IT freelance, small incomings in the EU

[pbda2]

Hi, I'd like to ask you about how safe is it to receive regular and relatively small (1000-3000) monthly payments for freelancing being a tax resident of the EU?
Let's assume that I have accounts at Wise (British jurisidction), Paypal (the US), and Paxum (Dominicana).
Which of them are obliged to report to CRS and for what reason?
How safe is it to use theirs cards for online shopping without withdrawing money to my personal "official" bank account?
What should be done to attract attention of tax authorities?

 

[Clank]

You can open a US LLC with Mercury bank and it won’t get reported.

You can get a New Mexico LLC for 50$ one time payment.

 

[pbda2]

You can open a US LLC with Mercury bank and it won’t get reported.
You can get a New Mexico LLC for 50$ one time payment.

Thanks for your tips, I'm in despair and grateful for any help.
Which of these banks can issue a virtual card?
And the most interesting question - why some banks report to the CRS but others still do not

 

[Clank]

Thanks for your tips, I'm in despair and grateful for any help.
Which of these banks can issue a virtual card?
And the most interesting question - why some banks report to the CRS but others still do not

Mercury bank won’t report CRS as it’s from the US and it’s a corporate account.

They have physical and virtual cards

 

[European]

You can open a US LLC with Mercury bank and it won’t get reported.

Are you sure about this? Why wouldn't they report it?

 

[Forester]

Hi, I'd like to ask you about how safe is it to receive regular and relatively small (1000-3000) monthly payments for freelancing being a tax resident of the EU?
Let's assume that I have accounts at Wise (British jurisidction), Paypal (the US), and Paxum (Dominicana).
Which of them are obliged to report to CRS and for what reason?
How safe is it to use theirs cards for online shopping They have physical and virtual cardswithout withdrawing money to my personal "official" bank account?
What should be done to attract attention of tax authorities?

Just generally – playing hide and seek with taxmen in the EU tax hell is neither safe nor recommendable. Yes, it is true that in some EU countries the enforcement is relatively weaker than in some other ones but unless you share the country name you cannot expect a different answer. Just either pay your taxes or move your activities to the country with more reasonable taxing.

And the most interesting question - why some banks report to the CRS but others still do not

It's pretty simple:
Any bank in an AEOI/CRS country reports (to the country of tax residence), otherwise the regulator would finish them. (For the current list of AEOI/CRS countries check OECD website.) Banks in non-AEOI/CRS countries do not report.
Any another financial institution (EMI, payment processor, ... ) in an AEOI/CRS country either already reports or will report sooner or later; the differences are due to varying level of the enforcement.
Special remark re: USA – it is a non-AEOI/CRS country but having FATCA; it means that US banks can report but in the practice do it only on demand, the main purpose of FATCA is reporting about US citizens from abroad to the feds (that is heavily enforced).

Are you sure about this? Why wouldn't they report it?

Mercury bank won’t report CRS as it’s from the US and it’s a corporate account.

This is the correct answer.

You can open a US LLC with Mercury bank and it won’t get reported.

You can get a New Mexico LLC for 50$ one time payment.

Just a technical remark
– there is not only Mercury bank for US LLCs; search here at Offshore Bank Accounts & EMI Accounts forum for more options, it was discussed several times;
– for LLC setup you can use Wyoming as well as New Mexico.

 

[mrthit]

Just generally – playing hide and seek with taxmen in the EU tax hell is neither safe nor recommendable. Yes, it is true that in some EU countries the enforcement is relatively weaker than in some other ones but unless you share the country name you cannot expect a different answer. Just either pay your taxes or move your activities to the country with more reasonable taxing.

It's pretty simple:
Any bank in an AEOI/CRS country reports (to the country of tax residence), otherwise the regulator would finish them. (For the current list of AEOI/CRS countries check OECD website.) Banks in non-AEOI/CRS countries do not report.
Any another financial institution (EMI, payment processor, ... ) in an AEOI/CRS country either already reports or will report sooner or later; the differences are due to varying level of the enforcement.
Special remark re: USA – it is a non-AEOI/CRS country but having FATCA; it means that US banks can report but in the practice do it only on demand, the main purpose of FATCA is reporting about US citizens from abroad to the feds (that is heavily enforced).



This is the correct answer.


