Opening a separate company only for payments

[D0naldDuck]

Hello guys!

Scenario: You're running a company that provides digital services to B2C customers in europe. You want to receive online payments from them via localized payment methods.

Your company is located in Georgia, so non-EEA.

Most payment gateways from the EU only allow EEA territory companies.

You cant use Stripe and most of the other big international gateways because you're a little bit risky. Not as risky as adult but more than selling colored socks or so.

Because of that you open up a EEA company which sole purpose is to handle your payments and withdraw the revenue to the main company. Your basically starting a payment company like for example Zalando payments GmbH that collects the payments for the main company Zalando SE.

Is this setup legal in regard to transfer pricing and BEPS regulations in the EU?

 

[CaptK]

A lot of companies set up gateways via more accepted jurisdictions. It is normal practice just make sure you only charge what you need to cover the cost of the transaction plus a small admin fee.

 

[orangekangaroo]

I would love to set up something like this to handle all my USD PayPal payments. Withdraw USD PayPal on to a USD bank account in US. Without the 2.5% FX conversion, I get from within EU from PayPal.

 

[Fly$]

Do you need to get VAT number?

Witch country in Europe look the most easy and fast to get registered and get VAT number?

 

[Sols]

This is a very common arrangement. Payment agent companies are typically incorporated in Cyprus or Malta due to lenient transfer pricing regulations, low costs, low taxes, and being more or less fully English speaking which makes things easy.

A payment agent company is often registered for VAT even though it's not always necessary. You need to structure the legal arrangements so that the agent is never the company that buys/sells the goods/services.

Banking can be difficult although many EMIs are happy to take on these companies since they tend to be low-risk and high-volume in isolation. Currencies other than EUR and access to SWIFT may be limited.

Payment processors and the card schemes are increasingly hostile towards this arrangement, so it requires a bit more finesse than before (having a dedicated office address, for example). Some processors have started to refuse to settle to EMIs, which can make operating one of thee companies even harder.