IT LLC to offshore

[noob3000]

Hi all!

I have an italian LLC and need an advice how to get the money out of 70% tax rate.

the costs should be low, the anonymity high and out of CRS (think thats important). i also need a bank account from a solid known bank with credit/debit card if possible but its not a must.

also there should be no taxes, oviosuly. its pretty simple to bring out the money with "roalties" invoices.

is there any country? actually i think of isle of man an and malta. but maybe you have better ideas....

thanks for all the good stiff i read here about!!

 

[apres777]

It's unfortunately not as easy as you might imagine.

Mainly due to three reason, simply summarised.

1) Cost Deduction in your Italian LLC won't work by simply invoicing "consulting" from an Offshore Entity. Your "cost" mostly wouldn't be deductible when doing your tax calculations at the end of the year.
2) To benefit from 0% Tax you mostly need substance in the desired country of choice. (Local Director, Team whatever). Just using an empty company with a bank account won't work and an invoicing tool is sufficient these days unfortunately.
3) Lastly building a proper "setup" which might work and suits yours needs will cost you time and money

Easiest way to "avoid" paying horrific taxes in EU is by living in a country with low taxes, trust me buddy we all have been there.

 

[noob3000]

It's unfortunately not as easy as you might imagine.

Mainly due to three reason, simply summarised.

1) Cost Deduction in your Italian LLC won't work by simply invoicing "consulting" from an Offshore Entity. Your "cost" mostly wouldn't be deductible when doing your tax calculations at the end of the year.
2) To benefit from 0% Tax you mostly need substance in the desired country of choice. (Local Director, Team whatever). Just using an empty company with a bank account won't work and an invoicing tool is sufficient these days unfortunately.
3) Lastly building a proper "setup" which might work and suits yours needs will cost you time and money

Easiest way to "avoid" paying horrific taxes in EU is by living in a country with low taxes, trust me buddy we all have been there.

Thank you for your advises.

i talked to my tax consultant and he said there would be no problem to invoice out the money through royalties. due the IT LLC is making videos and stuff. he said, just look for a country outside CRS and mentioned puerto rico.

i personaly talked to consultant on the isle of man, and there the costs are at 10k yearly with 0% tax. but i am unsure about CRS there. they told me to go to malta.

i can not leave the country (for tax purposes obviously) and i can not simply close the italian LLC because i need it to be in italy.

 

[JohnnyDoe]

Change your tax consultant

 

[noob3000]

Change your tax consultant

ok what would you do then?

 

[JohnnyDoe]

ok what would you do then?

I would not underestimate the intelligence of Agenzia delle Entrate and GdF. What you are trying to do will not work.

 

[noob3000]

I would not underestimate the intelligence of Agenzia delle Entrate and GdF. What you are trying to do will not work.

So you know about them... Any tips what would work?

 

[Cavaliere]

ok what would you do then?

He just told you. Invoicing a Puerto Rican company is going to come back to haunt you in 5/10 years.

 

[noob3000]

He just told you. Invoicing a Puerto Rican company is going to come back to haunt you in 5/10 years.

Why so long?

And what about IOM or any other jurisdiction? what would be the best way for this scheme?

 

[Cavaliere]

Why so long?

And what about IOM or any other jurisdiction? what would be the best way for this scheme?

The scheme won't work in the long run. You better move outside of Italy.

 

[noob3000]

The scheme won't work in the long run. You better move outside of Italy.

i can't do that. i do not care about complexity to make it work but the IT LLC is a must in this case...

 

[Cavaliere]

i can't do that. i do not care about complexity to make it work but the IT LLC is a must in this case...

Then pay the tax, you could even move to San Marino or Malta to reduce your taxes. Or the place in Switzerland that's part of Italy. But if you're going to outright reduce your taxable income with fake receipts to offshore jurisdictions like Isle of Man you're just blatantly dodging taxes and that is a criminal offence that can land you into jail whether you like it or not.

