Italian starting new online business. How to avoid my State taxes?

[AntonioT95k]

Hi everyone, I'm new here but i lurked a little bit on the forum and searched for articles and news online to answer my question, but I've only got headhace. So I'm asking experts!
I'm an Italian resident citizen, I'm in the adult business. I'm about to create a premium dating website (as I worked as an employee for such type of business and I know how to run it) and than, if possible, an Onlyfans Management agency (as I know a lot of girls willing to start this business).
I want to avoid the mandatory taxes I have to pay for my State either if I earn or don't earn money, plus if I reach a determined amount of income, about half of the cake will go to the State.
How can I avoid all of this? If i open up a US LLC in Wyoming or Delaware and sell the adult dating website services in Italy will it be usefull? I would like to work remotely, I'm also interested to move to Albania, where life is cheaper and I have some friends to enjoy the best part of the country.
Can someone give me some advice? Or there isn't much to do in this case?

Sorry for my english, I know it isn't perfect but I hope you undertstand.

 

[Forester]

Can someone give me some advice?

The advice is simple; but you might be not very happy of it
Move to the country with more friendly taxation. Yes, you can reach some tax optimization with a help of a qualified tax advisor; but in Italy it will not help you fundamentally, I am afraid. Albania might be better but I must admit I am not oriented there.

Or there isn't much to do in this case?

See above.
Yes, some people are still trying some forms of a tax evasion; but it's 2023, not 2003. Take it as a fact
E. g. opening a US LLC in Wyoming or Delaware and selling the adult dating website services in Italy while living in Italy gives you nothing.

Sorry for my english, I know it isn't perfect but I hope you undertstand.

No problem

 

[JohnnyDoe]

Legally, you can’t.

 

[AntonioT95k]

Legally, you can’t.

What, selling the service to Italian customers? And if I setup it for US customers instead? US LLC for non resident and moving to Albania is impossible?

 

[Forester]

What, selling the service to Italian customers? And if I setup it for US customers instead? US LLC for non resident and moving to Albania is impossible?

I am not @JohnnyDoe but I understand what he meant (we know each other, BTW).
You can't legally avoid the mandatory taxes etc.
Of course you can sell service of a US LLC to Italian customers, have it and move everywhere you want... But you have to pay local taxes where you live – if there are any.

 

[AntonioT95k]

I am not @JohnnyDoe but I understand what he meant (we know each other, BTW).
You can't legally avoid the mandatory taxes etc.
Of course you can sell service of an US LLC to Italian customers, have it and move everywhere you want... But you have to pay local taxes where you live – if there are any.

Sure, I understand. But if I move to Albania, managing a dating website, I can have customers from USA, Italy, or where to avoid double taxation and things like this? Do you think it's bettere to have a USA LLC living in Albania or form an Albanian company (where taxation is about 15%)? Or go directly to a "stealth" situation ad avoid everything?
Sorry for this amount of questions but I'm really lost.

 

[JohnnyDoe]

What, selling the service to Italian customers? And if I setup it for US customers instead? US LLC for non resident and moving to Albania is impossible?

In Italy you can do everything you want, as long as you pay taxes.

 

[AntonioT95k]

In Italy you can do everything you want, as long as you pay taxes.

That's why I want to move to Albania, lower taxes than Italy. And I'm here just to figure it out how it could be possibile. Outside of Italy, don't want to live here anymore.

 

[JohnnyDoe]

That's why I want to move to Albania, lower taxes than Italy. And I'm here just to figure it out how it could be possibile. Outside of Italy, don't want to live here anymore.

You can move to a zero-tax country and use a single member US LLC, no problem.

 

[AntonioT95k]

You can move to a zero-tax country and use a single member US LLC, no problem.

And selling to USA only, to avoid double taxation, right?

