Offshore location for IT service company

[ogbofjnr]

I'm staring small IT service company. My clients are mostly located in US and EU, and employee work on b2b, b2c contacts from Eastern Europe, India.

What jurisdiction would be a good fit for this use case?

The factors I care about is to be able to receive transfers from US/EU clients without any restrictions.
So far I consider Hong Kong, what do you guys think?

Maybe I won't event open bank account and use wise or other payment service for the start.

Also I like the all in one service like xolo.io where you open company and get accounting service. Is there similar service for other locations?

What would be other options to consider?

 

[CyprusLawyer101]

Cyprus could work .
Where is your current residence?

 

[KDX]

I'm staring small IT service company. My clients are mostly located in US and EU, and employee work on b2b, b2c contacts from Eastern Europe, India.

What jurisdiction would be a good fit for this use case?

The factors I care about is to be able to receive transfers from US/EU clients without any restrictions.
So far I consider Hong Kong, what do you guys think?

Maybe I won't event open bank account and use wise or other payment service for the start.

What would be other options to consider?

Are you aware of the AEOI, CRS, FATCA, and things like Permanent Establishment and CFC rules?

Please provide the following so that the people here can help you better:
What citizenships do you hold?
Where do you reside (tax residency)?
Can you relocate?
How much revenue do you expect to run through this to be formed entity per month?

If you live in a high tax country, you cannot just form an offshore company and pay 0 tax. You will most likely need to relocate unless you can somehow create proper substance and even then you will run into problems with CFC rules.

Right now, the UAE is quite popular with its free-zone company (FZCO) scheme.

(tried to post a reply before but the thread was deleted?)

 

[ogbofjnr]

Are you aware of the AEOI, CRS, FATCA, and things like Permanent Establishment and CFC rules?

Please provide the following so that the people here can help you better:
What citizenships do you hold?
Where do you reside (tax residency)?
Can you relocate?
How much revenue do you expect to run through this to be formed entity per month?

If you live in a high tax country, you cannot just form an offshore company and pay 0 tax. You will most likely need to relocate unless you can somehow create proper substance and even then you will run into problems with CFC rules.

Right now, the UAE is quite popular with its free-zone company (FZCO) scheme.

(tried to post a reply before but the thread was deleted?)

Thank you for the links, I'm really competent about international regulation.
I have Russian citizenship, but I travel most of the year, so I think I'm not a tax resident in Russia. As far as I know they don't require you to become tax resident somewhere else to loose resident status in Russia, only 183 day rule applies.

I don't really want to live somewhere for long time, answer is no concerning relocation.

The revenue is quite small, no more than 100k per year.

What do you think about Hong Kong and Gibraltar?

 

[KDX]

Thank you for the links, I'm really competent about international regulation.
I have Russian citizenship, but I travel most of the year, so I think I'm not a tax resident in Russia. As far as I know they don't require you to become tax resident somewhere else to loose resident status in Russia, only 183 day rule applies.

I don't really want to live somewhere for long time, answer is no concerning relocation.

The revenue is quite small, no more than 100k per year.

What do you think about Hong Kong and Gibraltar?

You need to get tax residency somewhere else. Plua you can't become tax resident anywhere (some countries its only 30 days)

If you can get tax residency somewhere, then HK would work great. If not, maybe a UAE company? If you go with HK your company and its bank accounts will be reported via CRS.

Plus your citizenship may cause problems when applying to banks/EMIs due to sanctions.

Could you give an example of how you travel in a year? Like 70 days in X, 30.days in Y?

 

[ogbofjnr]

You need to get tax residency somewhere else. Plua you can't become tax resident anywhere (some countries its only 30 days)

If you can get tax residency somewhere, then HK would work great. If not, maybe a UAE company? If you go with HK your company and its bank accounts will be reported via CRS.

Plus your citizenship may cause problems when applying to banks/EMIs due to sanctions.

Could you give an example of how you travel in a year? Like 70 days in X, 30.days in Y?

I have partner from Armenia, this might help to solve the blocking issue.

Let's say: 2 months Mexico, 2 months Belarus, 4 months Indonesia, 2 months Spain, 2 months UK.

Why I can't become tax resident nowhere? If from the standpoint of all the countries I've visited I'm not a resident there.

 

[KDX]

I have partner from Armenia, this might help to solve the blocking issue.

Let's say: 2 months Mexico, 2 months Belarus, 4 months Indonesia, 2 months Spain, 2 months UK.

Why I can't become tax resident nowhere? If from the standpoint of all the countries I've visited I'm not a resident there.

Ok. Seems like you are not staying anywhere for too long where they may claim you are a tax resident. However, I'm not 100% sure but usually you should have a TIN number at least from somewhere to claim you are tax resident there (preferably a 0% tax haven).

HK offshore tax exemption stuff here:

Hong Kong Offshore Tax Exemption: How To Qualify?

Hong Kong adopted a territorial tax regime, under which foreign-sourced income is exempted from tax. You can find helpful tips for applying offshore tax claim in this post.

bbcincorp.com

Hong Kong SAR - Corporate - Taxes on corporate income

Detailed description of taxes on corporate income in Hong Kong

taxsummaries.pwc.com

You could maybe also try a UAE company. A UAE FZCO does require a business license which may cost 5,000$+ a year though.

I'm not familiar with Cyprus but I know a few people here can help you with that too. But it would mean paying 12.5% tax. Not sure why you would do that if you can just pay 0 tax. I don't know much about Gibraltar but I'm sure people here have some experience with it. Maybe search previous threads?

I'll tag a few people who may be able to help you with this:
@Fred @CaptK

 

[ogbofjnr]

Ok. Seems like you are not staying anywhere for too long where they may claim you are a tax resident. However, I'm not 100% sure but usually you should have a TIN number at least from somewhere to claim you are tax resident there (preferably a 0% tax haven).

HK offshore tax exemption stuff here:

Hong Kong Offshore Tax Exemption: How To Qualify?

Hong Kong adopted a territorial tax regime, under which foreign-sourced income is exempted from tax. You can find helpful tips for applying offshore tax claim in this post.

bbcincorp.com

Hong Kong SAR - Corporate - Taxes on corporate income

Detailed description of taxes on corporate income in Hong Kong

taxsummaries.pwc.com

You could maybe also try a UAE company. A UAE FZCO does require a business license which may cost 5,000$+ a year though.

I'm not familiar with Cyprus but I know a few people here can help you with that too. But it would mean paying 12.5% tax. Not sure why you would do that if you can just pay 0 tax.

I'll tag a few people who may be able to help you with this:
@Fred @CaptK

Thank you for the information.

 

[khinkali]

However, I'm not 100% sure but usually you should have a TIN number at least from somewhere to claim you are tax resident there (preferably a 0% tax haven).

This is absolutely the case for people from some nationalities or former residence, especially in the years leaving that jurisdiction. Some (e.g. US) never fully escape their former tax orbit while citizens of that country.

Also some things can be difficult without tax residence or at least legal residence somewhere, for example some banks and brokers will ask for this.

But, some people have been claiming this on a global basis. Do you know where the information came from? I've asked around and I cannot find any evidence for applying the rules of places like Sweden to departing citizens of, for example, the UK.