Not sure what to do - Taxes, Payment Processing, Offshore

[Scorpy]

Her everyone. So here is my situation, maybe I can get some advice.

I live in one of the Balkan countries. I've been working online for the past 7 years, selling digital products and services. I'm a one-man show. I have a couple of websites. Last year and the year before I had my best years, with a net profit of about $45,000/year. I know it's not a lot, but for my country standards it's pretty good.

The two problems I face is that it's hard to scale a business when all you have to work with is gaypal and Payoneer and Transferwise etc. There are payment processors I can't use from my country. And it's especially hard when your main source of income comes from a business that's considered high risk. It's not crypto, it's social media related. And being from the country I'm in, I can't even apply to most high-risk payment processors, who only accept US/EU companies.

And then of course there's also taxes to consider. Working as an individual in my country I would have to pay 45% tax. There's another method of taxation which I can't use because my business falls under "marketing." And the other method of taxation is starting a company, hiring myself in the company, paying myself a salary and benefits (health/pension) on that salary, paying an accountant monthly (obligatory), paying 10-15% tax on the money my company earns, probably paying even more if I want to transfer the money to myself, having to keep books, having to collect bills to reduce my taxes (but I'm a saver, I don't spend money), having to convert all the money (USD/EUR) I earn into the local currency (it's obligatory, and I would lose money on the conversion rates), and having to live in fear of this "independence test" the government put in about a year ago. It's hell!

And when it's all said and done with the taxes, and I have the company locally, I still don't have access to all those payment processors that I would perhaps like to use at some point.

---

So I'm considering an offshore solution, with 0% taxes and no bookkeeping and no audits and no accountant needed on a monthly basis.

I would want to do it legally, so I would pay the taxes in my country. I'm not sure how that would work to be honest. Do I pay taxes in my country for the money my offshore company earned, or only for the money I transfer to myself from my offshore company? If I understand correctly, my country taxes its slaves... I mean citizens on their worldwide income. But at the end of the day, even if it would cost me 15%, at least the offshore company would give me peace of mind in terms of bookkeeping and audits, and it would open doors for me in terms of payment processors I can use.

I've been reading about offshore, and one of the issues is getting a bank account. Frankly, I don't really see a big problem with this, as I could just use Transferwise and/or Payoneer etc. If it's transferwise and I move the money to my personal bank account in my country, there's nothing wrong, I already paid taxes on that. And if it's Payoneer, the same deal, plus they have a debit card they issue so I could spend/withdraw money from the ATMs.

All the stuff about offshore companies in 0% tax countries having a bad "reputation" doesn't really interest me. My clients don't care, and I'm not looking for bank accounts. I'm not starting Facebook here. If it was up to me I wouldn't even start a company, I find it quite ridiculous actually. I only want to start one to be able to use payment processors. I mean, because of my situation I actually have customers who pay me for one service, and I deliver something else for them. I hate doing it, but sometimes I have to "mask" what I sell in order to stay under the radar on gaypal and other payment processors I use. I HATE IT! This is why I want to get myself a high-risk payment processor or two, pay them the higher fees, and then do my business openly and with peace of mind.

Anyway, sorry for the long post. I hope I can get some advice here on how to proceed. Thanks.

 

[Fred]

Her everyone. So here is my situation, maybe I can get some advice.

I live in one of the Balkan countries. I've been working online for the past 7 years, selling digital products and services. I'm a one-man show. I have a couple of websites. Last year and the year before I had my best years, with a net profit of about $45,000/year. I know it's not a lot, but for my country standards it's pretty good.

The two problems I face is that it's hard to scale a business when all you have to work with is gaypal and Payoneer and Transferwise etc. There are payment processors I can't use from my country. And it's especially hard when your main source of income comes from a business that's considered high risk. It's not crypto, it's social media related. And being from the country I'm in, I can't even apply to most high-risk payment processors, who only accept US/EU companies.

And then of course there's also taxes to consider. Working as an individual in my country I would have to pay 45% tax. There's another method of taxation which I can't use because my business falls under "marketing." And the other method of taxation is starting a company, hiring myself in the company, paying myself a salary and benefits (health/pension) on that salary, paying an accountant monthly (obligatory), paying 10-15% tax on the money my company earns, probably paying even more if I want to transfer the money to myself, having to keep books, having to collect bills to reduce my taxes (but I'm a saver, I don't spend money), having to convert all the money (USD/EUR) I earn into the local currency (it's obligatory, and I would lose money on the conversion rates), and having to live in fear of this "independence test" the government put in about a year ago. It's hell!

