Incorporating a business with an app product on App Store and Google Play

[Asterion]

Hello!

I'm looking to incorporate a legal entity to sell an app product on the Apple App Store and on Google Play. I'll describe my situation below and list doubts/questions. I have done some research on the forum, but I guess each situation is a bit different.
Thanks in advance to anyone who can help.

THE BUSINESS/PRODUCT
Because of the nature of the product, most prospective customers will be in Europe (Norway, Italy, United Kingdom, Sweden, Spain, Poland). But I can expect some in other English speaking countries such as the USA and Canada. Or English speaking countries in Africa.
The revenue is likely to come from extra content the user can pay to have, so sadly this likely means it will have to go through Apple and Google and cannot use external services such as Stripe. They'll get a 30% cut of the revenue.
So the legal entity must be acceptable to Apple and Google.

MY PERSONAL SITUATION - AKA how do I enjoy that money?
I'm an Italian national who is based and tax resident in the UK.
I normally work as a freelance consultant through my UK Ltd. I already pay myself the ideal amount to minimise taxation. Any further payments would incur 33.75% tax.
Also, I have to consider regulations againts income/dividends coming from Controlled Foreign Companies, as I am clearly looking to incorporating abroad.
A family member in Italy could be the sole UBO of the app business. They would pay a flat 26% tax on dividends, so better than my 33.75%. CFC rules stuff still apply.
Likewise, a family member in California could be the UBO. I trust his taxation on dividends from a US company would be quite lower (13.3% I think). No CFC issues there I guess, if the incorporation was in the US. But there might be some more US taxes stuff.

This said, I don't strictly need the income from the app business. A non pass-through entity that allows to retain profits and pay dividends at a later time (say if I move to a tax haven for enough time) could also work for me. Or a legal entity that allows to move the earnings to an investment company of some kind.

Further note: I want privacy, unless the app business starts to be big. I want privacy from a general Google search as I don't want anybody engaging with me for my "day job" to find out about this side gig and think that I am focusing more on my moonlighting than on client work. Especially in this world of remote working, I think clients can be rightly suspicious. Even if the UBO does end up being me, I still want privacy.

So, what would be my options?

1) I am considering Wyoming and New Mexico LLCs and Estonian ÖU (with a nominated director for privacy?). Are these good options for my case?

2) Can I create a legal entity to sell only to certain markets on the stores and another to sell to the others?

3) Is spending money directly from the account of the business (say for rent, living expenses and the like) a possibility with the legal entities that don't require filing accounts? Or do you have to be audit-proof, in the case?

4) A very trusted contact of mine could offer his BVI as the holder of the app's intellectual property, who would then charge royalties to the business thatgets the paymentr from Apple/Google. Is this something to consider?

Many thanks for any feedback

 

[Ready Offshore]

Hello!

I'm looking to incorporate a legal entity to sell an app product on the Apple App Store and on Google Play. I'll describe my situation below and list doubts/questions. I have done some research on the forum, but I guess each situation is a bit different.
Thanks in advance to anyone who can help.

THE BUSINESS/PRODUCT
Because of the nature of the product, most prospective customers will be in Europe (Norway, Italy, United Kingdom, Sweden, Spain, Poland). But I can expect some in other English speaking countries such as the USA and Canada. Or English speaking countries in Africa.
The revenue is likely to come from extra content the user can pay to have, so sadly this likely means it will have to go through Apple and Google and cannot use external services such as Stripe. They'll get a 30% cut of the revenue.
So the legal entity must be acceptable to Apple and Google.

MY PERSONAL SITUATION - AKA how do I enjoy that money?
I'm an Italian national who is based and tax resident in the UK.
I normally work as a freelance consultant through my UK Ltd. I already pay myself the ideal amount to minimise taxation. Any further payments would incur 33.75% tax.
Also, I have to consider regulations againts income/dividends coming from Controlled Foreign Companies, as I am clearly looking to incorporating abroad.
A family member in Italy could be the sole UBO of the app business. They would pay a flat 26% tax on dividends, so better than my 33.75%. CFC rules stuff still apply.
Likewise, a family member in California could be the UBO. I trust his taxation on dividends from a US company would be quite lower (13.3% I think). No CFC issues there I guess, if the incorporation was in the US. But there might be some more US taxes stuff.

This said, I don't strictly need the income from the app business. A non pass-through entity that allows to retain profits and pay dividends at a later time (say if I move to a tax haven for enough time) could also work for me. Or a legal entity that allows to move the earnings to an investment company of some kind.

Further note: I want privacy, unless the app business starts to be big. I want privacy from a general Google search as I don't want anybody engaging with me for my "day job" to find out about this side gig and think that I am focusing more on my moonlighting than on client work. Especially in this world of remote working, I think clients can be rightly suspicious. Even if the UBO does end up being me, I still want privacy.

So, what would be my options?