Just a technical remark
– there is not only Mercury bank for US LLCs; search here at Offshore Bank Accounts & EMI Accounts forum for more options, it was discussed several times;
– for LLC setup you can use Wyoming as well as New Mexico.

Sorry for hijacking,
What about if country of citizenship is Italy? despite not being a resident there since 2016. In Thailand since 2019.
I closed my work permit in Thailand since May 2022 but I stayed in the country for more than 180 days in 2022. Then I am moving around SEA and will spend 3 months in Europe for holiday.

 

[European]

Jbb1 said:
Mercury bank won’t report CRS as it’s from the US and it’s a corporate accoun

This is the correct answer.

@Forester
even if that is the case, the IRS might report the content of form 5472 you're obliged to file every year, correct?

 

[Marzio]

the IRS might report the content of form 5472 you're obliged to file every year, correct

No one knows.

Maybe they are not doing it right now or not doing it proactively like CRS but this doesn't mean that they will not do it in the future or report data if a country with which US has a DTA asks questions.

 

[Forester]

No one knows.

Maybe they are not doing it right now or not doing it proactively like CRS but this doesn't mean that they will not do it in the future or report data if a country with which US has a DTA asks questions.

I agree.

 

[OffshorePhantom]

even if that is the case, the IRS might report the content of form 5472 you're obliged to file every year, correct?

I do not think they will do it since it is not in their interest (they want to keep money flowing to their offshore system and this would kill it, also the pressure of Europe and other countries does nothing to US since it is not a small Caribbean island). The purpose of form 5472 is for internal purposes.

You can also read some FACTA bilateral agreements between US and other countries like Italy, Germany etc and you will see that it is not that reciprocal and symmetric in the information sent and also in the conditions for the account to be reported

Also if you do not transfer any money from the US LLC to your personal bank account you do not have to disclose that transaction in form 5472.

 

[European]

I do not think they will do it since it is not in their interest (they want to keep money flowing to their offshore system and this would kill it, also the pressure of Europe and other countries does nothing to US since it is not a small Caribbean island). The purpose of form 5472 is for internal purposes.

You can also read some FACTA bilateral agreements between US and other countries like Italy, Germany etc and you will see that it is not that reciprocal and symmetric in the information sent and also in the conditions for the account to be reported

Also if you do not transfer any money from the US LLC to your personal bank account you do not have to disclose that transaction in form 5472.

But you still have to disclose the LLC assets, i.e. the money it have has in the Mercury corporate bank account, and that could be reported

 

[OffshorePhantom]

But you still have to disclose the LLC assets, i.e. the money it have has in the Mercury corporate bank account, and that could be reported

It is unlikely this would happen, especially if you keep the money in US under the LLC name.

 

[Marzio]

It is unlikely this would happen

You'll never know how the situation will unfold in the future.

"Hey mr. Scholz, IRS here. I see many Germans are profiting from theirs US LLC here, we would be delighted to share with you that data but first please send some tanks to our Ukrainian friends"

One thing you can bet your a*s on is that US will do everything to maintain its power.

 

[OffshorePhantom]

One thing you can bet your a*s on is that US will do everything to maintain its power.

I agree, and the billions of dollars that flow to the largest offshore tax even in the world is one thing they want to maintain for sure

https://www.jrviola.com/tax-news/fa...on-demands-reciprocity-transparency-from-irs/

Jӓrvikare’s letter said that this was not enough given the burden the FATCA places on EU residents and banks to comply with U.S. tax reporting requirements. The letter said:

“We regret to note the lack of equivalent reciprocity in exchange of financial account information between the United States and EU member states.”

But the EU has issued letters like this before. Whether the U.S. government will step up to the calls for reciprocity and transparency remains to be seen.

I guess I know why US still refuses to adhere to CRS (with that they will still receive all the info about US tax payers worldwide) and still insists on FACTA, probably it is in their interest to do that.

 

[tyrexoid]

You can open a US LLC with Mercury bank and it won’t get reported.

You can get a New Mexico LLC for 50$ one time payment.

hmm, never heard about New Mexico services in this regard, who manages LLC and 'registered agent' services for foreigners at such a cheap price? (I pay Delaware 450$ annually and 100$ registered agent services at Stripe lol). What's the yearly franchise tax for New Mexico LLC?