 

[noob3000]

Then pay the tax, you could even move to San Marino or Malta to reduce your taxes. Or the place in Switzerland that's part of Italy. But if you're going to outright reduce your taxable income with fake receipts to offshore jurisdictions like Isle of Man you're just blatantly dodging taxes and that is a criminal offence that can land you into jail whether you like it or not.

ok! understood.

you mean Art. 2 74/2000 where they fine you with 1-6 years if you use "fake invoices" to lower your LLCs taxable income.

but what is tbis forum about? its just about crypto? i do not get it. there are selled "anonymous LLCs" and stuff. i coud use 20 of them to send invoices to my LLC and then move the money to IOM and i am good. so please, tell me whats wrong with my thinking.

 

[JohnnyDoe]

you mean Art. 2 74/2000 where they fine you with 1-6 years if you use "fake invoices" to lower your LLCs taxable income.

Plus fraud, money laundering etc. Roughly 20 years.

but what is tbis forum about? its just about crypto?

It’s not about tax evasion and money laundering

i do not get it. there are selled "anonymous LLCs" and stuff. i coud use 20 of them to send invoices to my LLC and then move the money to IOM and i am good. so please, tell me whats wrong with my thinking.

Everything

 

[Marzio]

he said there would be no problem to invoice out the money through royalties

Did you realize that paying royalties means that somebody else is the owner of the IP for the royalties you are paying out?

To pull this off in a credible way you need to setup a holding company that will own the IP and license that IP to the Italian subsidiary.

That holding company will require a local director, an office and some staff to create substance.

The best place for your holding would be Georgia because it has 0% WHT on royalties with Italy and it's a territorial taxation country so any income generated abroad (by your Italian company in this case) will be tax exempt.

If instead you want something outside of CRS there's North Macedonia with 0% WHT on royalties with Italy but it has 10% CIT so you'll pay 10% on the royalties received from Italy.

In any case you have to invest in creating substance for either company, creating the IP, license that IP and most likely speak with somebody with knowledge abou transfer pricing.

what is tbis forum about?

Legal tax avoidance. Not stupid tax evasion.

 

[noob3000]

Did you realize that paying royalties means that somebody else is the owner of the IP for the royalties you are paying out?

To pull this off in a credible way you need to setup a holding company that will own the IP and license that IP to the Italian subsidiary.

That holding company will require a local director, an office and some staff to create substance.

The best place for your holding would be Georgia because it has 0% WHT on royalties with Italy and it's a territorial taxation country so any income generated abroad (by your Italian company in this case) will be tax exempt.

If instead you want something outside of CRS there's North Macedonia with 0% WHT on royalties with Italy but it has 10% CIT so you'll pay 10% on the royalties received from Italy.

In any case you have to invest in creating substance for either company, creating the IP, license that IP and most likely speak with somebody with knowledge abou transfer pricing.

Thank you for your advice. That sounds pretty good. Is it difficult to work in this countries and how high would be the running costs?

Legal tax avoidance. Not stupid tax evasion.

Thats what I want to do. I am not that expirienced like all of you, so i registered here to learn from you all. I know I am stupid but thats why i choosed my username. so big thanks for your help!

 

[JohnLocke]

Then pay the tax, you could even move to San Marino or Malta to reduce your taxes. Or the place in Switzerland that's part of Italy. But if you're going to outright reduce your taxable income with fake receipts to offshore jurisdictions like Isle of Man you're just blatantly dodging taxes and that is a criminal offence that can land you into jail whether you like it or not.

I can only agree with this. Times have changed, where one could previously assume that the tax authorities were a bit foolish and unenlightened, they have become intelligent liars who will surely figure out your plan and actually make what you have done even worse by just fabricating and assuming whatever they feel like. And you have no chance of convincing them otherwise. That is, unless you're Bill Gates or Mark Zuckerberg, maybe.

 

[Marzio]

The best place for your holding would be Georgia because it has 0% WHT on royalties with Italy and it's a territorial taxation country so any income generated abroad (by your Italian company in this case) will be tax exempt.

