Residence in Monaco + US LLC

[baltic7]

Hello to all members of the forum.

I hope I've chosen the right section to write this thread, but being a combination of residency + business setup I'm not entirely sure.

I put my situation in context.

I have had a company in Estonia for 2 years. The company is dedicated to online services. I use Stripe as payment gateways to charge my customers.

Last year I paid more than 600k euros in taxes in Estonia when distributing my dividends, and the first year more than 400k euros. This year, according to the forecast, the taxes will exceed 1M euros.

I want to move to Monaco, because although the costs of living in the country are high, by saving taxes I can rent a decent apartment there from my perspective of life for about 200,000 or 250,000 euros a year. And still have much of the money I pay in taxes for personal use.

The idea is to move my business from the Estonian company to an LLC in Delaware, opening bank accounts in the USA. I can rent a small studio in the United States as proof of address if that is necessary for opening bank accounts, since I don't think that cost will be more than 15k or 20k a year.

The doubts are the following:

- Monaco as a requirement among others, asks for proof of funds of more than 500k in a bank in Monaco. I currently have just over 2M euros in investment funds in an Estonian bank. Can these investment funds be transferred to a Monaco bank to meet the residency requirement? All funds have been previously declared in taxes and are all legal.

- As I mentioned, the idea is to transfer all payments to an LLC. The ownership of the websites and trademarks are owned by an LLC in Delaware 100% owned by me, which assigns the rights of use to the company in Estonia in exchange for a fee. Currently, since it is a symbolic payment, I collect it in Mercury, but the idea to act operationally is to open accounts in traditional banks in the USA. The question is, how does Monaco treat the management of an LLC in Delaware by residents in the country? Would Monaco consider the LLC a permanent establishment in the country and would I have to pay corporate tax in Monaco?

- I understand that moving from an offshore jurisdiction to Monaco may be somewhat more complicated in terms of compliance with the origin of funds. But if you move there from a European Union country with funds that have been taxed, how simple is the procedure?

I have chosen Monaco because I want to live in Europe, and not on a Caribbean island or in a Middle Eastern country.

 

[Sols]

- Monaco as a requirement among others, asks for proof of funds of more than 500k in a bank in Monaco. I currently have just over 2M euros in investment funds in an Estonian bank. Can these investment funds be transferred to a Monaco bank to meet the residency requirement? All funds have been previously declared in taxes and are all legal.

Yes, should be fine.

- As I mentioned, the idea is to transfer all payments to an LLC. The ownership of the websites and trademarks are owned by an LLC in Delaware 100% owned by me, which assigns the rights of use to the company in Estonia in exchange for a fee. Currently, since it is a symbolic payment, I collect it in Mercury, but the idea to act operationally is to open accounts in traditional banks in the USA. The question is, how does Monaco treat the management of an LLC in Delaware by residents in the country? Would Monaco consider the LLC a permanent establishment in the country and would I have to pay corporate tax in Monaco?

Monaco does not lift a single finger to go after people who live in Monaco, meet the minimum capital requirements, and generally don't cause a nuisance. You're joining many other people who, much like you, are still involved in the day to day of their businesses, which could in theory trigger tax residence in Monaco.

You might want to hire someone and/or appoint a nominee director to establish a least a tiny bit of substance outside of Monaco for the business. Not so much for Monaco's sake as for your own sake, in case banks or others start asking questions about where the company is managed.

- I understand that moving from an offshore jurisdiction to Monaco may be somewhat more complicated in terms of compliance with the origin of funds. But if you move there from a European Union country with funds that have been taxed, how simple is the procedure?

It's very easy. You can do it yourself mostly online, but most people have a lawyer or PA in Monaco handle as much of the process as possible.

 

[baltic7]

Thank you very much for your answer. I really appreciate the time you took, because I want to do everything right.

When you mean putting some substance into the Delaware LLC, what should be the right way to do it?

Wouldn't the LLC become tax resident in the USA by having an American director?

Regarding the advice of using a lawyer in Monaco or a personal assistant in Monaco, I suppose it is the best option, since I prefer to be advised on the procedures by someone who knows how to carry them out correctly. Any recommendations?

 

[TRGali]

Just be sure not to be french for Monaco.

