Looking for advice on offshore business creation

[Travers]

Hi all!

I am very new to this and not finding the information that I need in my search, so I figured I would try posting. I welcome any feedback and/or advice.

I have a short term rental business (LLC) that takes place on the Airbnb platform. Currently, I have 13 listings in the state of Tennessee and am having to pay nearly 50% taxes on my earnings. I am currently living in Indonesia and looking to find a way to minimize this amount.

I was wondering if it would be possible to form an offshore business/ bank account to have my Airbnb earnings deposited in to. From that account, I would transfer an money back to my TN based LLC to cover expenses, employee payroll, and a small amount of profit for myself (that would end up being taxed). The remainder of the profit would stay in the offshore bank account, hopefully un-taxed or at a low rate.

1. Does this seem like a viable solution?
2. Would this be likely to cause red flags for an audit?
3. What would be the best country for the formation of this type of business?
4. What would be the best country for the formation of a bank account for this?
5. Would the money need to stay in the offshore account or is there a way to get it back to a US account?
6. Does anyone have a consultant or company that you would recommend to assist with the formation of this?

Thanks so much for the help!

 

[James Turner]

As a resident of Indonesia there is nothing to stop you creating a none US business and charging your clients from this. As long as the Tennessee registered business receives some income from the activity of owning those properties and letting them out, this is fine. Operating in the way you have suggested works.

Tennessee is not known for it's strict tax regime and as long as you accurately declare tax due from the income received by the Tennessee business then you are doing nothing wrong, so you should not trigger an audit.

I am not familiar with local Indonesian tax law and depending upon our personal liabilities in Indonesia you could look at locations such as Belize, BVI, Seychelles, Hong Kong etc.

I am of the opinion that sending the funds to the US account would result in a tax on the gross amount received, so this would not be a good idea.

 

[countryfree]

I don't like it, and Airbnb won't like it either. I believe that income from Airbnb in one given country must be paid to a bank account in the same country. If it's not the case, assuming it's possible, it would raise a flag. More than that, property rentals isn't a good business to go offshore.
Besides, I'm surprised with your tax rate. 50%! That looks very high to me.

 

[fshore]

If the offshore company is renting out the US situated properties then the offshore company will probably be subject to US tax.
There might be other ways to reduce tax some. Talk to a US accounting.

 

[JohnLocke]

Aren't US citizens taxed on foreign income / worldwide? So regardless if you try to hide behind a "shelf" offshore company you are still liable for tax on all income this company may have?