower %s would have to be offset against the expense of hiring auditors, nominal directors, business address rental etc. It could well result in savings - and I´d love to have the setup in Cyprus as I love the island and consider moving back there in future if/when work commitments allow.

However, the mission here isnt to save tax/expenses - but to cut down time/effort/headaches needed for administration, reporting, bookkeeping etc (as I work fulltime aside from this business & as such the sidebusiness is hard enough to get time for without such non-productive activities which on top I hate doing).

And this is where im struggling to see Cyprus helping - of course I can hire accountants, bookkeepers etc, but that is exactly the same as here (potentially with added complications from audits and banking there) meaning that I dont see how it helps with the mission of cutting my time spent on admin/bureaucracy to setup in Cyprus?

Most of the admin etc could be taken over from your lawyers/accountants, as noted above the fees in Cyprus are not high, this would essentially take the burden off your hands, and at the same time enjoy that tax benefits and the island's great weather whenever you are here. I believe you should discuss with advisors in Cyprus to get some fee quotes and more precise advice.

 

[Hincapie]

Most of the admin etc could be taken over from your lawyers/accountants, as noted above the fees in Cyprus are not high, this would essentially take the burden off your hands, and at the same time enjoy that tax benefits and the island's great weather whenever you are here. I believe you should discuss with advisors in Cyprus to get some fee quotes and more precise advice.

Maybe you are right, it would be worth at least investigating. Do you have recommendations for good advisors there to talk to?

 

[CyprusLaw]

Maybe you are right, it would be worth at least investigating. Do you have recommendations for good advisors there to talk to?

It is definitely worth talking to someone. I am not sure with the forum rules if I can refer you to anyone on this public post.