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Recommendation for consulting entity

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speedster

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Nov 11, 2019
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#1
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I have recently started doing quite a bit of consultancy in the crypto-space and would like to set up an entity through which to channel this business. My home nation has pretty strict CFC rules and I don't see myself getting around those, so taxation issues are not really relevant. All the company will do is generate invoices and receive payment from clients (both business and individual). Something like Leap Go would have been perfect, but my clients are all non-EU.

This leaves me looking for the easiest (and cheapest) jurisdiction in which to setup and maintain a company. At the moment I'm leaning towards Seychelles. Is there another option I should be considering?
 
#2
If taxes are not your problem then depending on your budget I would setup something in Maltha, Cyprus or even the UK to get a fast and best possible setup which can be used world wide.
 
#3
Admin said:
If taxes are not your problem then depending on your budget I would setup something in Maltha, Cyprus or even the UK to get a fast and best possible setup which can be used world wide.
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I have considered Cyprus, bit it seems the annual costs and admin are quite a bit more than Seychelles. That being said my knowledge is limited to what I've been able to glean off the forum and other internet sites, so please do help!
 
#6
If the costs of a setup in Cyprus or Malta is too much, it probably means Isle of Man and Gibraltar are also out of the question. However, I see people in similar situations operate under Seychelles, Mauritius, and BVI companies a lot. Sometimes Hong Kong and Singapore. The general trend is towards EU companies and compliance, and US LLCs.

Ultimately, it doesn't make a big difference and the key decision making factor tends to be access to banks. Speak with service providers. Wouldn't surprise me if you'd end up satisfied with a Mauritius company (GBL) and bank account.

I'd stay away from weaker jurisdictions like Belize and most of the Caribbean (except for BVI) and South Pacific, since those tax havens are probably not going to last very long and banking there tends to be disappointing.
 
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#7
Sols said:
If the costs of a setup in Cyprus or Malta is too much, it probably means Isle of Man and Gibraltar are also out of the question. However, I see people in similar situations operate under Seychelles, Mauritius, and BVI companies a lot. Sometimes Hong Kong and Singapore. The general trend is towards EU companies and compliance, and US LLCs.

Ultimately, it doesn't make a big difference and the key decision making factor tends to be access to banks. Speak with service providers. Wouldn't surprise me if you'd end up satisfied with a Mauritius company (GBL) and bank account.

I'd stay away from weaker jurisdictions like Belize and most of the Caribbean (except for BVI) and South Pacific, since those tax havens are probably not going to last very long and banking there tends to be disappointing.
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Thanks. This helps a lot. My brother in law works for an offshore management company in Mauritius, he (and Mauritius) was my first point of call. He says their company refuses to touch anything that involves crypto in any way, and also reckons Mauritius in general isn't very crypto friendly at all. I explained to him that this is only crypto consulting, not actually doing anything crypto at all, but he didn't think I'd get far in Mauritius so I left that idea there. It is probably a good idea phoning another company in Mauritius though.

It does seem that Seychelles is quite a bit cheaper than Mauritius and hence my current preference for Seychelles. I am able to afford a more expensive solution if necessary, I just don't see what the extra money buys me that Seychelles won't deliver?
 
#8
Sols said:
Since you're going to have to pay local tax anyway, why not form a local company where you live?
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The only way realistically for me to get around CFC is a so called high tax exemption if I pay more than 19% tax. Is there a viable alternative (doesn't have to be offshore) for a jurisdiction that has around 19% tax, and very low dividend tax (foreign dividends here are tax free). UK would have been perfect, but their tax rate is dropping to 18% next year which puts them below the required threshold.
 
#9
speedster said:
Thanks. This helps a lot. My brother in law works for an offshore management company in Mauritius, he (and Mauritius) was my first point of call. He says their company refuses to touch anything that involves crypto in any way, and also reckons Mauritius in general isn't very crypto friendly at all. I explained to him that this is only crypto consulting, not actually doing anything crypto at all, but he didn't think I'd get far in Mauritius so I left that idea there. It is probably a good idea phoning another company in Mauritius though.
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Consulting is always tricky, since you aren't actually doing any of the restricted activities but often get grouped in with them all the same. Everyone defaults to risk aversion. Speak with other service providers or even banks. You wouldn't be the first consultant active in crypto to have a Mauritian company and bank account.

speedster said:
It does seem that Seychelles is quite a bit cheaper than Mauritius and hence my current preference for Seychelles. I am able to afford a more expensive solution if necessary, I just don't see what the extra money buys me that Seychelles won't deliver?
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It's mostly a reputational advantage, which may or may not matter in your situation. If a distinction is made, Mauritius is normally viewed more favourably than the Seychelles.