If instead you want something outside of CRS there's North Macedonia with 0% WHT on royalties with Italy but it has 10% CIT so you'll pay 10% on the royalties received from Italy.

I revised my post because both recommendations were wrong.

Georgia is indeed a territorial taxation country but only for natural persons, not companies so you'll pay 15% CIT on royalties from Italy.

North Macedonia has 10% CIT so by establishing a IP holding there you'll fall into italian CFC rules because Norh Macedonia's CIT is less than half of Italian CIT and more than 1/3 of income is passive income.

So the advice about establishing a holding company that owns IP is correct but the reasons behind the countries i initally highlited are incorrect.

By being tax resident in Italy you have to establish a holding company in a country that:
1. has a DTT with Italy
2. would not fall into Italian CFC rules (this means that CIT has to be minimum 14%)
3. not part of CRS (those are countries that are currently not part of CRS, will you bank in those?)

Since you said that your LLC is creating videos i guess you are a youtuber.

Is that correct?

Having said this there are some countries that could work:
- Georgia > 0% IT WHT on royalties, 15% CIT
- Estonia > 0% IT WHT on royalties, 0% CIT (deferred until distribution)

I think Estonia could be a great option in your case (it has to be seen if the deferred payment of corporate income tax would fall into Italian CFC rules), speak with @Don

 

[noob3000]

Since you said that your LLC is creating videos i guess you are a youtuber.

Is that correct?

Not really but similar. I have normal business too i make money with (basically consulting and stuff) so its a mix.

- Georgia > 0% IT WHT on royalties, 15% CIT
- Estonia > 0% IT WHT on royalties, 0% CIT (deferred until distribution)

I think Estonia could be a great option in your case (it has to be seen if the deferred payment of corporate income tax would fall into Italian CFC rules), speak with @Don

1. "deferred until distribution" does mean i can "stow" my money there until i can moove myself living in a low income taxation country and make the distribution there? like monaco etc.
2. i can't contact him because i have to upgrade my account i think
3. what's about Malta?

 

[Don]

I revised my post because both recommendations were wrong.

Georgia is indeed a territorial taxation country but only for natural persons, not companies so you'll pay 15% CIT on royalties from Italy.

North Macedonia has 10% CIT so by establishing a IP holding there you'll fall into italian CFC rules because Norh Macedonia's CIT is less than half of Italian CIT and more than 1/3 of income is passive income.

So the advice about establishing a holding company that owns IP is correct but the reasons behind the countries i initally highlited are incorrect.

By being tax resident in Italy you have to establish a holding company in a country that:
1. has a DTT with Italy
2. would not fall into Italian CFC rules (this means that CIT has to be minimum 14%)
3. not part of CRS (those are countries that are currently not part of CRS, will you bank in those?)

Since you said that your LLC is creating videos i guess you are a youtuber.

Is that correct?

Having said this there are some countries that could work:
- Georgia > 0% IT WHT on royalties, 15% CIT
- Estonia > 0% IT WHT on royalties, 0% CIT (deferred until distribution)

I think Estonia could be a great option in your case (it has to be seen if the deferred payment of corporate income tax would fall into Italian CFC rules), speak with @Don

For Royalty setups, we have recommended a combination of the following:
1) Tax residency in Georgia (foreign-sourced income is exempt from tax)
2) Personal income comes in as royalties from a US SMLLC (structured purely as an IP holding, so the source of income is entirely passive). Partly you can also pay salaries from the Estonia entity since foreign employment income is not taxed in Georgia and Estonia doesn't tax the employment of non-residents for work performed abroad.
3) Estonian operating entity - developing the IP for the US SMLLC (active income). Profit is not distributed, so it remains at an effective 0% tax.
To avoid CFC rules, you can operate as a non-profit association. Its exempted from CFC since it's not a corporation. Establishing an Estonian entity could be step one.