 

[Konstanz]

Monaco does not lift a single finger to go after people who live in Monaco, meet the minimum capital requirements, and generally don't cause a nuisance. You're joining many other people who, much like you, are still involved in the day to day of their businesses, which could in theory trigger tax residence in Monaco.

You might want to hire someone and/or appoint a nominee director to establish a least a tiny bit of substance outside of Monaco for the business. Not so much for Monaco's sake as for your own sake, in case banks or others start asking questions about where the company is managed.

I agree 100%. Monaco does not care about foreign companies you own. Even if it's managed from Monaco.
The principle of the country is that persons who reside in Monaco do not have to declare any assets their hold to Monaco.

 

[Sols]

When you mean putting some substance into the Delaware LLC, what should be the right way to do it?

Wouldn't the LLC become tax resident in the USA by having an American director?

Most people in your situation aren't using US LLCs. LLCs have some peculiar characteristics (mainly the tax transparency/disregarded status) that you don't run into with the more common companies formed elsewhere.

Tax residence of the LLC doesn't really matter in this case, since it'll be tax transparent in the US (not taxed there). Income attributable to the US may be taxable in the US, but in reality the IRS doesn't do much to check on LLCs owned by non-resident aliens.

Most people in your situation appoint a nominee director and 1–2 part time employees in BVI, Isle of Man, Gibraltar, or wherever their companies happen to be incorporated. This creates a modicum of substance in the company some place that isn't Monaco, which can have benefits for banking and payment processing purposes. Since there is no corporate tax applicable anyway, creating that substance is actually beneficial.

Your plan to use a US LLC is probably fine, though.

Regarding the advice of using a lawyer in Monaco or a personal assistant in Monaco, I suppose it is the best option, since I prefer to be advised on the procedures by someone who knows how to carry them out correctly. Any recommendations?

CMS, Gardetto, and Zabaldano are popular law firms. They might be able to help you find a PA, but most people either bring their PAs with them to Monaco or hire someone once there.

 

[baltic7]

Just be sure not to be french for Monaco.

No soy francés. Soy de otro país europeo. En Mónaco hay unos 200 o 300 residentes de mi país de origen así que entiendo que no hay ningún problema.

I agree 100%. Monaco does not care about foreign companies you own. Even if it's managed from Monaco.
The principle of the country is that persons who reside in Monaco do not have to declare any assets their hold to Monaco.

This is really something great. The last thing I want is to have to deal with governments over where they think my company should be taxed.

Most people in your situation aren't using US LLCs. LLCs have some peculiar characteristics (mainly the tax transparency/disregarded status) that you don't run into with the more common companies formed elsewhere.

Tax residence of the LLC doesn't really matter in this case, since it'll be tax transparent in the US (not taxed there). Income attributable to the US may be taxable in the US, but in reality the IRS doesn't do much to check on LLCs owned by non-resident aliens.

Most people in your situation appoint a nominee director and 1–2 part time employees in BVI, Isle of Man, Gibraltar, or wherever their companies happen to be incorporated. This creates a modicum of substance in the company some place that isn't Monaco, which can have benefits for banking and payment processing purposes. Since there is no corporate tax applicable anyway, creating that substance is actually beneficial.

Your plan to use a US LLC is probably fine, though.


CMS, Gardetto, and Zabaldano are popular law firms. They might be able to help you find a PA, but most people either bring their PAs with them to Monaco or hire someone once there.

It is not a necessary requirement to operate through an LLC in Delaware. I can do it through another jurisdiction if it is more advantageous. The only thing I want is for the ownership of the brands, websites and software to belong to an LLC in Delaware for protection reasons and so that in the event that in the future I must change the operating structure to another country, the transfer is simple. changing the transfer of rights.

What you say makes sense, when creating a substance. Isle of Man and BVI sound good, Gibraltar I'm not so sure because it has a 12.5% corporate tax. Am i wrong with Gibraltar?

The only thing I wanted a US LLC for was because payment processing and bank accounts are easier through the United States.

I was reading on this forum about the Isle of Man and the BVI, and many people say that opening bank accounts is complicated afterwards. To what extent is this true?

Because if it is possible to open bank accounts in the BVI or Isle of Man, I can use a payment processor like 2Checkout or others that allow companies from those countries to operate.

