Looking for some advice on either countries or consulting firms.

[xageyi9050]

I am residing in and have the citizenship of Estonia. I am fine with the dividend tax in Estonia but sadly the VAT kills my business model. The business model is related to the sale of virtual goods.

I am looking for a country with no VAT tax and then either no income tax or low income tax with some sort of tax treaty preventing me from being taxed twice if I wanted to get the money to Estonia.
Having an US bank account would be beneficial for me so I am wondering if an US state with low taxes like Wyoming may be a good choice but I don't quite understand the tax treaty between the US and Estonia so I'm not sure what kind of tax I'd end up paying if I did that.

All suggestions are welcome. Thank you!

 

[Sols]

Raise your prices.

If you can afford to set up a US company and move yourself and your team to the US (as would be required for the company to not have the company be tax resident in Estonia/EU), I would imagine your margins are high enough to start charging VAT. Otherwise, your company just remains a company in Estonia by virtue of being operated/managed/controlled from Estonia.

Although in some cases, operating outside of the EU doesn't absolve you of VAT on sales to EU customers.

So just raise your prices, or find another way to increase your margins.

 

[xageyi9050]

Sadly raising price isn't and option, the margins are really slim and the competition is tough.

So my only option to not need to pay VAT would be to physically move to a country that doesn't charge VAT and just creating a company wouldn't be enough, correct?

 

[JustAnotherNomad]

No. You can’t legally avoid VAT. The only option would be to move the company somewhere where they can’t get to you easily.
I think many Hong Kong companies don’t charge VAT, although they legally have to?

 

[Sols]

So my only option to not need to pay VAT would be to physically move to a country that doesn't charge VAT and just creating a company wouldn't be enough, correct?

You might want to read up on VoES (VAT on Electronic Services). Here's a starter: Electronically supplied services - Taxation and Customs Union - European Commission

 

[Estek]

I am residing in and have the citizenship of Estonia. I am fine with the dividend tax in Estonia but sadly the VAT kills my business model. The business model is related to the sale of virtual goods.

I am looking for a country with no VAT tax and then either no income tax or low income tax with some sort of tax treaty preventing me from being taxed twice if I wanted to get the money to Estonia.
Having an US bank account would be beneficial for me so I am wondering if an US state with low taxes like Wyoming may be a good choice but I don't quite understand the tax treaty between the US and Estonia so I'm not sure what kind of tax I'd end up paying if I did that.

All suggestions are welcome. Thank you!

Hi.
I am also from Estonia and pretty new to offshore business.
Why don’t you want to establish a branch of your Estonian company in let’s say Gibraltar and use it as agent? There is no VAT and it’s EU. Or am I missing something?

 

[JustAnotherNomad]

Estonia already has a great system. Set up a company in Cyprus or Ireland or Malta (not sure if it works with Malta), then pay yourself dividends from that company. You pay no tax in Estonia if you can avoid permanent establishment in Estonia. I wouldn’t bother with any other setup, unless you want to move somewhere else.

 

[onemansomewhere]

If you are selling a virtual good to EU customers, you do not need any new company anywhere else.

If you incorporate a company outside of EU, and selling to EU customers, without any change in a structure of your products, you will be liable to register for VAT in any EU country and you will still have to pay VAT.

The secret is not in the country of incorporation. The secret is in a formal structure of how you sell a virtual goods.