Liechtenstein vs Switzerland incorporation for a crypto-related company

[hlepic211]

Seeking advice...

Ok so we have:
2 EU nationals ( to be exact - 1 EU national and 1 Alien's passport holder with permanent residence in the EU Estonian alien's passport - Wikipedia) looking to form a company to manage crypto assets + relocate our software development services to 1 company, either Liechtenstein or Switzerland. We also have potential Swiss national who can be the company director which is mandatory to have for this setup.

The goals are:
- to move this business from our home country (personal reasons)
- incorporate somewhere where there are crypto-friendly banks around
- potential tax residence change (home country->switzerland residence)

Questions:

1) When forming a company there needs to be a local director, but can a Swiss resident act as a director in the Liechtenstein company or they strictly limit that to Liechtenstein residents?
2) Is it possible for both to apply for the "B" residence permit after forming a Swiss company and physically arriving to Switzerland? The "alien's" passport holder does not need any visas for entry 90/180 based on his permanent EU residentship, but what about the "B" permit application, will he be treated as a EU/EEA national as well? Does anyone know?
3) Do we need to be employed in our own Swiss company as software developers for example (beside being shareholders) and pay salaries, have a work contract before we apply for the residence? How would the process look like, maybe someone has already taken this route and can suggest something.
4) Liecthenstein is preferred because of the low corp tax and no witholding taxes but how better it is if we compare it to Zug incorporation for example? The reason to choose Switzerland VS Liechtenstein for now is only for the residence, because as I understand even if you run a 8 figure business there's still a big queue and small quota for the LI residence permits.
5) Maybe there are better options than CH and LI in the EU?

 

[Allisgood]

2) (…) The "alien's" passport holder does not need any visas for entry 90/180 based on his permanent EU residentship, but what about the "B" permit application, will he be treated as a EU/EEA national as well? Does anyone know?

You already linked the answer to 2) in your own Wikipedia link:
Aliens passport holders are stateless and not Estonian citizens.

“The vast majority of nations which provide visa-free entry to Estonian citizens with an Estonian passport do not allow visa-free entry to holders of the Estonian alien's passport, who are not Estonian citizens.

Unlike Estonian citizens, holders of an Estonian alien's passport do not enjoy the Freedom of movement within the EU and the Schengen area. They are only allowed to stay in other Schengen area countries for up to 90 days in a 6-month period.

Moreover, holders of an Estonian alien's passport cannot legally work in other EU countries without a work permit.”

I think Alien passport holders must have some way to become Estonian citizens (proving language requirements ect) - but it would probably be a long process.

 

[GPT]

1,2,3 = yes.
4. I understand you look at taxes. What I would personally look at is to see if you even get a bankaccount in one of the two countries. For a fact I can say that it’s very very difficult. Only companies I currently see opening accounts are the ones which bring solid money to Switzerland. I don’t have hands on info on Liechtenstein.
5. I can’t give an answer to that.

 

[EliasIT]

What about to look into Switzerland as many crypto exchanges already have done? Inside mentor group gold I saw a similar thread to this one where Zug was suggested.

I know @Martin Everson is against Switzerland as a relocation stop but still many with money and into crypto are doing it.

 

[GPT]

What about to look into Switzerland as many crypto exchanges already have done? Inside mentor group gold I saw a similar thread to this one where Zug was suggested.

I know @Martin Everson is against Switzerland as a relocation stop but still many with money and into crypto are doing it.

In a different thread I explained why Switzerland for crypto isn’t a good idea. Bottom line; yes incorporation won’t be the biggest problem. Opening of a bank a point however.. I wouldn’t bet on it anymore.

 

[JackAlabama]

In a different thread I explained why Switzerland for crypto isn’t a good idea. Bottom line; yes incorporation won’t be the biggest problem. Opening of a bank a point however.. I wouldn’t bet on it anymore.

Agreed. Especially if you are still somehow active and do more than staring at your ideally 8digit wealth the whole day while not touching it and letting the bank charge you obscene fees for managing your wealth with their super innovative hyper growth products which in reality gets you a mediocre %o in returns after subtracting all fees and negative interest rate charges.

 

[Martin Everson]

I know @Martin Everson is against Switzerland as a relocation stop but still many with money and into crypto are doing it.

