Is it better to setup an offshore company for freelancer?

Discussion in 'TAX Issues or Questions' started by senty, Jul 9, 2018.

  1. senty

    senty New Member

    Hi, I am a young freelancer (programmer) and permanent tourist/digital nomad for the past 2 years. Now my income has been rising and I'll clearly need to declare it/pay taxes and I wanted to ask for your advice about the optimum way. There are lots of opinions online but I couldn't figure out how to achieve the best deal.

    I am both UK citizen & Cyprus citizen & North Cyprus citizen. I am living in the EU as a tourist (without becoming tax-resident anywhere). However, my clients are from US mainly.

    For the past week, I have been researching the options; and apparently there are 2 options - self-employed or LTD or offshore LTD. These are all new to me so if I have any misunderstandings, please please correct me.

    My findings are:
    - For the UK, if I opt in as self-employed, £0-30k is liable to 20% tax - and first £11.500 is allowance. I am not sure if foreign-earned money is tax-free.
    - For Cyprus self-employed, apparently first €19.5k is %0 tax. And it is said that "income from employment outside Cyprus is not taxable" - on Europa

    - If I decide to create a UK limited company (one director/owner), the corporate tax comes in - which is 19% - (and as far as I understand I will be the employee of the limited company at the same time). I read about one tactic which is having a salary to the director of £11.500/yr and also there is £5000 tax allowance for dividends - which makes £16,500 tax free.

    - Also there is a offshore company option in North Cyprus free-zone - which is %0 corporate tax for foreign-earned money but I'll still need to pay my income tax somewhere.

    I doubt combining North Cyprus LTD & Cyprus for income tax may be an issue because Cyprus doesn't recognize North Cyprus, have no clue.

    I'd be grateful for any inputs. What would you do if you were in my shoes?
    negon likes this.
  2. Uillians

    Uillians Member

    I have company in HK and I use a debit card from the company account.
    Some sales I receive with PayPal from a personal account and I transfer to a personal bank account, and make a personal income tax return in my country, with low value to enter the government subsidy.
  3. senty

    senty New Member

    So at the same time, you are also registered as self-employed in a different country than HK?
  4. negon

    negon hannibal the cannibal Mentor Group Business Angel Commercial Service

    Where are you tax liable if you don't live anywhere more than 183 days within the EU ?
  5. senty

    senty New Member

    That is my question - I think for now nowhere. I haven't been earning much so I didn't declare it before. I am concerned about it now so it won't cause bigger problem in the future because I started earning good amounts just recently ($15-25k).

    My question is - where should I do it? should I do it via offshore ltd or self-employed? What is the most optimum way so that I can save some on taxes? What would you do if you were me?
  6. Uillians

    Uillians Member

    The ease of you not wanting to pay taxes correctly and very simply, here in Brazil
    Most of it gets by the offshore company and a small part by the personal account.
  7. negon

    negon hannibal the cannibal Mentor Group Business Angel Commercial Service

    Tell me do you live anywhere more than 183 days at a time? If not you don't have to pay tax but considered a nomade!
  8. senty

    senty New Member

    I lived in Spain (for around 200 days~) however I believe as a tourist - without using any health-service or applying to tax number - I rented a house just like airbnb and they didn't ask for my tax ID and stuff.

    However, I have left 2 months ago and now in Greece as a tourist. I am not sure if I will settle here either for more than 183 days.

    My freelance money is going into my personal bank account in the UK (or from Paypal/Transferwise to my UK bank). I am pretty confused if they will freeze my UK bank account, in fact I didn't live there for the past 4 years (just barely visited for 1 month maximum in the 4 year span).
  9. senty

    senty New Member


    I did more readings on the forum; however the more I read, the more confused I get.

    Is a Cyprus LTD better for a freelance (software) business? or a Northern Cyprus (Free-zone) LTD and creating a bank account in Bank of Cyprus/UK (as far as I understand, you can setup a bank account in a different country) is better ?