And spending substance on a nominated director and a couple of part-time employees would even be interesting, since that is currently what I have hired in Estonia for the IT part of the company.

Any suggestions on which jurisdiction may be most interesting for my situation and my business model?

Thank you very much for all your advice, they are really valuable.

 

[Sols]

What you say makes sense, when creating a substance. Isle of Man and BVI sound good, Gibraltar I'm not so sure because it has a 12.5% corporate tax. Am i wrong with Gibraltar?

Gibraltar has a territorial tax system, similar to Panama and Hong Kong. The 12.5% only applies on income derived from within Gibraltar.

The only thing I wanted a US LLC for was because payment processing and bank accounts are easier through the United States.

I was reading on this forum about the Isle of Man and the BVI, and many people say that opening bank accounts is complicated afterwards. To what extent is this true?

It's true if you're DIYing it. It's a bit easier if you have a good service provider helping you with the process.

Any suggestions on which jurisdiction may be most interesting for my situation and my business model?

I know the jurisdictions I mentioned are popular with some Monegasque residents. You can add Hong Kong, Labuan, and Singapore to that list. UAE used to be popular but with the 9% tax and other issues there, there's been a bit of a slowdown.

Cyprus and Malta are also popular, even if they aren't entirely 0% tax.

If your customers are in the EU, consider that processing costs and currency exchange costs are significantly cheaper if you open a merchant account with Stripe in EU rather than in the US.

 

[baltic7]

Gibraltar has a territorial tax system, similar to Panama and Hong Kong. The 12.5% only applies on income derived from within Gibraltar.


It's true if you're DIYing it. It's a bit easier if you have a good service provider helping you with the process.


I know the jurisdictions I mentioned are popular with some Monegasque residents. You can add Hong Kong, Labuan, and Singapore to that list. UAE used to be popular but with the 9% tax and other issues there, there's been a bit of a slowdown.

Cyprus and Malta are also popular, even if they aren't entirely 0% tax.

If your customers are in the EU, consider that processing costs and currency exchange costs are significantly cheaper if you open a merchant account with Stripe in EU rather than in the US.

The problem I find for companies in countries with territorial tax systems is that payment processors only usually transfer money to bank accounts in the same country of origin as the company. So, I understand that in that case I must pay corporate tax in that country. Otherwise Singapore would be unbeatable due to prestige and because companies must have a resident director, which is an interesting step for substance. In addition, it would be very easy to find talent there to work part-time.

Am I confused with the territorial tax system? That is, if my clients are not from Singapore, but the profits are derived to a Singapore bank, would I be exempt from corporate tax?

UAE, Malta and Cyprus I completely rule them out. Since I prefer to allocate the money from what I would pay in taxes in those countries to the cost of living in Monaco.

Any good providers for an all in one solution in Isle of Man, BVI or similar? I want to delve deeper into creating a substance in some jurisdiction like these because what you have told me makes sense to me.

 

[Sols]

The problem I find for companies in countries with territorial tax systems is that payment processors only usually transfer money to bank accounts in the same country of origin as the company. So, I understand that in that case I must pay corporate tax in that country. Otherwise Singapore would be unbeatable due to prestige and because companies must have a resident director, which is an interesting step for substance. In addition, it would be very easy to find talent there to work part-time.

That's not what territoriality means in all cases. Gibraltar isn't doing anything to go after people who incorporate there and open local bank accounts.

Am I confused with the territorial tax system? That is, if my clients are not from Singapore, but the profits are derived to a Singapore bank, would I be exempt from corporate tax?

Singapore is not a true territorial tax system jurisdiction. It's a hybrid of remittance based taxation and territorial tax basis.

Any good providers for an all in one solution in Isle of Man, BVI or similar? I want to delve deeper into creating a substance in some jurisdiction like these because what you have told me makes sense to me.

Vistra, Sovereign Group, Trident Trust, TMF, and Dixcart to name a few.

 

[baltic7]

That's not what territoriality means in all cases. Gibraltar isn't doing anything to go after people who incorporate there and open local bank accounts.


Singapore is not a true territorial tax system jurisdiction. It's a hybrid of remittance based taxation and territorial tax basis.


Vistra, Sovereign Group, Trident Trust, TMF, and Dixcart to name a few.

