Low/mid tax for legitimate digital business without using nominee director?

[deepspeculator]

I would like to incorporate company for digital business (selling videos, ebooks etc. - everything legal and content is "normal", no nudity or other high risk things). I am EU citizen and tax resident, although probably in 2022 I will move to Thailand and have my personal residence there.

My requirements:
1. I do not need super low taxes, e.g. I can tolerate up to 25-30% of taxes on profit of such company.

2. I don't want to use nominee director, as I just don't trust such services, as such person can legally wreak havoc in the business if they want. So this probably rules out Cyprus? Or maybe I could be that director of Cyprus company, but what would be the consequence of it, if I am living in different EU country? (if only slightly higher tax, than it's OK for me)

3. What I need, is the easy way to hire remote independent contractors to do various works - for example software engineering or graphic design or other such things, often performed by freelancers who don't have their own companies. As this is a problem in some jurisdictions, for example now I have a company (different business) where I cannot easily give freelancing job to private person - I would need to establish some social security for them, have a lot of their tax data and generally it's inpractical.

4. What I also need is some relatively easy access to banking and payment providers - to have normal bank accounts, not get banned by banks, and to be able to use normal credit/debit card processors with normal rates (e.g. 2% + 0.30 cent or something like this, not crazy payment providers for high risk businesses).

Any ideas? Maybe Cayman Islands or some Singapore setup with 0% tax?

 

[CyprusLaw]

I would like to incorporate company for digital business (selling videos, ebooks etc. - everything legal and content is "normal", no nudity or other high risk things). I am EU citizen and tax resident, although probably in 2022 I will move to Thailand and have my personal residence there.

My requirements:
1. I do not need super low taxes, e.g. I can tolerate up to 25-30% of taxes on profit of such company.

2. I don't want to use nominee director, as I just don't trust such services, as such person can legally wreak havoc in the business if they want. So this probably rules out Cyprus? Or maybe I could be that director of Cyprus company, but what would be the consequence of it, if I am living in different EU country? (if only slightly higher tax, than it's OK for me)

3. What I need, is the easy way to hire remote independent contractors to do various works - for example software engineering or graphic design or other such things, often performed by freelancers who don't have their own companies. As this is a problem in some jurisdictions, for example now I have a company (different business) where I cannot easily give freelancing job to private person - I would need to establish some social security for them, have a lot of their tax data and generally it's inpractical.

4. What I also need is some relatively easy access to banking and payment providers - to have normal bank accounts, not get banned by banks, and to be able to use normal credit/debit card processors with normal rates (e.g. 2% + 0.30 cent or something like this, not crazy payment providers for high risk businesses).

Any ideas? Maybe Cayman Islands or some Singapore setup with 0% tax?

You can use a Cyprus company and be a director - the main problem with this it may be deemed that the substance and control of company is the country where you are residing in and be taxed accordingly.

The nominees are mainly used to show substance and control in Cyprus, using a law firm as nominees safeguards you to a great extend from such issues. So it depends on the goal you want to achieve by using a Cyprus company for your business.

 

[deepspeculator]

You can use a Cyprus company and be a director - the main problem with this it may be deemed that the substance and control of company is the country where you are residing in and be taxed accordingly.

The nominees are mainly used to show substance and control in Cyprus, using a law firm as nominees safeguards you to a great extend from such issues. So it depends on the goal you want to achieve by using a Cyprus company for your business.

Thanks for the reply. Cyprus seems really nice for me, especially if I could fully understand the issue of me being this director (e.g. what are exactly the consequences). For example:

1. If I am the director of Cyprus company and living abroad and they decide that control of company is abroad, who will be taxing me additionally - Cyprus or my local country? If my local country than I would speak with my local accountant and lawyer to understand this. Because if this additional taxation is small, than it's perfectly fine for me.

2. If I would be such director of Cyprus company and living abroad, will there be issues with getting bank account or payment processing services (e.g. Stripe) for such Cyprus company?

3. Would me moving to Cyprus and living there (either getting that 60 day non-dom visa or full 183+ day residency) would be in any way helpful to solve these issues? As I can move freely, but would prefer to not have to stay 183+ days in Cyprus if possible - 60 day is fine.

 

[CyprusLaw]

Thanks for the reply. Cyprus seems really nice for me, especially if I could fully understand the issue of me being this director (e.g. what are exactly the consequences). For example:

1. If I am the director of Cyprus company and living abroad and they decide that control of company is abroad, who will be taxing me additionally - Cyprus or my local country? If my local country than I would speak with my local accountant and lawyer to understand this. Because if this additional taxation is small, than it's perfectly fine for me.

2. If I would be such director of Cyprus company and living abroad, will there be issues with getting bank account or payment processing services (e.g. Stripe) for such Cyprus company?

3. Would me moving to Cyprus and living there (either getting that 60 day non-dom visa or full 183+ day residency) would be in any way helpful to solve these issues? As I can move freely, but would prefer to not have to stay 183+ days in Cyprus if possible - 60 day is fine.

Can I PM you about this?

 

[deepspeculator]

Can I PM you about this?

Yes, please.

 

[sujoe]

Have you thought of using just a US LLC to achieve what your objectives?