Yes I am. A lot of uninformed people moved crypto business to Zug and ended up banking business outside Switzerland or moving business out. Access to stable crypto banking has to drive the decision making process and not the myth that Zug is some crypto mecca. Swiss residency is not even worth it tax wise as personal taxes are high. No capital gains tax maybe interesting but they easily label people professional investors negating that. There are way lower tax EU countries out there with less pedantic white glove Swiss tax officers who take no prisoners.

Zug is not even a nice place to live. I lived there once upon a time. Its horrible to drive to and dead end. Vaduz is even worse.

If you move business to LI then you got bank Frick for crypto and in CH you got Seba bank. Both are basically automatic rejection machines unless you can prove to them that they can rape you for fees and margin.

 

[4br]

5) Maybe there are better options than CH and LI in the EU?

I know you are asking for EU, but from what I am seeing UAE will be a better option for everything you have asked for, other than location.

The DMCC freezone has a crypto centre (Grow Your Business with our Crypto Centre | DMCC), which is affiliated with Crypto Valley. As I remember it Crypto Valley (CV) has three hubs: Dubai, Vaduz + Zug. I have been on some of their webinars and the CV boys are more bullish on Dubai, as Dubai is going out of its way to make crypto startups viable. The downisde is they are still working on the latter, but that is the same anywhere. UAE should be very crypto friendly. If you look at the country's ten year economic strategy it more or less begins with the words - crypto, blockchain. They have engaged with a bank to provide banking services to crypto companies (Commercial Bank of Dubai to provide crypto businesses in DMCC with banking services - UNLOCK Blockchain).

Otherwise you will be looking at EMI and specialist processors. It doesn't seem many exchanges have direct bank accounts, unless they have their own bank (as Nuri does).

Benefits of UAE -
- no questions asked when creating your company
- no questions asked when getting a visa
- most people will be able to get a visa
- government is becoming very active in enabling crypto business, as they have with other industries before it
- no tax, unless you are selling locally, in which case there is 5% VAT


In one of DMCC's crypto webinars the CEO said this:

"Cryptо is here to stay... Some parts of the world don't want to have anything to do with it. And other parts of the world cannot survive without it... What is most attractive to me is it is a better alternative (in my opinion) to the IMF and World Bank... There is a lot of convicted felons, convicted banks involved in that industry [legacy banking], while crypto is just pure..."

https://nitter.ca/dmcccrypto

 

[AMD]

If you move business to LI then you got bank Frick for crypto and in CH you got Seba bank. Both are basically automatic rejection machines unless you can prove to them that they can rape you for fees and margin.

That's an interesting business model

I know you are asking for EU, but from what I am seeing UAE will be a better option for everything you have asked for, other than location.

But that's still a Islamic place with lot's of rules of what you can do and can't do. You even get in prison for just pissing on the street if you are drunk.

I know Dubai has a lot to offer, but for a western European I believe it is a hell of a kind of a change.

 

[spacely]

looking to form a company to manage crypto assets

could you please elaborate on that? Meaning you would like to run a crypto investment fund? If yes, what are your expected turnovers? There might be better solutions considering your partner's alien passport even in Estonia in the terms of licensing.

I know you are asking for EU, but from what I am seeing UAE will be a better option for everything you have asked for, other than location.

There are a lot of overly complimentary words about UAE almost in every thread there is a person who can fix all the problems by moving to UAE or by having a company there.
In practice, how many crypto projects do you know from UAE? I do not know much to be honest

We spoke with an official of DIFC (Dubai International Financial Center) - banks, funds, insurance companies, etc are operating in this zone and they said that there are no licenses for crypto at the moment. Some news and changes may appear not earlier than 2-3 months
Now, neither exchanges nor funds can legally work with crypto in UAE. Licenses are given only to crypto-related tech companies. There might be some workarounds for sure but still, it will not be official.

DMCC opened a crypto center and it has been quiet since then, most likely they are preparing something at the moment - I don't know

 

[maxmoney]

In practice, how many crypto projects do you know from UAE? I do not know much to be honest

you are totally right, wonder what crypto firms are situated in UAE / DUBAI??

 

[4br]

There are a lot of overly complimentary words about UAE almost in every thread there is a person who can fix all the problems by moving to UAE or by having a company there.
In practice, how many crypto projects do you know from UAE? I do not know much to be honest

We spoke with an official of DIFC (Dubai International Financial Center) - banks, funds, insurance companies, etc are operating in this zone and they said that there are no licenses for crypto at the moment. Some news and changes may appear not earlier than 2-3 months
Now, neither exchanges nor funds can legally work with crypto in UAE. Licenses are given only to crypto-related tech companies. There might be some workarounds for sure but still, it will not be official.