 

[saponaire]

the only legal way for you to do this and save taxes is:
* Setup an italian SRL
* Setup a foreign company, let your SRL be the shareholder of this company and have other people (directors + employees) running it from a favourable jurisdiction (ideally with a DTT with italy) with office bank account & co

The SRL takes advantage of participation exemption, this means that the SRL can keep avoiding paying the corporate tax (but you pay a reduced 5% last time I checked) and THEN you get profits out at 26% withholding (say in 10 years).

This achieves foreign taxation at the corporate level and tax deferral in italy at your personal level.

 

[Forester]

And selling to USA only, to avoid double taxation, right?

Do not overlook that US customers => tax liability in the USA (I do not understand well what do you mean by “double taxation” here).

the only legal way for you to do this and save taxes is:
* Setup an italian SRL
* Setup a foreign company, let your SRL be the shareholder of this company and have other people (directors + employees) running it from a favourable jurisdiction (ideally with a DTT with italy) with office bank account & co

The SRL takes advantage of participation exemption, this means that the SRL can keep avoiding paying the corporate tax (but you pay a reduced 5% last time I checked) and THEN you get profits out at 26% withholding (say in 10 years).

This achieves foreign taxation at the corporate level and tax deferral in italy at your personal level.

Yes. Just my personal opinion: 26% tax on getting the profits I consider a standard governmental robbery that should be (legally) avoided.

 

[Marzio]

This achieves foreign taxation at the corporate level and tax deferral in italy at your personal level.

I would do the other way around.

I would setup a holding company in Romania with director + office so that OP will be taxed at Italian rates (it's 24% if i'm not mistaken) but then he will avoid the massive 26% withholding tax on dividends since Romania is one of the very few countries with 0% withholding tax on dividends with Italy.

Also, the other plus of Romania is that there are no withholding taxes on dividends distributed to non residends so ideally he could move to [put tax free country here] and receive dividends completely tax free from Romanian holding.

At this point we optimized the taxation of dividends but there are ways to futher optimize CIT.

OP could save some taxes by working with a professional BUT the real next step of this strategy would be to take advantage of the SRL branch exemption.

It works like in the UK where income attributed to foreign branches are tax exempt.

Branches can fall within Italian CFC so the branch has to pay no less than 50% of Italian CIT.

Of course the foreign branch can't sell in Italy, all Italian sales will be taxed at Italian's CIT rate.

Bottom line he could save a lot

US customers => tax liability

You’re ETBUS only if two things are true: (i) you have at least one “dependent agent” in the US and (ii) that dependent agent does something substantial to further your business in the US (as opposed to only something administrative or ministerial).

source: Non-US Entrepreneurs: You Can Sell Products or Services into the US Without Paying US Tax – US Tax Services

 

[saponaire]

Do not overlook that US customers => tax liability in the USA (I do not understand well what do you mean by “double taxation” here).

Yes. Just my personal opinion: 26% tax on getting the profits I consider a standard governmental robbery that should be (legally) avoided.

Note that 26% is on the final gains whenever you want to distribute the $$ in the company, ideally you never do that and you take loans against it or you pay some deductions..


If you do your setup Marzio, you end up paying the 26% anyway in the form of dividend tax at the personal level. The issue is that italian corp tax is higher than romania, so by doing what I propose you only pay 26% ONCE at the end, if you EVER redistribute.

Example:
Setup a BVI co, pays 0 corp, distributes to IT SRL a total of 10M in 20 years, you can either reinvest them tax free or you distribute them to yourself at 26%.

In the other case, it will work like this:
Pay 24% on every income, then distribute to Romania not sure if romania pays corp tax on that. Then distribute to yourself at 26%. In this case you will pay more than 26% total.

In other words, you can't escape the 26% as long as you live in Italy, the only way is to defer the gain and to pay zero income (so zero corp tax) for as long as possible.

 

[koohl]

Relocate to a low tax country and where you can live your life, that would be your best option to avoid taxes.