1) I am considering Wyoming and New Mexico LLCs and Estonian ÖU (with a nominated director for privacy?). Are these good options for my case?

2) Can I create a legal entity to sell only to certain markets on the stores and another to sell to the others?

3) Is spending money directly from the account of the business (say for rent, living expenses and the like) a possibility with the legal entities that don't require filing accounts? Or do you have to be audit-proof, in the case?

4) A very trusted contact of mine could offer his BVI as the holder of the app's intellectual property, who would then charge royalties to the business thatgets the paymentr from Apple/Google. Is this something to consider?

Many thanks for any feedback

Hi,

Privacy: Assets held in a Wyoming LLC enjoy a high level of anonymity because the state does not keep electronic records of the members or managers of an LLC. However, this level of privacy is not available to family limited liabilities.
The annual report however requires the name of the filer, so in order to remain completely anonymous, you would need to hire a nominee to file and sign for you.
You can set up different companies and option 3 and 4 to be discussed.

 

[startfleetio]

Hello!

I'm looking to incorporate a legal entity to sell an app product on the Apple App Store and on Google Play. I'll describe my situation below and list doubts/questions. I have done some research on the forum, but I guess each situation is a bit different.
Thanks in advance to anyone who can help.

THE BUSINESS/PRODUCT
Because of the nature of the product, most prospective customers will be in Europe (Norway, Italy, United Kingdom, Sweden, Spain, Poland). But I can expect some in other English speaking countries such as the USA and Canada. Or English speaking countries in Africa.
The revenue is likely to come from extra content the user can pay to have, so sadly this likely means it will have to go through Apple and Google and cannot use external services such as Stripe. They'll get a 30% cut of the revenue.
So the legal entity must be acceptable to Apple and Google.

MY PERSONAL SITUATION - AKA how do I enjoy that money?
I'm an Italian national who is based and tax resident in the UK.
I normally work as a freelance consultant through my UK Ltd. I already pay myself the ideal amount to minimise taxation. Any further payments would incur 33.75% tax.
Also, I have to consider regulations againts income/dividends coming from Controlled Foreign Companies, as I am clearly looking to incorporating abroad.
A family member in Italy could be the sole UBO of the app business. They would pay a flat 26% tax on dividends, so better than my 33.75%. CFC rules stuff still apply.
Likewise, a family member in California could be the UBO. I trust his taxation on dividends from a US company would be quite lower (13.3% I think). No CFC issues there I guess, if the incorporation was in the US. But there might be some more US taxes stuff.

This said, I don't strictly need the income from the app business. A non pass-through entity that allows to retain profits and pay dividends at a later time (say if I move to a tax haven for enough time) could also work for me. Or a legal entity that allows to move the earnings to an investment company of some kind.

Further note: I want privacy, unless the app business starts to be big. I want privacy from a general Google search as I don't want anybody engaging with me for my "day job" to find out about this side gig and think that I am focusing more on my moonlighting than on client work. Especially in this world of remote working, I think clients can be rightly suspicious. Even if the UBO does end up being me, I still want privacy.

So, what would be my options?

1) I am considering Wyoming and New Mexico LLCs and Estonian ÖU (with a nominated director for privacy?). Are these good options for my case?

2) Can I create a legal entity to sell only to certain markets on the stores and another to sell to the others?

3) Is spending money directly from the account of the business (say for rent, living expenses and the like) a possibility with the legal entities that don't require filing accounts? Or do you have to be audit-proof, in the case?

4) A very trusted contact of mine could offer his BVI as the holder of the app's intellectual property, who would then charge royalties to the business thatgets the paymentr from Apple/Google. Is this something to consider?

Many thanks for any feedback

If you use a american as an UBO, that US LLC will be taxable, you will probably need to think about this because the whole point of setting up a US LLC as a non-us resident is not to trigger US federal taxes.

 

[CyprusLaw]

Hello!

I'm looking to incorporate a legal entity to sell an app product on the Apple App Store and on Google Play. I'll describe my situation below and list doubts/questions. I have done some research on the forum, but I guess each situation is a bit different.
Thanks in advance to anyone who can help.

THE BUSINESS/PRODUCT
Because of the nature of the product, most prospective customers will be in Europe (Norway, Italy, United Kingdom, Sweden, Spain, Poland). But I can expect some in other English speaking countries such as the USA and Canada. Or English speaking countries in Africa.
The revenue is likely to come from extra content the user can pay to have, so sadly this likely means it will have to go through Apple and Google and cannot use external services such as Stripe. They'll get a 30% cut of the revenue.
So the legal entity must be acceptable to Apple and Google.