 

[JustAnotherNomad]

It. Will. Not. Work. Period. Honestly what are you thinking?
The company will be deemed tax resident in your home country due to its place of effective management. You cannot save any taxes this way. You will only cause problems for yourself.
Pay your taxes, move to Thailand. Then after (!) you have moved, set up your company wherever you like.

 

[deepspeculator]

It. Will. Not. Work. Period. Honestly what are you thinking?
The company will be deemed tax resident in your home country due to its place of effective management. You cannot save any taxes this way. You will only cause problems for yourself.
Pay your taxes, move to Thailand. Then after (!) you have moved, set up your company wherever you like.

Thank you for your input, but you probably have not read this carefully, as I'm not looking to save on any taxes. Just need jurisdiction to satisfy requirements I stated at the first post.
I explicitly mentioned that I can tolerate taxes up to 30%, what's significantly higher than I have currently in home country, and significantly higher than most "offshore wannabes" want.

 

[Marzio]

Best setup for you would probably be a UK LLP with you as one partner resident in Thailand and a dormant UK LTD as the second partner.

This will give you access to Stripe and all the major EMIs.

Since the work will be performed by freelancers outside Thailand you will also be tax free.

 

[deepspeculator]

Best setup for you would probably be a UK LLP with you as one partner resident in Thailand and a dormant UK LTD as the second partner.

This will give you access to Stripe and all the major EMIs.

Since the work will be performed by freelancers outside Thailand you will also be tax free.

Thanks for the reply. Yes, I looked briefly at UK or Scottish LLPs, but the main problem for me is like you said: probably you will get banking only in EMIs, not real banks (when not having any real resident physically in the UK).

And for me this company will be important business if it succeeds, and I would really prefer to have real bank account and not be treated as "second category" company. Because today EMIs accept such UK LLPs, but who knows what happens tomorrow (and by the fact that they are declined from normal banking, we already see that they are treated as "second category"). EMIs are fast moving fintechs, so I can easily imagine that some AMLD5/6 arrives causing them bigger compliance burden and they drop all such non-resident LLPs. Maybe I worry too much, but maybe not.

 

[Marzio]

you will get banking only in EMIs, not real banks

That’s why you use a UK LTD as second partner. Having a UK resident company will greatly improve the chances of getting a real bank account.

 

[deepspeculator]

That’s why you use a UK LTD as second partner. Having a UK resident company will greatly improve the chances of getting a real bank account.

Interesting. And I assume this second partner is company controlled by someone else, who is resident in the UK, right? If that's the case, can it be arranged that this second partner is not able to do any harm to my company if they go rogue? In other words, does it not cause the same need to "trust someone" as nominee director used in other jurisdictions?

 

[BigUnicorn]

Where are you from and why you don't want to incorporate from the place you are from/live?

 

[Fulton Abraham Sanchez]

US LLC single member in Delaware is also an option. Profits are tax free.

 

[deepspeculator]

US LLC single member in Delaware is also an option. Profits are tax free.

Thanks. Yes, I wrote reply to the other person why I'd rather avoid incorporating in the US, but this message is waiting for moderator approval, as it contains a link So, I won't be repeating it here, but hopefully it gets approved soon.

 

[JustAnotherNomad]

US LLC single member in Delaware is also an option. Profits are tax free.

Wasn't this guy banned? He keeps giving out wrong information.

 

[JustAnotherNomad]

Thank you for your input, but you probably have not read this carefully, as I'm not looking to save on any taxes. Just need jurisdiction to satisfy requirements I stated at the first post.
I explicitly mentioned that I can tolerate taxes up to 30%, what's significantly higher than I have currently in home country, and significantly higher than most "offshore wannabes" want.

Sorry, somehow I missed that. I thought you wanted to save taxes, but that you were willing to pay some tax.

I don't think you will be able to legally do any of this, though. There will be a permanent establishment in your country of residence, and that will most likely also be subject to local labor/social security laws. If you want to be sure, you should ask a labor law attorney in your home country. Don't just assume that you can circumvent your country's laws by registering the company in another country.
Since you're planning to move to Thailand anyway, forget about setting up anything before that, at least if you live in a country with exit tax. It will only get messy.
Just do it by the book for these few months, then move to Thailand, then do whatever you want.
If you are worried about social security, try to find an umbrella company that will hire those freelancers for you.

 

[Fulton Abraham Sanchez]

Wasn't this guy banned? He keeps giving out wrong information.

I am back! Thanks for noticing. If the owner of the LLC is foreign and the income of the company is not US sourced, profits are free for LLC single member. Fulton CPA.

 

[JustAnotherNomad]

Profits are not tax free, which you should know if you were a CPA. They are just not taxed in the US.
By the way, this is the opposite of the wrong information you were giving out before, where you were claiming everyone had to pay taxes in the US if they have a US bank account.

 

[Fulton Abraham Sanchez]

Profits are not tax free, which you should know if you were a CPA. They are just not taxed in the US.
By the way, this is the opposite of the wrong information you were giving out before, where you were claiming everyone had to pay taxes in the US if they have a US bank account.

Right. Tax free in the USA. If the source of income is within the USA yes, they have to pay taxes.