Offshore company or bank account for my business - selling virtual goods from Europe

[Odda1969]

I am looking for a way to start a offshore company or bank account for my business. I sell IPTV subscriptions from Norway. I sell to Norway, Finland and Danmark. TAX in Norway is 22%, I want to find a way where I do not have to pay this much in TAX. Also, it must be impossible for the government in my country to track my earnings.

What is the best way?

 

[Sols]

You're many, many years too late. There's no practical, feasible way to do this anymore. Secrecy is if not dead then on its very dying breath.

You can move to another EU/EEA member state quite easily to lower your corporate and personal tax burden (Malta, Cyprus, Ireland, Portugal) but you still need to comply with VAT regulations.

If your business is small enough, you could relocate to outside of the EU/EEA (such as UAE), run a business from there, and not charge customers VAT. Technically, you might still be required to charge VAT but enforcement is rather limited for businesses that are small enough to get on anyone's radar.

If you form an offshore company, open an offshore bank account, and somehow manage to get payment processing, the company becomes tax resident in Norway (has to pay Norwegian tax), the bank account is reported to Norway under CRS, and payment processing will be fragile at best and quite expensive.

 

[troubled soul]

it must be impossible for the government in my country to track my earnings.

In 2021, Best way to save tax is to move to tax free country.

 

[OJ333]

I find a confusing trend lately in the forum - people seem to mix the corporate tax with the dividend one or at least don't ask the question clearly enough.
Which one are you concerned about? If you are concerned about the corporat tax just do all of the business through the UAE company.
If you are concerned about the dividend tax then I am afraid other than moving abroad there aren't a lot of ways to change it.

 

[OJ333]

You're many, many years too late. There's no practical, feasible way to do this anymore. Secrecy is if not dead then on its very dying breath.

You can move to another EU/EEA member state quite easily to lower your corporate and personal tax burden (Malta, Cyprus, Ireland, Portugal) but you still need to comply with VAT regulations.

If your business is small enough, you could relocate to outside of the EU/EEA (such as UAE), run a business from there, and not charge customers VAT. Technically, you might still be required to charge VAT but enforcement is rather limited for businesses that are small enough to get on anyone's radar.

If you form an offshore company, open an offshore bank account, and somehow manage to get payment processing, the company becomes tax resident in Norway (has to pay Norwegian tax), the bank account is reported to Norway under CRS, and payment processing will be fragile at best and quite expensive.

Why would he need to physically relocate to UAE to not charge VAT if his company is not located in Norway?
First, as far as I know VAT is about where the end customer is, less about where the seller is and even less about where the owner of the seller company is.
Second, how would the "company" that is incorporated in another country become a "resident" of the country in which the owner is a resident of?
Can you elaborate?

 

[Sols]

Why would he need to physically relocate to UAE to not charge VAT if his company is not located in Norway?

That's not what I meant. I must've been unclear.

Move to UAE = no more Norwegian taxes (personally or for the company).

Sell through an UAE company (and be a low profile business) = chances are no one will bother you or your customers regarding VAT for digital services.

First, as far as I know VAT is about where the end customer is, less about where the seller is and even less about where the owner of the seller company is.

Yes, but enforcement of paying/charging VAT when the seller is a non-EU company is limited right now. So if you sell a digital service to EU customers through a non-EU company, the chances of anyone doing anything about it are slim.

It's not a particularly wise move long-term if you plan to grow your business, but it can and does work for the time being.

Second, how would the "company" that is incorporated in another country become a "resident" of the country in which the owner is a resident of?
Can you elaborate?

Tax residence of companies is in most jurisdictions determined based on where the company is effectively controlled and managed. So if you live in Norway and control and manage a BVI company, that BVI company is tax resident in Norway and must be pay tax like a Norwegian company.

 

[CyprusBusiness]

I am looking for a way to start a offshore company or bank account for my business. I sell IPTV subscriptions from Norway. I sell to Norway, Finland and Danmark. TAX in Norway is 22%, I want to find a way where I do not have to pay this much in TAX. Also, it must be impossible for the government in my country to track my earnings.

What is the best way?

Hello

I would agree with @Sols that to properly setup a bulletproof structure in an offshore jurisdiction would require for you to relocate and build proper substance. This means that you would need to obtain tax residency in that country and abandon your residency in Norway.

I would suggest to explore Cyprus (which is an EU country) as a jurisdiction to establish such a setup as significant benefits will be granted. Please see a few benefits listed below:

(1) It conveys substantial tax optimisation benefits such as the IP box regime (effective tax rate: 2.5%) and personal income tax benefits for non-domiciled (tax resident individual) such as 0% tax on dividend income (only a 2.65% deduction for national health system ‘GESY’)

(2) The existance of the 60-days rule tax residency scheme makes it a fast and smooth process to obtain such residency in an EU country.

(2) For vat compliance relating to electronic intra-european services (B2C), these fall under the MOSS system (mini one stop shop) whereby a single vat payment to the VAT office would be required at Cyprus level and in this way you avoid the hussle of vat registrations and payments to the EU states of the consumers.

I hope this helps.