So to understand it, Gibraltar is fine if all my clients are from outside Gibraltar and I collect money from Stripe into a Gibraltar account. There is no 12.5% corporate tax. It's right?

In that case, the only doubt with Gibraltar is because of my nationality of origin, hahaha. But hey, I understand that not having been a tax resident in my country of origin for many years, it wouldn't be a problem either. I could consult it.

So, Singapore also ruled out.

Wow, lots of suppliers. I'm going to investigate them one by one.

 

[Armani]

What kind of services are you selling?
Are you young?
Monaco is mostly for old people, old dinastic wealth, it gets quite boring pretty fast, after a few months you'll feel small village kind of vibes.

You'll have to rent a crazy expensive apartment to maintain residence,
i think is better to live in Switzerland (beautiful and safe country, less polluted but also pretty boring) or in Italy using the flat tax regime, you "only" need to pay 100K a year and a 300-400 € a month apartment, then you can travel around the world.
If you want you can also find nice villas pretty much everywhere.

 

[Konstanz]

What kind of services are you selling?
Are you young?
Monaco is mostly for old people, old dinastic wealth, it gets quite boring pretty fast, after a few months you'll feel small village kind of vibes.

You'll have to rent a crazy expensive apartment to maintain residence,
i think is better to live in Switzerland (beautiful and safe country, less polluted but also pretty boring) or in Italy using the flat tax regime, you "only" need to pay 100K a year and a 300-400 € a month apartment, then you can travel around the world.
If you want you can also find nice villas pretty much everywhere.

Italian tax program will not work for BVI, Isle of Man structures etc.
Swiss is expensive and you have to pay flat tax.

 

[baltic7]

What kind of services are you selling?
Are you young?
Monaco is mostly for old people, old dinastic wealth, it gets quite boring pretty fast, after a few months you'll feel small village kind of vibes.

You'll have to rent a crazy expensive apartment to maintain residence,
i think is better to live in Switzerland (beautiful and safe country, less polluted but also pretty boring) or in Italy using the flat tax regime, you "only" need to pay 100K a year and a 300-400 € a month apartment, then you can travel around the world.
If you want you can also find nice villas pretty much everywhere.

Thanks for your answer. Interesting point of view.

Something similar to Saas. But not really that.

I am 29 years old.

I know Monaco is small, but living in Monaco doesn't mean you don't have to leave the country. The same as if you lived in Zug or in a residential area of a large capital. In the end, Nice and Cannes are minutes from Monaco.

I currently live in Tallinn, which I think is much more boring than Monaco, especially in winter. Not to mention the weather and darkness.

I travel a lot for pleasure, so even here in Estonia I don't feel completely cooped up. As I say, this is a very small place, and the only places around it are Helsinki, which you have to go by ferry, Saint Petersburg, which is 4 hours away by car (and now it's difficult to get there) and Riga, which is the same as Tallinn. For the rest you have to take a flight.

The flat tax in Italy is 100k, with that I can rent a decent apartment in Monaco, and not have to live in a hole of 300-400 euros a month. From Monaco I can go to Italy every weekend if I want, it's right next door.

Italian tax program will not work for BVI, Isle of Man structures etc.
Swiss is expensive and you have to pay flat tax.

This is also true. It makes no sense to pay a flat tax in Switzerland, when with that money I can rent something interesting in Monaco. And I also don't think the cost of living is much cheaper in Switzerland than in Monaco.

 

[Sols]

So to understand it, Gibraltar is fine if all my clients are from outside Gibraltar and I collect money from Stripe into a Gibraltar account. There is no 12.5% corporate tax. It's right?

Only a tax adviser can tell you for sure. What I do know is that people are doing exactly that and not paying tax in Gibraltar, and the government of Gibraltar is aware and leaving them alone.

In that case, the only doubt with Gibraltar is because of my nationality of origin, hahaha. But hey, I understand that not having been a tax resident in my country of origin for many years, it wouldn't be a problem either. I could consult it.

If you're Spanish — the only problem is how Spain feels about Gibraltar. It's a pretty one-sided dispute for the most part, with Spain crying and Gibraltar/UK ignoring. As long as your ties with Spain are cut and you have a genuine tax residence somewhere else (i.e. Monaco), there should be no issues.

