HK/Latvia/Malta + Latvia Bank for Digital Goods Company?

[zyzl]

Hi, I want to minimize my tax expenditure because I am a German resident. I can potentially re-locate to any EU country.

I sell digital products.
All of my customers are from GER + EU, that's why I prefer an EU bank account.

The best would be RAK UAE + RAK bank account but I am not near Dubai in the next days.

Next options:
- HK Ltd. + Latvia Bank (0% tax?)
- Latvia SIA + Latvia Bank (20% tax)
- Malta ltd. + Latvia Bank (5-15% tax)

I am very greatful for any advise.

 

[GrumpyMess]

I am a German resident. I can potentially re-locate to any EU country.

Simply relocate to any low tax EU country you like. You can't use any tax avoidance options while being a German resident

 

[zyzl]

Simply relocate to any low tax EU country you like. You can't use any tax avoidance options while being a German resident

what do you mean exactly? It's not about avoidance, which is definitivly possible (UAE/HK?), but to choose the easiest and quickest solution for me.

I can relocate to any EU country but of course stay registered in Germany if that is possible (which it should be possible, correct?). Can you please explain your statement in detail? Thanks!
Non-residents from Malta 5% and non-residents from Latvia 20% (via dividends)?

 

[GrumpyMess]

but of course stay registered in Germany if that is possible

Impossible. You will be taxed by the german tax rates if you are a Germany resident.

 

[zyzl]

Impossible. You will be taxed by the german tax rates if you are a Germany resident.

double tax agreements? I should only pay 20% on dividends from Latvia or am I wrong? What's your source of information?

 

[Silvio]

First of all, AVOID all Latvian banks forever and anything related to Latvian banks unless you want to lose your money

2nd of all, as long as you are registered in Germany you are taxed as a German resident and your offshore company will be taxed in Germany according to CFC rules. You can't avoid or minimize tax as long as you live in Germany. Get a residency elsewhere and then figure out your options.

 

[user9823671]

what do you mean exactly? It's not about avoidance, which is definitivly possible (UAE/HK?), but to choose the easiest and quickest solution for me.

I can relocate to any EU country but of course stay registered in Germany if that is possible (which it should be possible, correct?). Can you please explain your statement in detail? Thanks!
Non-residents from Malta 5% and non-residents from Latvia 20% (via dividends)?

Just a friendly warning. All this is a lot more complicated than you realise. Most if not all ways around it you can think of as someone who doesn't know anything about the subject have been thought of and protected against by tax / banking experts. Germany (in this case) does not want it to be easy for German residents to not pay taxes to them if they are resident and any foreign business is managed and run by German residents

 

[user9823671]

double tax agreements? I should only pay 20% on dividends from Latvia or am I wrong? What's your source of information?

The business will be seen as German resident company REGARDLESS of where you incorporated it.

 

[zyzl]

The business will be seen as German resident company REGARDLESS of where you incorporated it.

This is simply not true. Because of double tax agreements inside the EU you should only be taxed once (company side) not twice.

First of all, AVOID all Latvian banks forever and anything related to Latvian banks unless you want to lose your money

2nd of all, as long as you are registered in Germany you are taxed as a German resident and your offshore company will be taxed in Germany according to CFC rules. You can't avoid or minimize tax as long as you live in Germany. Get a residency elsewhere and then figure out your options.

What do you mean with losing money? They close the account?

CFC does not apply to every country and can be avoided if you use a local director?

 

[Marzio]

This is simply not true. Because of double tax agreements inside the EU you should only be taxed once (company side) not twice.

Before posting anyting else i highly suggest you to read this.

 

[zyzl]

i highly suggest you to read this.

which paragraph particularly?

 

[Sols]

Don't you think that if it were as easy as you think it is, everyone in Germany would be doing it?

Pack up and move to Malta or Cyprus, or look at other low-tax EU destinations. It's the easiest way you can legally and sustainably significantly lower your tax burden as an entrepreneur.

Or, go ahead and form a HK or UAE company with a bank account in Latvia. Send us a postcard form prison.

 

[zyzl]

Don't you think that if it were as easy as you think it is, everyone in Germany would be doing it?

As of right now I collected my information from nomad/law blogs and am in dialogue with an offshore agency (3 letters .com, probably already known here).
I read about same structures here in this forum all the time, that's why I'm a bit confused right now and feel like I'm getting trolled. I don't earn that much with my business, it's under € 80k revenue/year but I want to optimize the construct.

 

[Sols]

It sounds like you're talking to SFM. They are not qualified to give you tax and legal advice. Nomad blogs are all trying to sell you something. They, too, aren't qualified advisers.

It's like that old saying: If something sounds too good to be true, it's probably not true.

Speak with an actual lawyer instead, who understands German law.

At 80,000 EUR annual revenue, focus on growing your business first and foremost. If it's a business that can be done from anywhere in the world, research moving to for example Malta and Cyprus. Both have very favourable tax systems and it's easy to move there as an EU national.

 

[Marzio]

which paragraph particularly?

What about this?

 

[Marzio]

Don't think for a second that having a local director will let you avoid the place of management rule. Your company will be considered managed from Germany UNLESS you will provide full documentation of having a substrate overseas meaning renting an office, hiring a couple of dudes and a managing director.

Then maybe you'll convince the taxman that you are not managing your company from Germany.

 

[zyzl]

Don't think for a second that having a local director will let you avoid the place of management rule.

How will they know anything related to me if it's managed by a nominee director?

Perfect scenario would be UAE formation with Dubai banking. Then applying for a visa and live there.


I don't know if I should go 100% anonymity or not.

 

[Sols]

How will they know anything related to me if it's managed by a nominee director?

Under CRS/AEOI, the bank will report (via government bodies) to the German tax authority. They will receive a report that you own a company in UAE and information about the bank account.

The nominee means nothing to the bank. They will know that you are the UBO.

You have a lot of reading to do. Don't listen to corporate service providers when it comes to strategies for saving on tax, unless they are also authorised to provide legal advice and tax advice. Most of them aren't. Most are just sales people.

 

[zyzl]

Okay, then only option is EU company + EU bank account. Double taxation treaties should also work for non-residents. If not, rent a flat and declare a new domicile.

 

[Marc Jacob]

I wouldn't give you the advice to avoid Latvian banks, to be precise, you should avoid Latvian private banks such as Latvia pasta bank, Rietumu, etc... But major scandinavian banks like Swedbank, Luminor or SEB are very decent banks and much better than mostly Italian or Spanish banks for instance....

In addition, you should be informed that banking in Baltics Nowadays isn't so easy without residency, but in the meantime getting the residency in Latvia is a quite straight forward process and can be done within 3 days time.

Last point, Latvia has a very easy taxation and the taxman will not bowser you as long as you invoice in respect to local standarts (one tip, In latvia the taxation on dividends is based as follows : 20% of 80% which makes a real rate of 16% and it's 0% corporate tax on retained earnings)