If we're talking about Malta and Cyprus, the advantage there is primarily if you are able to relocate or otherwise establish enough of a presence there that your company qualifies as tax resident there.[/QUOTE][/QUOTE]
 
#10
Sols said:
Consulting is always tricky, since you aren't actually doing any of the restricted activities but often get grouped in with them all the same. Everyone defaults to risk aversion. Speak with other service providers or even banks. You wouldn't be the first consultant active in crypto to have a Mauritian company and bank account.


It's mostly a reputational advantage, which may or may not matter in your situation. If a distinction is made, Mauritius is normally viewed more favourably than the Seychelles.

If we're talking about Malta and Cyprus, the advantage there is primarily if you are able to relocate or otherwise establish enough of a presence there that your company qualifies as tax resident there.
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Awesome thanks. Relocation isn't an option currently. I'll give some Mauritian guys a call during the week and then probably be in a position to make a decision between them and Seychelles.

One other option I've been playing with is to strike some sort of deal with my brother who stays in Hong Kong. We could start a company in which he owns 50% (so not a CFC) and since the income will be generated offshore it should be tax free. We could declare a dividend equal to what we agree his payment should be, but then I don't know how to get the rest of the profit back this way? Any ideas on that?
 
#11
speedster said:
One other option I've been playing with is to strike some sort of deal with my brother who stays in Hong Kong. We could start a company in which he owns 50% (so not a CFC) and since the income will be generated offshore it should be tax free. We could declare a dividend equal to what we agree his payment should be, but then I don't know how to get the rest of the profit back this way? Any ideas on that?
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I'm wary of Hong Kong right now due to the political unrest but if we set that aside, you can pay yourself a salary or invoice the company as a consultant. The HK company enters into an agreement with your client. Your client pays the company. You have a consulting agreement with the company, and the company pays you personally. When you open the corporate account in HK, also open a personal account so that you can keep your funds in foreign currency and outside of your home jurisdiction.

Even if you manage to solve CFC and corporate tax residence, you're still likely subject to personal income tax in your home jurisdiction on the funds paid to you. If capital gains tax is lower than income tax for you, look into dividing your payments between salary and dividends. Something to discuss with a local tax adviser.
 
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#12
Sols said:
I'm wary of Hong Kong right now due to the political unrest but if we set that aside, you can pay yourself a salary or invoice the company as a consultant. The HK company enters into an agreement with your client. Your client pays the company. You have a consulting agreement with the company, and the company pays you personally. When you open the corporate account in HK, also open a personal account so that you can keep your funds in foreign currency and outside of your home jurisdiction.

Even if you manage to solve CFC and corporate tax residence, you're still likely subject to personal income tax in your home jurisdiction on the funds paid to you. If capital gains tax is lower than income tax for you, look into dividing your payments between salary and dividends. Something to discuss with a local tax adviser.
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That is sort of along the lines I was thinking. If I understand correctly there is no withholding tax on dividends in HK and foreign dividends are tax exempt here so dividends will certainly have a role to play. I understand that I will be taxed locally on any salary or commission paid to me, although this route will allow me to defer some of the tax (retained funds won't be taxed).

I've also been thinking about some form of non-voting preference share which could allow me to receive a higher dividend but won't count towards CFC consideration of ownership/control or participation. I'll need to confirm those details with a local tax guy though.
 
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#14
speedster said:
Thanks. This helps a lot. My brother in law works for an offshore management company in Mauritius, he (and Mauritius) was my first point of call.
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If he is in the business I wonder why he is unable to point you in the right direction?
 
#16
No but if you know the industry then you most often know people and most often you may know someone who can do what you can't do :)
 
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