How I can do this with offshore companies or other solutions...

[OffShore1950]

Hello.
I want to explain my situation because I want to know how I can reduce my tax invoice with the government.

First of all I want to explain my actual situation.
Spanish company (Limited, SL here) selling virtual services to natural customers (not companies). This services its in range 10-20€ and includes VAT. I mean if I charge 10 euro to one customer this 10 euros include 21% VAT (IVA) tax.
My question is how I can avoid to pay this tax. The main problem is the merchant gateway where we process the payments (we use moto merchant gateway here with Banco Santander).

I think one option can be to open offshore company (in swiss or in some region like panamá...) and use the company in spain as the intermediary

Customers pay to the Spain company -> Spain company pay to offshore company

Offshore company makes invoice without vat to spanish customer

Spain company makes invoice about the fee for process the payment to the offshore company.


I need to say we have about 25k euro per month of income.

Sorry for my bad english... I'm trying to improve it.

Thanks.

 

[Sols]

I'll just quote what I wrote in an almost identical thread from yesterday:

Strictly speaking, you can only avoid VAT on sales to non-VAT registered EU persons by not selling to them at all. Even non-EU companies are required to pay VAT.

In reality, a lot of non-EU companies are selling digital services into the EU without charging and paying VAT. This works fine as long as you don't have any assets within the EU that a local tax authority can lay claim to. But if your US LLC is managed and controlled from within the EU, it's an EU company as far as tax is concerned and you need to pay local tax (corporate tax, and VAT).

Your structure looks like Tax Evasion 101 and won't fly. If your business model can't handle VAT, I think the problem is the business model, not the VAT.

https://www.offshorecorptalk.com/threads/how-to-avoid-paying-vat.31346/
In addition to problems with VAT regulations, you're looking at issues related to transfer pricing and BEPS (Base Erosion Profit Shifting).

 

[CaptK]

There is not an actual legal way to do it VAT is the responsibility of the seller. You can use a PSP outside of Europe but you should pay the VAT unless your client is from outside the EU.

VAT is the only thing you should never get creative with as they will throw you in jail first and ask questions later.

 

[Sir Gelato]

Hello.
I want to explain my situation because I want to know how I can reduce my tax invoice with the government.

First of all I want to explain my actual situation.
Spanish company (Limited, SL here) selling virtual services to natural customers (not companies). This services its in range 10-20€ and includes VAT. I mean if I charge 10 euro to one customer this 10 euros include 21% VAT (IVA) tax.
My question is how I can avoid to pay this tax. The main problem is the merchant gateway where we process the payments (we use moto merchant gateway here with Banco Santander).

I think one option can be to open offshore company (in swiss or in some region like panamá...) and use the company in spain as the intermediary

Customers pay to the Spain company -> Spain company pay to offshore company

Offshore company makes invoice without vat to spanish customer

Spain company makes invoice about the fee for process the payment to the offshore company.


I need to say we have about 25k euro per month of income.

Sorry for my bad english... I'm trying to improve it.

Thanks.

They can cat get you with tax evasion.
And you know how spanish government likes to catch this type of schemes to make you pay big amounts, hacienda somos todos, just joking, if you find a solution keep us updated.
Saludos.

 

[OffShore1950]

Thank you everyone for the explanation. I think the best way its to look for reduce the company tax (25% current) and pay all VAT (21%) in spain without doing everything to avoid problems.

 

[minotari]

I don't know how to avoid VAT. Why don't you increase the prices for EU customers by adding the amount of VAT on top and notify the said customers upfront?

 

[Martin Everson]

Your just gonna have to accept VAT as the cost of doing B2C business in EU. VAT avoidance is a very easy way to run into problems with the taxman .

 

[OffShore1950]

Your just gonna have to accept VAT as the cost of doing B2C business in EU. VAT avoidance is a very easy way to run into problems with the taxman .

Yes that's true. And I was reading if some non-EU Company do business in Spain and sell more than 30k euro per year, they need to sign up for Spain TAX in Agencia tributaria, so... same problem. We can only play with the company tax and the yearly profits. VAT its needed to avoid problems...

thx

 

[saduna]

Yes that's true. And I was reading if some non-EU Company do business in Spain and sell more than 30k euro per year, they need to sign up for Spain TAX in Agencia tributaria, so... same problem. We can only play with the company tax and the yearly profits. VAT its needed to avoid problems...

thx

You can do offshore company to avoid most of VAT across EU, but this is related to what is the virtual service you are selling, what do you need to have to provide the service -can it be offshored, and how your revenue is distributed. If you really need to keep your company in Spain to provide services, you can't really do much. I am pretty sure if you are selling to a Spanish customer a service from a Spanish source, you have to invoice it in Spain with the VAT.

 

[John Andrews]

To be honest, I don't think EU can do much if you trade using a Panamanian company while residing in Panama for example. However using an EU company (in this case a Spanish SL) as an intermediary is likely straight-out illegal in regards to VAT avoidance.

 

[Dandyline]

Or you can just trade through a couple of LLPs/LTDs and make sure that each company is below the yearly VAT threshold. Spread out the revenue.

If you sell to other EU countries and are supposed to report through MOSS, i think its no risk at all just skip to report it. They can never find out, there is 0% possibility they would find out except if you are under tax investigation.