Italian resident -->New Online Business (All outside Italy!) - New company but where? HELP!

[ReMida]

Hello!
It's some days i'm reading all around the forum, I found very interesting users and topics, now i'm looking for some additional information!
Let me explain..

ITALIAN SITUATION:
Resident and working in Italy, since 9 years i have an Italian Company (Srl/LLC) for my Italian business --> (corporate events and specific consulting for ONLY Italian companies + Amazon FBA for physical products)
I'm the only shareholder and that would remain for the future!
No employees, only some seasonal freelancers at the need.
My italian company move around 250k/year and works ONLY IN ITALY, all my client works and live in Italy and this is ok for me and i don't want to change that..Even if the tax system in Italy is really high and disincentive..But I found my mental and work balance, i have armored contracts for the next 10/15 years of activity and above all, I am young and without children(for now) !
I could consider selling my company within 5/8 years with a good exit, or simply delegating it to a manager and think about retire.
I am already investing part of my earnings (40%) in the stock market / ETF for dividends.

ONLINE SITUATION
Last year, due to Covid pandemic, i decide to take a Gap Year to think about the future (even because no events can be held, damn! but my contract are very solid)
So i started some online businesses to diversify my core business and yes, thanks to the Covid (strange to say that!) the business took off like a skyrocket!
Online Business: Digital Content Creator - Online service as website developing/creation - Dropshipping - Lead Generation - AD Sense - Social Network Growing/Service - E-commerce (85% digital products - 15% physical product) - Ticketing for event.. ALL BUSINESS ARE COMPLETELY LEGIT.
I'm a sort of solo venture builder, i have the idea (or replicate..), investing my own money hiring freelances all around the world, find customer in an automated way and yes, monetize.
Currently this business are moving around 8-10k/months (net earning before tax) with an average growth of 10-15% monthly.
I'm reinvesting 80% of earnings to make the business grow more, while 20% in crypto as savings.

To let you know better, for these online businesses i blocked the Italian GEO, so all the business are OUTSIDE ITALY or NOT CONDUCTED WITH ANY ITALIAN COMPANIES OR CUSTOMER. This is my choice, i want to sleep peacefully and not have compromises on my own business.
I don't want problem with legal, tax, double taxation etc.

CONSIDERATION AND FUTURE PLANNING
In these years of work experience I have saved up a good amount of money and within the next 5/8 years I have planned to retire.
Yes, i strongly believe in FIRE (Financial Independence Retire Early) and strongly work for it since i was 16 years old. Not so long before reach my goal!
In some years i'll be also ready to buy a second passport (Caribbean) with real estate investment (from my italian fund)

So, coming to the point ..
I want to separete the 2 business, Italian business will remain as it is, and would be my life, while online business will go aside..
I am looking for a company structure in a country that allows me to reinvest my money without the anxiety of doing so by the end of the year or be forced to pay me dividends otherwise by burning the money!
If i set up those online business in Italy, i need to pay tax on the earning at the end of the year even if i don't take dividends! 10 years * 60k tax/year = 600k burned...
Currently with my italian company i take only 15k/year of dividends from earning resinvesting the other, plus 15k/year dividends from stock market and that is what i need to live all the year (paying taxes, yes!).

What could be the best set-up for me?
I would need a company in a reputable territory that would allow me to invoice my clients and use banking service (EMI are growing, but banking would be good..)
I would need a credit card to be able to buy on some web agencies platform, process advertising payments and lead generation, buying product like lights/cameras/materials, paying travel for my content set, some expenses for me..
I stress the fact that I will not invoice any single Euro or Dollar in Italy, all completely online and abroad. I don't want problem with italian tax authority.
Basically I only do online brokerage working on AD and lead generation. No office, no employee, nothing..Only some freelance or agencies that i pay for!

if I need quick extra money for emergencies, I can always invoice from the Italian company to the foreign one and take some money (paying taxes of course)

What do you suggest for me?
Thanks in advance, appreciate!

 

[UndividedNomad]

If you remain in Italy, then it is easy: create an Italian company for your online business. To benefit from offshore companies, you need to physically move to another country. Italy being in the EU has strict CFC/PE rules which will make an offshore company you create & manage in Italy an Italian company taxed at Italian rates.

 

[Martin Everson]

That's pretty much correct what was said above. While your sat in Italy your liability is to Italian taxman for worldwide income period.