And when it's all said and done with the taxes, and I have the company locally, I still don't have access to all those payment processors that I would perhaps like to use at some point.

---

So I'm considering an offshore solution, with 0% taxes and no bookkeeping and no audits and no accountant needed on a monthly basis.

I would want to do it legally, so I would pay the taxes in my country. I'm not sure how that would work to be honest. Do I pay taxes in my country for the money my offshore company earned, or only for the money I transfer to myself from my offshore company? If I understand correctly, my country taxes its slaves... I mean citizens on their worldwide income. But at the end of the day, even if it would cost me 15%, at least the offshore company would give me peace of mind in terms of bookkeeping and audits, and it would open doors for me in terms of payment processors I can use.

I've been reading about offshore, and one of the issues is getting a bank account. Frankly, I don't really see a big problem with this, as I could just use Transferwise and/or Payoneer etc. If it's transferwise and I move the money to my personal bank account in my country, there's nothing wrong, I already paid taxes on that. And if it's Payoneer, the same deal, plus they have a debit card they issue so I could spend/withdraw money from the ATMs.

All the stuff about offshore companies in 0% tax countries having a bad "reputation" doesn't really interest me. My clients don't care, and I'm not looking for bank accounts. I'm not starting Facebook here. If it was up to me I wouldn't even start a company, I find it quite ridiculous actually. I only want to start one to be able to use payment processors. I mean, because of my situation I actually have customers who pay me for one service, and I deliver something else for them. I hate doing it, but sometimes I have to "mask" what I sell in order to stay under the radar on gaypal and other payment processors I use. I HATE IT! This is why I want to get myself a high-risk payment processor or two, pay them the higher fees, and then do my business openly and with peace of mind.

Anyway, sorry for the long post. I hope I can get some advice here on how to proceed. Thanks.

Regarding your first point. You see you already struggle with merchant processors in your home country you was born and raised up I assume and is your country of citizenship.

If you now want to move offshore believe me especially with paypal things will get even harder.

For the second part you mentioned the UAE is your only bet to even have a chance to get accepted by merchants because you can have local company with residence and local bank account. But even then you have only good connection to normal merchants - PayPal doesn't work good.

You can combine the local UAE company with a UK LLP to get stripe for example. The UK LLP requires two partners - one partner is you - the other partner is your UAE company. The UK LLP is tax neutral - you have a zero tax residence with zero tax company.

Payoneer and Transferwise will work for the LLP - for the UAE company you go with a local bank account you can accumulate wealth and invest in stocks and so on.

May I ask you if you are from Serbia? That's pretty important to consider.

I know this isn't a serious looking advice I'm only a man of the practice - it can be the case you need to work with Photoshop to get Stripe and PayPal work. That's what we see from all the Dropshippers we incorporated companies for.

Forget about caribbean companies if you require merchants. Forget about eu tax heavens if require merchants and zero tax. The big tech companies like PayPal makes the rules and you have to play after that. That's the sad truth.

 

[Scorpy]

Regarding your first point. You see you already struggle with merchant processors in your home country you was born and raised up I assume and is your country of citizenship.

If you now want to move offshore believe me especially with paypal things will get even harder.

For the second part you mentioned the UAE is your only bet to even have a chance to get accepted by merchants because you can have local company with residence and local bank account. But even then you have only good connection to normal merchants - PayPal doesn't work good.

You can combine the local UAE company with a UK LLP to get stripe for example. The UK LLP requires two partners - one partner is you - the other partner is your UAE company. The UK LLP is tax neutral - you have a zero tax residence with zero tax company.

Payoneer and Transferwise will work for the LLP - for the UAE company you go with a local bank account you can accumulate wealth and invest in stocks and so on.

May I ask you if you are from Serbia? That's pretty important to consider.

I know this isn't a serious looking advice I'm only a man of the practice - it can be the case you need to work with Photoshop to get Stripe and PayPal work. That's what we see from all the Dropshippers we incorporated companies for.

Forget about caribbean companies if you require merchants. Forget about eu tax heavens if require merchants and zero tax. The big tech companies like PayPal makes the rules and you to play after that. That's the sad truth.

I don't want to move offshore for gaypal. In fact, I want to stop using gaypal completely, I absolutely hate that company. Plus they don't allow me to sell what I mostly sell, as it's considered high risk. Same goes for Stripe. Frankly, gaypal and stripe and all such companies are not what I would consider serious. You can't rely on them, they're out to fu*k you over.

About merchants, I'm not really looking to get a merchant account from a bank, I was thinking more along the lines of companies like CCAvenue, Safecharge, Instapage, Paymentwall, Cardinity, etc etc.

