Feasibility Malta Self Sufficent + New Mexico LLC

[hasby2023]

Hi all,

I’d like to hear your thoughts on a setup involving an LLC used to manage various online income streams,such as royalties from AdSense and Amazon KDP, as well as sales of digital products delivered electronically to end customers, primarily located in a specific EU country (not Malta).

Here’s the structure:

The LLC is already active and has a Wise business account. The sole member (not a US resident) also has a personal US account in a Top Bank. Management fees are transferred from the LLC’s Wise account to the owner’s personal US account,none of which are reported under FATCA as we know, and Trump ruled out the UBO registry.

In Malta, the european individual registers as Self Sufficent and lives off “clean capital” coming from EU-based personal accounts, formally remains jobless, and pays the standard €5,000 flat tax,essentially living under the radar, jobless on the beach.

My two main questions:

1. What are the realistic chances of this setup being flagged by Maltese authorities?
2. For selling digital products, the individual is weighing two options:
   • Option 1: Use a platform like Gumroad, which handles VAT and acts as merchant of record, so the LLC’s name never enters EU tax systems.
   • Option 2: Sell under the LLC directly and use Hellotax to register and manage VAT in the relevant country (cannot register to the OSS since the company is extra-EU). This is for sure the riskier approach.

What do you think about the overall structure and the VAT approaches? Thanks in advance!

 

[Marzio]

What are the realistic chances of this setup being flagged by Maltese authorities?

You are paying taxes. Malta is happy.

For selling digital products, the individual is weighing two options

Options 3: take a look at Creem.io a merchant of record that does exactly what you need.

Be aware that this setup works for a "lifestyle business" where you manage everything yourself.

 

[BasedOperative]

Wouldn’t running the US LLC from Malta create POEM/PE issues?

 

[hasby2023]

Wouldn’t running the US LLC from Malta create POEM/PE issues?Yes, but this setup is actually very common among expats in Malta who run B2B businesses with relatively modest volumes. The key, in my opinion, is keeping the funds in the U.S. Once the business scales and the volumes grow significantly, it definitely makes sense to switch to a two-tier structure , at that point, the €10K in accounting fees essentially pay for themselves.

Yes, but this setup is actually very common among expats in Malta who run B2B businesses with relatively modest volumes. The key, in my opinion, is keeping the funds in the U.S. so don't move money back here. Once the business scales and the volumes grow significantly, it definitely makes sense to switch to the famous two-tier structure , at that point, the €10K in accounting fees essentially pay for themselves.
For B2C instead the LLC makes little to no sense if you want to be VAT compliant, unless you use a merchant of record.

 

[BigUnicorn]

Once the business scales and the volumes grow significantly, it definitely makes sense to switch to the famous two-tier structure , at that point, the €10K in accounting fees essentially pay for themselves.

What is the two-tier structure? I'm unfamiliar with the US, LLC+LLC?

 

[hasby2023]

What is the two-tier structure? I'm unfamiliar with the US, LLC+LLC?

Nono it has nothing to do with LLCs. The two tier structure in Malta is trading company in Malta + holding company elsewhere (like Cyprus) so that the operating company pays only 5% CIT. The thing is that accountants in Malta are thieves and this structure will end up costing you much more than you think, even because auditing is ALWAYS compulsory. On top of this I read some horror stories about continuous document requests to keep the company compliant.
End of the story, it is worth it I think from >200k operating profits at least

 

[BasedOperative]

Yes, but this setup is actually very common among expats in Malta who run B2B businesses with relatively modest volumes. The key, in my opinion, is keeping the funds in the U.S. so don't move money back here. Once the business scales and the volumes grow significantly, it definitely makes sense to switch to the famous two-tier structure , at that point, the €10K in accounting fees essentially pay for themselves.
For B2C instead the LLC makes little to no sense if you want to be VAT compliant, unless you use a merchant of record.

Got it, that’s waht I was thinking. Thanks for sharing.

Did anyone ever get in trouble for that?

I sell consulting services (manually delivered) that are outside of the scope of EU VAT in the customers’ country. It’s a bit complex but, to sum it up, VAT is due where the supplier is located, so I’d have to pay VAT in Malta, not where the customer is.

Not sure what would happen if I used a US LLC as I’m using a US company (no VAT) but operate from Malta (Maltese VAT =18%).

Any thoughts on this?