 

[croydon]

Hi I'm Italian too.
In Italy is possible to ask for foreign branch exemption, that will let you to exempt all foreign branch profits and losses from Italian taxation.
So you could open a foreign branch of Italian Srl (Ltd) in a low tax country (Ungary, Ireland, Cyprus, Bulgaria), get a EU Vat number if you need, and pay taxes only in those countries.
Without being accused of "esterovestizione" and no problem of CFC.

 

[Marzio]

Without being accused of "esterovestizione" and no problem of CFC.

I don't think they will let you do business through a foreign branch while being resident in Italy

 

[croydon]

I think it's all about balance between Italian and foreign turnover, if you make at least 50% of national and italian taxed turnover they will not be able to dispute.
Of course you cannot pretend to use Italian Ltd as pure holding, or worse use foreign branch to make business in Italy, in those cases they will not be happy!
Second your foreign branch must be located in a whitelisted country, so forget Caribbean, UAE, Seychelles, Belize etc.

 

[heliotrope]

I think it's all about balance between Italian and foreign turnover, if you make at least 50% of national and italian taxed turnover they will not be able to dispute.
Of course you cannot pretend to use Italian Ltd as pure holding, or worse use foreign branch to make business in Italy, in those cases they will not be happy!
Second your foreign branch must be located in a whitelisted country, so forget Caribbean, UAE, Seychelles, Belize etc.

Forget Singapore also.

Presumably the company abroad would need to be correctly structured, he can't be sitting there managing it from Italy or the taxman will laugh in his face.

 

[croydon]

Forget Singapore also.

Presumably the company abroad would need to be correctly structured, he can't be sitting there managing it from Italy or the taxman will laugh in his face.

Yes you can, taxman do perfectly knows that the branch is managed and controlled from Italy.
A branch is not a separate legal entity but a foreign “unit” of the mother company. Branches do not enjoy, as such, organizational and decision-making autonomy. For tax purposes, branches are considered as permanent establishments and are therefore subject to taxation in the country of establishment.

 

[heliotrope]

Yes you can, taxman do perfectly knows that the branch is managed and controlled from Italy.
A branch is not a separate legal entity but a foreign “unit” of the mother company. Branches do not enjoy, as such, organizational and decision-making autonomy. For tax purposes, branches are considered as permanent establishments and are therefore subject to taxation in the country of establishment.

Yes sure, but you will still need a properly structured foreignCo and not to be managing the foreignCo from Italy. I.e. if it does nothing and brings in little revenue and all the action is happening with the branch, then you will still be screwed at Italian tax rates.

 

[saduna]

I am looking for a company structure in a country that allows me to reinvest my money without the anxiety of doing so by the end of the year or be forced to pay me dividends otherwise by burning the money!
If i set up those online business in Italy, i need to pay tax on the earning at the end of the year even if i don't take dividends! 10 years * 60k tax/year = 600k burned...
Currently with my italian company i take only 15k/year of dividends from earning resinvesting the other, plus 15k/year dividends from stock market and that is what i need to live all the year (paying taxes, yes!).

What could be the best set-up for me?
I would need a company in a reputable territory that would allow me to invoice my clients and use banking service (EMI are growing, but banking would be good..)
I would need a credit card to be able to buy on some web agencies platform, process advertising payments and lead generation, buying product like lights/cameras/materials, paying travel for my content set, some expenses for me..
I stress the fact that I will not invoice any single Euro or Dollar in Italy, all completely online and abroad. I don't want problem with italian tax authority.
Basically I only do online brokerage working on AD and lead generation. No office, no employee, nothing..Only some freelance or agencies that i pay for!

if I need quick extra money for emergencies, I can always invoice from the Italian company to the foreign one and take some money (paying taxes of course)

What do you suggest for me?
Thanks in advance, appreciate!

You can set up a company in a country outside Italy, but with correct structure/partner to avoid Italian tax regulation from day one. As long as you are residing in Italy, the money you take from the company is subject to Italian taxes. How you take the money can change your tax rate, e.g. personal income tax vs dividend tax. If you are interested, let me know and I can walk you through at least one real solution.

 

[HKS]

You can set up a company in a country outside Italy, but with correct structure/partner to avoid Italian tax regulation from day one. As long as you are residing in Italy, the money you take from the company is subject to Italian taxes. How you take the money can change your tax rate, e.g. personal income tax vs dividend tax. If you are interested, let me know and I can walk you through at least one real solution.

Hi Please share the outline information for this structure.. Understood that personal income and or dividends are taxable. The ability to avoid tax regulation is interesting..

