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Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
The year after, you become tax resident in a country B: completely untie with country A, 100% legit.

You decide to cash out from Xolo to your personal bank account.

Where the personal income tax on these profits should be paid?

To country B the money is considered capital as it was earned before you moved to it and hence no tax is due. With country A you would owe taxes depending on country A's tax rules. Xolo Go is a partnership agreement where they offer a legal entity under which you can provide services and they offer management, support and representation services. Read the agreement it is clear.
 

dziter

New member
Ok thanks @Martin Everson for your answer.
I was hoping it will be possible to let the money staying in Xolo the time to change tax residence and paying taxes in country B and not A when it’s done. Too good to be real of course.
 

JustAnotherNomad

Mentor Group Gold
The invoices were made during the time you were tax resident in country A but you didn’t take the money from the Xolo partnership.

Usually in the country where you were tax resident, but it depends on where you were tax resident. Most countries have a principle called “constructive receipt” (google it).
Since the money was yours and you could have paid it out any time, the tax was due already that year. If it was your decision whether you wanted to pay the money out or not, then you already had control of the money, so then you also had to pay the tax.
But of course, there may be some countries that don’t have such a rule and which will only tax money that is actually paid out, especially countries with territorial taxation, I would imagine.

I am a bit skeptical of companies like Xolo:
They have a partnership agreement with you, meaning they are only responsible for the billing. The way I understand it, they would in no way offer liability protection. They are basically like a freelancer platform like Upwork, the only difference being that they don’t match customers and freelancers and that they charge the company on your behalf. Maybe PayPal would be a better analogy.
So if something goes wrong, they can always point their finger at you, nothing will happen to them. They also explicitly state that they won’t help you with your taxes. They give you a report of any amounts paid out and that’s all.
So many people think they only pay taxes on what they paid out because the money is “Xolo’s,” but it’s not - the way I understand it. The money was yours all along, they are only some sort of escrow service, if you like.
For that reason I also don’t think the payments from Xolo would classify as capital gains! It can’t be a dividend since you’re not a shareholder. I’m pretty sure any payments from Xolo must be classified as freelance/business income. I don’t see how it could be anything else.
But maybe someone else has more knowledge about this topic.
 
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boomy

Mentor Group Gold
Would you say it is possible to let the money stay in the Xolo setup or must I take it out to my own account?

I know it's about trust but, despite that, could I do it and forget about tax until Im in a country with lower or no personal tax?
 

JustAnotherNomad

Mentor Group Gold
Would you say it is possible to let the money stay in the Xolo setup or must I take it out to my own account?

I believe they have a rule that the money can’t stay in the account for longer than a year. But that’s Xolo’s rule, other companies may allow the money to stay there forever.

I know it's about trust but, despite that, could I do it and forget about tax until Im in a country with lower or no personal tax?

Did you not read what we just wrote?!
 

boomy

Mentor Group Gold
I believe they have a rule that the money can’t stay in the account for longer than a year. But that’s Xolo’s rule, other companies may allow the money to stay there forever.
ohhh.... my fault, sorry. That make good sense, so we could move the money from there to an UAE company in secrecy or is there something that will stop me from doing it?
 

JustAnotherNomad

Mentor Group Gold
ohhh.... my fault, sorry. That make good sense, so we could move the money from there to an UAE company in secrecy or is there something that will stop me from doing it?

I think you might actually be able to pay subcontractors from a Xolo account, so that might work. But from a legal/tax perspective, I would assume that Xolo is completely transparent. They are only an escrow/billing company, as far as I have understood. Meaning the situation will be as if you had paid the UAE company yourself. Xolo probably wouldn’t report the account under CRS though as it’s a pooled account. So it could work if you want to hide where the money is going, at least temporarily. But eventually I would expect there to be some kind of reporting. Not something I would recommend.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
Would you say it is possible to let the money stay in the Xolo setup or must I take it out to my own account?

You can leave the money there for max 12 months.

I know it's about trust but, despite that, could I do it and forget about tax until Im in a country with lower or no personal tax?

No. Xolo Go is a partnership agreement and the money has been earned. Xolo is also very proactive in reminding you of your tax obligations with both Xolo Go and Xolo Leap. They have no intention of providind a tax avoidence setup and they DO cooperate with Estonia tax authority.

Btw Xolo Go requires your clients all to be in EU and to be VAT registered. They do allow exceptions to billing none VAT registered clients but we are talking a very very low amounts you can bill such clients with no VAT number. So its B2B and not B2C service in reality.
 
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