 

[Marzio]

In other words, you can't escape the 26% as long as you live in Italy

I know, that's why i said "ideally he could move to [put tax free country here] and receive dividends completely tax free from Romanian holding"

My strategy assumed that he would pay himself a salary while waiting to move.

 

[Forester]

You’re ETBUS only if two things are true: (i) you have at least one “dependent agent” in the US and (ii) that dependent agent does something substantial to further your business in the US (as opposed to only something administrative or ministerial).

source: Non-US Entrepreneurs: You Can Sell Products or Services into the US Without Paying US Tax – US Tax Services

Well – yes. Sorry for misleading. I was too short. (My intention was to say that there can arise an obligation to pay US taxes – IMO relatively easily – and it needs to be carefully cared of.) The article you referred to explains it IMO nicely. Sorry, once more; and thanks for the instant correction.

 

[Marzio]

Setup a BVI co, pays 0 corp, distributes to IT SRL a total of 10M in 20 years, you can either reinvest them tax free or you distribute them to yourself at 26%.

Honestly don't know if you would be able to claim partecipation exemption for a BVI co.

Pay 24% on every income, then distribute to Romania not sure if romania pays corp tax on that. Then distribute to yourself at 26%. In this case you will pay more than 26% total.

Pay 24% then distribute everything to romania with 0% WHT on dividends because of participation exemption and furhter distribution from the Romanian holding to the natural person will 0% because Romania doesn't impose WHT on dividends on non resident persons.

 

[saponaire]

Sorry, BVI wont work with participation exemption, it must have a DTT with italy.

Romania might not impose, but the individual must pay 26% in Italy on any dividend they receive.

 

[Don]

Hi everyone, I'm new here but i lurked a little bit on the forum and searched for articles and news online to answer my question, but I've only got headhace. So I'm asking experts!
I'm an Italian resident citizen, I'm in the adult business. I'm about to create a premium dating website (as I worked as an employee for such type of business and I know how to run it) and than, if possible, an Onlyfans Management agency (as I know a lot of girls willing to start this business).
I want to avoid the mandatory taxes I have to pay for my State either if I earn or don't earn money, plus if I reach a determined amount of income, about half of the cake will go to the State.
How can I avoid all of this? If i open up a US LLC in Wyoming or Delaware and sell the adult dating website services in Italy will it be usefull? I would like to work remotely, I'm also interested to move to Albania, where life is cheaper and I have some friends to enjoy the best part of the country.
Can someone give me some advice? Or there isn't much to do in this case?

Sorry for my english, I know it isn't perfect but I hope you undertstand.

Albania can be a great place to run a smaller business, but it's not so great for personal tax residency.
Albanian law applies the principle of worldwide taxation, and dividends are not exempt from personal income tax (0-23%) + You also need to pay local income taxes.

Operating in Albania with a permanent establishment of an Estonian company can be a better choice if you move your tax residency to Estonia.
You don't need to stay present in Estonia to keep the tax residency, and it's much better than Albania for banking, but you can't stay more than 183 days in Albania in a calendar year in this case. Easy to get residence in Estonia for an EU citizen. No problem to get a visa or residency in Albania either.

The branch of your Estonian entity in Albania will pay 0% tax in Albania if the income doesn't exceed ~137k EUR (otherwise 15%). When you withdraw profits to Estonia, you will need to pay a 5% WHT tax. At the Estonian level, it will be free of tax.

You can also attribute some profits to the Estonian level, which will be 0% tax until distribution.

This can be a decent setup for the start.

Especially if you can consider your business under a category, which is exempt from CIT: Legal entities that conduct religious, humanitarian, charitable, scientific, or educational activities.

Isn't Onlyfans about the religion of pussy worship? Pussy worship is a type of nature worship. Its followers often ascribe to other pagan religions such as Wicca and Druidry. Should be tax-free?

People can practice pussy worship through a variety of forms including pussy gazing, vulva massage, sex toys, cunnilingus, intercourse, sex orgies, and creating or consuming art celebrating the pussy.