 

[saduna]

Hi Please share the outline information for this structure.. Understood that personal income and or dividends are taxable. The ability to avoid tax regulation is interesting..

You become a shareholder in a company in a country other than where you live. The shareholder structure, agreements and company charter is set up so that this is not classified as a CFC according to the tax laws of your country of residence. The company invoices your customers and has the income. You plan how much of the profits you want to move to your country of residence in a given year, and pay your local taxes, social security etc. The profits you leave in the company stays there until take it out.

Some people live in countries where dividend taxes and other fees are much lower than income taxes and other fees. Then you may choose to get money out as dividend without delay and pay local taxes. Or you may want to park profits in the company to get them in the future.

When the company distributes profits, the country of your residence for that year is what matters. So if you leave 50% of your profits every year in the company you will have a lot of pre-tax money in the company after a few years. When you want to get the money, you may go live in any low tax/zero tax location for 6 months in a given year and get a lump sum of profits low tax/tax-free. Your location of residence is independent from where your company is, can be any place of choice. (This doesn't work for US citizens/permanent residents but you get an exemption for around 100K if you are residing outside US)

Even if you don't travel, you can control payments over years so you avoid high bracket taxes in your country.

Or you may sell your company shares (it has lots of cash) and pay capital gains tax locally if that tax rate is low.

 

[letsgonow]

You become a shareholder in a company in a country other than where you live. The shareholder structure, agreements and company charter is set up so that this is not classified as a CFC according to the tax laws of your country of residence. The company invoices your customers and has the income. You plan how much of the profits you want to move to your country of residence in a given year, and pay your local taxes, social security etc. The profits you leave in the company stays there until take it out.

Some people live in countries where dividend taxes and other fees are much lower than income taxes and other fees. Then you may choose to get money out as dividend without delay and pay local taxes. Or you may want to park profits in the company to get them in the future.

When the company distributes profits, the country of your residence for that year is what matters. So if you leave 50% of your profits every year in the company you will have a lot of pre-tax money in the company after a few years. When you want to get the money, you may go live in any low tax/zero tax location for 6 months in a given year and get a lump sum of profits low tax/tax-free. Your location of residence is independent from where your company is, can be any place of choice. (This doesn't work for US citizens/permanent residents but you get an exemption for around 100K if you are residing outside US)

Even if you don't travel, you can control payments over years so you avoid high bracket taxes in your country.

Or you may sell your company shares (it has lots of cash) and pay capital gains tax locally if that tax rate is low.

this is great advice, im looking to move to spain or italy and this is the best solution i read so far

 

[mallshtow]

I wonder what you (@saduna) meant by

The shareholder structure, agreements and company charter is set up so that this is not classified as a CFC according to the tax laws of your country of residence.

And, regarding the schema you've mentioned, I have a couple of questions:

So, say I work as a remote engineer living in Italy. I'd incorporate an offshore company in a country which has 0% corporate tax (e.g BVI). Then, the BVI company would invoice my customers (VAT free as these customers won't be in the BVI --> export services). These money will accumulate on the BVI company but will pay no taxes because of the 0% corporate tax.
For my living expenses in Italy, I would distribute monthly some money as dividends. And this is where I have some questions:
- I guess that my BVI company should demonstrate that is not tax resident in Italy. Would I need to demonstrate that by using nominees + some part-time employee? Would Italian tax authorities challenge that? Is this legal?
- Should I distribute these foreign dividends monthly to myself as a natural person? What's the tax for this? 24%?
- Or should I distribute these foreign dividends dividends monthly to a local Italian resident company I would need to incorporate? How much tax would my local company pay? 24%? Can I get the 95% exemption if the company is incorporated in the BVI? Would that exemption depend on if I have chosen the path of the nominees or not?
- If I do the option above (local company), then I would also need to distribute the money received from the foreign dividends monthly as dividends (which would now be local dividends) to myself as natural person, correct? What about the taxes in this case?

Thanks!!

 

[JohnLocke]

You can set up a company in a country outside Italy, but with correct structure/partner to avoid Italian tax regulation from day one. As long as you are residing in Italy, the money you take from the company is subject to Italian taxes. How you take the money can change your tax rate, e.g. personal income tax vs dividend tax. If you are interested, let me know and I can walk you through at least one real solution.

mind to share the real solution here, I mean, if you are not advertising for your own service it may not be a problem to reveal what you know here?