Yeah I know about the UAE, and it's attractive, but having and maintaining a company there would be quite costly, right? I don't wanna have to go where my company is at for even a day, I would rather not have to. I also don't want to be a digital nomad, or move to a different country. I want an offshore company with no tax and no headache, I want to pay taxes in my country, and I want to be able to apply for payment processors that accept high-risk businesses - I would imagine if a payment processor accepts high-risk businesses, they won't mind if my company is in a "tax haven", though I could be wrong.

Wouldn't Transferwise/Payoneer work for Ecuador/Belize/Panama/Seychelles/whatever it may be?

Yes, I am from that country.

No, see, I don't wanna work with photoshop, I don't wanna mask what I sell, I don't wanna have dummy sites to process payments for fake services. I want a high-risk payment processor who will rape me on the fees and rolling reserve, who will know what I sell and allow me to sell it, and though who I can accept debit/credit card payments, maybe even bank transfers.

I've been in business for years already, so I know my chargeback rate is way way way below 1%. It's almost non-existant. I am VERY hands-on in my business, so I almost never get chargebacks. Even the rare unhappy customer or someone who made the wrong purchase I can often convince to not get a chargeback/refund by offering them a massive freebie or something. I got it down.

Though I guess for the high risk payment processors I'd have to go with a EU or US company, otherwise I'd be limited as half of the ones I looked into seem to only accept US/EU (or only one or the other) companies.

I wish everyone just switched to crypto, push out the banks and credit card companies and merchants and payment processors, and we could all have a nice day

 

[Fred]

The first part - got it.

The second part - then UAE is fine for your merchant requirements.

Regarding your digital nomad lifestyle - does it work when it comes to banks? Clear no.

The only solution you have for this right now is to setup UAE company with residence and get a business bank account. You have to be in UAE 24 hours all 180 days. That's the minimum possible in 2021.

Do you really want consider Payoneer and Transferwise your savings account?

If you are from Serbia you may have already figured out that 99% of the emis reject you - even banks is difficult. The both already mentioned are the only ones that work for you.

Now what you want to do is this few options you have test with offshore companies from let's say Seychelles? If you apply with a Seychelles company for Transferwise and they reject you - they will shut down all your Accounts you have with them.

For the profits you make and the business you conduct I can't see why UAE shouldn't be affordable for you.

We get this worked out for you here because as already said you will get the residence. We even had get this done for people from Iran and Iraq.

To be honest and please don't take this as a offense - with your citizenship you shouldn't do make to many experiments or you will burn Transferwise like mentioned aboth.

A old school mate of myself have Serbian Citizenship too and permanent residence in one of the best developed EU countries. Even their are some local banks that don't open account for him.

 

[Scorpy]

The first part - got it.

The second part - then UAE is fine for your merchant requirements.

Regarding your digital nomad lifestyle - does it work when it comes to banks? Clear no.

The only solution you have for this right now is to setup UAE company with residence and get a business bank account. You have to be in UAE 24 hours all 180 days. That's the minimum possible in 2021.

Do you really want consider Payoneer and Transferwise your savings account?

If you are from Serbia you may have already figured out that 99% of the emis reject you - even banks is difficult. The both already mentioned are the only ones that work for you.

Now what you want to do is this few options you have test with offshore companies from let's say Seychelles? If you apply with a Seychelles company for Transferwise and they reject you - they will shut down all your Accounts you have with them.

For the profits you make and the business you conduct I can't see why UAE shouldn't be affordable for you.

We get this worked out for you here because as already said you will get the residence. We even had get this done for people from Iran and Iraq.

To be honest and please don't take this as a offense - with your citizenship you shouldn't do make to many experiments or you will burn Transferwise like mentioned aboth.

A old school mate of myself have Serbian Citizenship too and permanent residence in one of the best developed EU countries. Even their are some local banks that don't open account for him.

I understand what you're saying about the EMIs. Definitely something to be careful with.

Yeah but I don't wanna have to go somewhere twice a year just because. And it's not like I can get in my car and go to the UAE with a 3 hour drive. It's airplanes and hassle. I'm not a nomad, I don't like moving because I have to. I only move if I want to. I mean, literally, I could be making this money and never even have to get out of bed. If I actually have to get out of bed to make money, I might as well not make it, I'm not for sale! I get out of bed if I want to get out of bed, not because I have to get out of bed

So the cost and the requirement to visit twice a year makes the UAE not a very attractive option for me. But just out of curiosity, what would be the total cost to set up a UAE company? Just give me a ballpark figure, if possible. No need to go into details.