MY PERSONAL SITUATION - AKA how do I enjoy that money?
I'm an Italian national who is based and tax resident in the UK.
I normally work as a freelance consultant through my UK Ltd. I already pay myself the ideal amount to minimise taxation. Any further payments would incur 33.75% tax.
Also, I have to consider regulations againts income/dividends coming from Controlled Foreign Companies, as I am clearly looking to incorporating abroad.
A family member in Italy could be the sole UBO of the app business. They would pay a flat 26% tax on dividends, so better than my 33.75%. CFC rules stuff still apply.
Likewise, a family member in California could be the UBO. I trust his taxation on dividends from a US company would be quite lower (13.3% I think). No CFC issues there I guess, if the incorporation was in the US. But there might be some more US taxes stuff.

This said, I don't strictly need the income from the app business. A non pass-through entity that allows to retain profits and pay dividends at a later time (say if I move to a tax haven for enough time) could also work for me. Or a legal entity that allows to move the earnings to an investment company of some kind.

Further note: I want privacy, unless the app business starts to be big. I want privacy from a general Google search as I don't want anybody engaging with me for my "day job" to find out about this side gig and think that I am focusing more on my moonlighting than on client work. Especially in this world of remote working, I think clients can be rightly suspicious. Even if the UBO does end up being me, I still want privacy.

So, what would be my options?

1) I am considering Wyoming and New Mexico LLCs and Estonian ÖU (with a nominated director for privacy?). Are these good options for my case?

2) Can I create a legal entity to sell only to certain markets on the stores and another to sell to the others?

3) Is spending money directly from the account of the business (say for rent, living expenses and the like) a possibility with the legal entities that don't require filing accounts? Or do you have to be audit-proof, in the case?

4) A very trusted contact of mine could offer his BVI as the holder of the app's intellectual property, who would then charge royalties to the business thatgets the paymentr from Apple/Google. Is this something to consider?

Many thanks for any feedback

Hi,

From the facts set out above I would urge you to consider Cyprus.

12.5% corporate tax plus 2.65% GHS contribution on dividend payments. Especially if you are willing to relocate in order to become a Cyprus tax resident this would mean your effective tax rate would be around 15%.

Please also note that your line of business, if structured properly, could fall under the IP Box regime, this would mean that the corporate tax would be reduced to an effective tax rate of up to 2.5%.

Feel free to PM me if you would be interested in this and would like to discuss more.

 

[Asterion]

Thank you all for the answers.

I have learned that as UK resident but still domiciled in Italy, I don't have to pay any tax in the UK on income that arises from overseas so long as I don't bring that money in the UK. This would seem to counter any CFC issue.

I think a major factor here could be using a US LLC to sell anywhere but the US (which shouldn't be a major market for me, not immediately at least) and a non-US legal entity to sell there.

@CyprusLaw funny enough, a very good friend of mine, whom I would easily consider as a partner in this venture, is Cypriot and resident there for the moment (if that is an advantage). I believe there is a significant amount of IP in my product (content comparable to that of study books and specific, custom-made algorithms). Let me see if I'm allowed to PM users.

Looking forward to any other observations, it took me months to find advice on the business and legal sides of publishing an app. I'd recommend anyone who is a professional advisor in the broader field to advertise to the population of app entrepreneurs and developers. There is much need of knowledge and very few soruces.

 

[Osh18]

Hi there,

If you had developed fully or partly your IP in Mauritius, the Mauritian company would have been eligible for an 8 year tax holiday (no corporate taxes payable for 8 years). Any royalties are taxable at 15% in Mauritius and the Mauritian company could claim credit on any foreign taxes suffered on any royalties received from outside Mauritius.

You may send me a PM for more details.

Best
O

 

[mad1max]

From the facts set out above I would urge you to consider Cyprus.

I actually also want to build an app that does basically the same thing, but also will have a website/app where you can pay for subscriptions, the app can only consume subscriptions. I think this is why Netflix gets away without paying the 30% fee (15% for small businesses). Stripe also offers the pay out solution.

My understanding is also that Cyprus doesn't work because auditing all the micro transactions would be really expensive there.

I am thinking more like registering an US LLC (+ private bank account) to release the app and website (Poof of Concept). But implement payment processing later and do that in Dubai or Romania or both? Depending on how successful this will be. Thoughts?

 

[CyprusLaw]

I actually also want to build an app that does basically the same thing, but also will have a website/app where you can pay for subscriptions, the app can only consume subscriptions. I think this is why Netflix gets away without paying the 30% fee (15% for small businesses). Stripe also offers the pay out solution.

My understanding is also that Cyprus doesn't work because auditing all the micro transactions would be really expensive there.

I am thinking more like registering an US LLC (+ private bank account) to release the app and website (Poof of Concept). But implement payment processing later and do that in Dubai or Romania or both? Depending on how successful this will be. Thoughts?

I don't expect the audit fees to be as high as you expect. Happy to PM you to discuss further.

 

[blizz]

In average what are the accounting fees for a CYP Ltd ?

 

[CyprusLaw]

In average what are the accounting fees for a CYP Ltd ?

This would depend on the type of business and the annual volume of transactions.