DMCC opened a crypto center and it has been quiet since then, most likely they are preparing something at the moment - I don't know

Yes. It's in the works. DMCC has crypto licences, and as posted above they have agreed with CBD to offer bank accounts for crypto companies in the Crypto Center.

BitOasis used to require AED deposits to be sent to Switzerland. But 2-3 weeks ago they began accepting local AED with Ajman Bank. I've not seen any other crypto firms with direct bank deposits (they use specialist EMIs).

Yes there aren't any good projects for Dubai yet. Hopefully that will change for the next bull market.

The CryptoValley directory lists 500 crypto-related projects/companies in UAE - CryptoValley Swiss Blockchain Ecosystem

 

[369]

Dubai denied licenses to nearly everyone over the last 5 years.I know at least 3 projects which tried VERY hard to receive a license in dubai.All rejected.

 

[hlepic211]

Thank for the inputs. Was only thinking about the Swiss setup in terms of taxation. Also I heard that there are options with a fund/trust and 0% corp income then but yes that would be a company under a microscope from the local taxmen.

Currently thinking about applying for citizenship (I still have some options with the EU citizenship, we'll see where this goes). Will know only on a year.

In regards to banking - Bank Frick is the only viable option I found, I do bank there currently and have to say that you have to have a good story + all the papers should be legit and in order, then you can bank there without any problems. Fees are high but believe me 5 EUR for a SEPA transfer vs constant account blocking by other banks is nothing. I would recommend them 100% if you have 500k+ EUR for the initial deposit which comes from a legit source. Start by applying for a personal account, show them your legitimacy and try to apply with your business. They do pretty strict due diligence but every question they ask is on point.

So for the Swiss/Liechtenstein company I would definitely choose them + SEBA maybe, but I had no experience since they only offer services for CH, LI, DE and AT companies.

Estonia is OK tax wise but believe me you don't want to keep 7+figures here, no bank would open an account for you + the only EMI left is Paysera but don't even try to tie your transfers with crypto they'll block you instantly and good luck afterwards dealing with their incompetent customer service. LHV Bank can be the option but you have to contact their compliance department directly and negotiate + again they would need legit docs and a good story to open an account for you. Be prepared that if you deal with 7 figuers+ the tax authorities will constantly send you questions. Not a safe place for such capital, maybe will be in the not near future.

And not every business needs a crypto license, if you're doing smart contract audit for other crypto companies for any public bank it's the same if you're dealing with crypto now - they don't care and if there is something suspicious they just politely (or sometimes not politely) close your account.

From what I found Switzerland and Liechtenstein seemed OK but now I'm not sure.

Oh btw UAE doesn't recognize Alien passports So I can't even enter the country lol.

Now I'm thinking maybe this route is an option -> Try to get EU citizenship within a year (or without if no luck), then Portugal NHR, then Singapore company and account at Bank Frick (assuming they'll accept the application based on our current relationship) + some local SG banks and enjoy 0% corp tax 0% dividend tax.

Would love to hear more thoughts, thanks

 

[Allisgood]

Don’t most Estonian Alien passport holders have Russian ancestors/heritage ? Could you get Russian citizenship then and go to UAE with that ?

 

[Don]

Would you consider other options besides Switzerland and Lichtenstein?

 

[hlepic211]

Does anyone know if a Portgual NHR+Singapore setup works?

 

[Don]

Does anyone know if a Portgual NHR+Singapore setup works?

It's good if you don't actively manage or be involved with your company since NHR is for passive income.

 

[JackAlabama]

Don’t most Estonian Alien passport holders have Russian ancestors/heritage ? Could you get Russian citizenship then and go to UAE with that ?

With Russian citizenship he can also go to Switzerland which caters to those with somewhat deeper pockets throwing some nice tax deals in the mix.

Otherwise, getting a carribean passport and solve that tricky situation with "alien passport".

 

[GPT]

With Russian citizenship he can also go to Switzerland which caters to those with somewhat deeper pockets throwing some nice tax deals in the mix.

Otherwise, getting a carribean passport and solve that tricky situation with "alien passport".

Not just deeper pockets for switzerland. Many banks here have changed their threshold. You need to bring 25 million before they even want to speak to you.