 

[Gediminas]

what would be the total cost to set up a UAE company? Just give me a ballpark figure, if possible. No need to go into details.

For a 45k/year net profit, the UAE option will be too costly for you

 

[Fred]

Got your point. It all depends on what type you are.

We have some clients from Serbia they use to make holidays two times a year here for a weekend. They told me they fly from Belgrad to Dubai with flyDubai for 300 bucks.

One time setup cost is below 7.000 EUR
Yearly running costs about 4.000 EUR

That's all no hidden fees for bookkeeping or anything else.

Please keep in mind we work only with Dubai companies.

 

[Scorpy]

For a 45k/year net profit, the UAE option will be too costly for you

There we go, I thought as much. I also don't really want to have to go anywhere twice a year

So then, what's my best option?

 

[Gediminas]

So then, what's my best option?

Tell me more about the products and services you sell. How old is your processing history? Do you have many chargebacks?

Case by case I could help to get processing for any jurisdiction (including Seychelles, BVI, etc), so there could be a cheaper alternative for you.

I would also want to see your website. You can send the answers by email or to PM if you wish.

 

[Scorpy]

Got your point. It all depends on what type you are.

We have some clients from Serbia they use to make holidays two times a year here for a weekend. They told me they fly from Belgrad to Dubai with flyDubai for 300 bucks.

One time setup cost is below 7.000 EUR
Yearly running costs about 4.000 EUR

That's all no hidden fees for bookkeeping or anything else.

Please keep in mind we work only with Dubai companies.

Yeah, that's too expensive for me.

I don't care for travelling. Like I said in my opening post, I'm a saver. I save money. Traveling costs money. I don't care for traveling and nice memories, I care for food. But not like, I'm quite underweight, because I never eat. I just like to know that I have fat stacks of money (cash and digital) to buy food when hungry, or to pay a doctor to put me back together when I get hit by a bus. That's what I like

 

[Gediminas]

Like I said in my opening post, I'm a saver. I save money. Traveling costs money.

If you won't change your tax residency, you won't lower your tax burden (unless you are paying too much as of now). You have to be aware of that. So in some cases, traveling and related expenses could be lower than your current tax rate.

 

[Scorpy]

Tell me more about the products and services you sell. How old is your processing history? Do you have many chargebacks?

Case by case I could help to get processing for any jurisdiction (including Seychelles, BVI, etc), so there could be a cheaper alternative for you.

I would also want to see your website. You can send the answers by email or to PM if you wish.

Well, it's mostly social media services. I also have a site where I sell some ebooks, some automation scripts, some graphics. But that's all baby stuff. Over 95% of my income is from social media services. I sell to customers worldwide, but mostly USA to be honest. Not because I target any specific location when I promote, it just happens that most of my customers are from the US.

I almost never get any chargebacks. Way below 1%.

Well, what's a processing history? Would that be 5 suspended paypal accounts, and payoneer, and transferwise, and perfectmoney, and 2checkout, and coinpayments, and a private bitcoin wallet, and skrill, and neteller, and webmoney? I mean, I guess I can get all of my processing history going back 5 years, every single invoice if need be. But that would be a Massive task, thousands and thousands and thousands of payments (just those $1.99 payments on gaypal would make the amount of invoices enormous). Many of the invoices are specific and describe exactly what I sold, but then many are vague or completely false (not becuase I wanted to be vague or false, but because I had to in order to keep doing business). But of course I also have larger payments of a few hundred $ each, up to $1,000 max.

I have 6 websites. Sure I'll send you the info, but I don't see a way to contact you via email or via private message. I'm new to the forum, so not sure how it all works. How can I get get in touch?

 

[Gediminas]

How can I get get in touch?

I'll pm you.

 

[Scorpy]

If you won't change your tax residency, you won't lower your tax burden (unless you are paying too much as of now). You have to be aware of that. So in some cases, traveling and related expenses could be lower than your current tax rate.

Yeah, I'm aware of that. Of course, I could be a bit of a bad boy and keep some of my income tax-free, you know, by way of crypto and whatnot

But I'm not really looking to reduce tax. That's why I want a 0% tax solution, so that I don't actually add to the tax I already pay, you know. Although I guess if my country has a double tax treaty with a country, and I pay 5% there and 15% in my country, maybe I can end up paying 5% there and 10% here and be legit like that. Not sure how that all works to be honest.

What I am looking for is a way to not have to do heavy reporting and audits and all that crap, and to be able to apply for payment processors that accept high-risk businesses. That's pretty much it.