 

[BigUnicorn]

Nono it has nothing to do with LLCs. The two tier structure in Malta is trading company in Malta + holding company elsewhere (like Cyprus) so that the operating company pays only 5% CIT. The thing is that accountants in Malta are thieves and this structure will end up costing you much more than you think, even because auditing is ALWAYS compulsory. On top of this I read some horror stories about continuous document requests to keep the company compliant.
End of the story, it is worth it I think from >200k operating profits at least

I'm Italian myself. Been having lot of costs (useless) and thieves in Switzerland. Since I'll be going through your same OP process (not this holding), would you like to share a contact info (TG?) and we'll mastermind/go through this together?

 

[BasedOperative]

I'm Italian myself. Been having lot of costs (useless) and thieves in Switzerland. Since I'll be going through your same OP process (not this holding), would you like to share a contact info (TG?) and we'll mastermind/go through this together?

I’m in a similar situation too. And I’m thinking me, you and OP are in the same line of business.

From what I understand, having a US llc while living in Malta is not compliant, since the place of management of the company would be in Malta and you would then be required to pay taxes in Malta. Are you aware of this as well?

It’s an interesting (and cheap) setup and I’m still wondering if it can actually be used…

 

[Helkins]

What are the realistic chances of this setup being flagged by Maltese authorities?

At the moment Maltese authorities have resources to audit and investigate about 800-1000 companies a year, with a total active companies in 2025 at around 75k it puts you at 6.66% chance in the 5 year period to be flagged and investigated. (It's not only Malta that might investigate you but also your current country of residence/nationality, especially if you go from paying $XXX.XXX in tax to $0.00). Mind that with the prevelance of such basic set-ups using US LLCs, no substance, abusing CFC and PE, and information about them circulating between young, entrepreneurs (who say they use it and it's all goooood [till it's not]) it's going to be flagged more often and easier + with AI and new systems being introduced the current audit numbers are going to significantly increase. You can't just hope that you won't get - it's silly.

Wouldn’t running the US LLC from Malta create POEM/PE issues?

It is in violation of the PE rules.

Yes, but this setup is actually very common among expats in Malta who run B2B businesses with relatively modest volumes.

Just because something is common doesn't make it right or legal. All those people are going to be whining and screaming in the coming 5-10 years as their unsophisticated tax avoidance creations will cause them a lot of legal and tax liabilities. The amount of stories I've heard of people 20-30 in online business or crypto vouching for PT NHR and US LLC, Malta + US LLC etc. is honestly concerning.

The thing is that accountants in Malta are thieves and this structure will end up costing you much more than you think

CPAs in Malta are not thieves, they just follow local billables, just because you think a qualified CPA or tax attorney don't deserve their fees doesn't make it theft, Malta is an expensive place to live and run a real business. You'll see that in the long run it's better to pay a professional to handle your tax affairs as it'll end up costing you much much more than you think if you don't do it right from the start (and keep it compliant over the years)

Did anyone ever get in trouble for that?

Yes, and audit and conviction rates are only going to grow

From what I understand, having a US llc while living in Malta is not compliant, since the place of management of the company would be in Malta and you would then be required to pay taxes in Malta.

You're right, it's not compliant

 

[BasedOperative]

You're right, it's not compliant

We then agree on this.

What would be a valid and compliant setup that avoids PEOM/PE issues?
For many, a fiscal unit setup (5% effective tax) is not economically viable due to its high maintenance cost, so it's worth exploring different options too.

 

[Milei]

What would be a valid and compliant setup that avoids PEOM/PE issues?
For many, a fiscal unit setup (5% effective tax) is not economically viable due to its high maintenance cost, so it's worth exploring different options too.

You could hire a director and an employee for your LLC in a 0% corporate tax jurisdiction, but I doubt this would be cheaper than the Maltese setup.
The most cost-effective and straightforward solution is likely to become a digital nomad, spending as little time as possible in Malta while maintaining a permanent base there.

 

[Helkins]

What would be a valid and compliant setup that avoids PEOM/PE issues?

Establishing and excercising real control from a tax favourable jurisdiction. Set ups that are viable and work well operating within the laws are more complex and pricy. Tax avoidance rules are to stop normal folks from doing so, not the rich or the corps
The below comment sums it up well. \/

You could hire a director and an employee for your LLC in a 0% corporate tax jurisdiction, but I doubt this would be cheaper than the Maltese setup.