 

[baltic7]

Only a tax adviser can tell you for sure. What I do know is that people are doing exactly that and not paying tax in Gibraltar, and the government of Gibraltar is aware and leaving them alone.


If you're Spanish — the only problem is how Spain feels about Gibraltar. It's a pretty one-sided dispute for the most part, with Spain crying and Gibraltar/UK ignoring. As long as your ties with Spain are cut and you have a genuine tax residence somewhere else (i.e. Monaco), there should be no issues.

I have just looked at a couple of tax advisors in Gibraltar. On Monday I am going to consult to see what the situation is. I will report it here in the thread when I have the answer in case someone can find the information helpful. Because the really interesting thing about Gibraltar is that you can use Stripe, which would prevent me from having to change the payment system completely to another payment processor (which wouldn't be a problem either).

Yes, it's Spain exclusively that puts the problems towards Gibraltar. It seems that the government is bothered that people around there go to
refuel the car or buy tobacco, as well as that Gibraltarian residents live in villas in Sotogrande instead of Gibraltar.

Personally I think I don't have that problem, because I am a tax resident in Estonia. And before Estonia it was in a country other than Spain. I will check better.

But the government of Spain, for Spanish residents, if they move to jurisdictions classified as tax havens and that do not have a double taxation agreement with Spain, forces them to pay taxes during the first 5 years in Spain that they reside in the tax haven.

I even have a friend who has lived in Andorra for 7 years, his wife is from Andorra, his son goes to a school in Andorra, he has his own house in Andorra, plus 2 apartments that he rents to tourists there...but since he has a empty apartment in Barcelona (which he uses for vacations), now the Spanish tax office (Hacienda) has opened an investigation on him considering that he has a center of interests in Spain. Something that at the judicial level is not going anywhere, but they are already bothering you with concerns. So crazy country.

 

[scooterguy]

If you really have an inclination towards living in Monaco, you may want to try living there for a few months first and see if you like it. After the initial novelty wears out you may find yourself not liking the place.

To be honest, if we talk specifically about tax and cost of living optimization, the best option nowadays is to move out of Europe, especially if you have significant income.

If it's from websites ads or subscriptions, you can easily set it all up wherever you want and live in territorial tax countries like Thailand, Malaysia, Panama, etc. and pay personal income tax on your own terms (usually on remittances, which you can plan accordingly). Spain also doesn't consider the aforementioned SEA countries to be tax havens.

And if you want to spend 250k EUR a year in SEA... well, welcome to Heaven.

 

[Dandyline]

Hello to all members of the forum.

I hope I've chosen the right section to write this thread, but being a combination of residency + business setup I'm not entirely sure.

I put my situation in context.

I have had a company in Estonia for 2 years. The company is dedicated to online services. I use Stripe as payment gateways to charge my customers.

Last year I paid more than 600k euros in taxes in Estonia when distributing my dividends, and the first year more than 400k euros. This year, according to the forecast, the taxes will exceed 1M euros.

I want to move to Monaco, because although the costs of living in the country are high, by saving taxes I can rent a decent apartment there from my perspective of life for about 200,000 or 250,000 euros a year. And still have much of the money I pay in taxes for personal use.

The idea is to move my business from the Estonian company to an LLC in Delaware, opening bank accounts in the USA. I can rent a small studio in the United States as proof of address if that is necessary for opening bank accounts, since I don't think that cost will be more than 15k or 20k a year.

The doubts are the following:

- Monaco as a requirement among others, asks for proof of funds of more than 500k in a bank in Monaco. I currently have just over 2M euros in investment funds in an Estonian bank. Can these investment funds be transferred to a Monaco bank to meet the residency requirement? All funds have been previously declared in taxes and are all legal.

- As I mentioned, the idea is to transfer all payments to an LLC. The ownership of the websites and trademarks are owned by an LLC in Delaware 100% owned by me, which assigns the rights of use to the company in Estonia in exchange for a fee. Currently, since it is a symbolic payment, I collect it in Mercury, but the idea to act operationally is to open accounts in traditional banks in the USA. The question is, how does Monaco treat the management of an LLC in Delaware by residents in the country? Would Monaco consider the LLC a permanent establishment in the country and would I have to pay corporate tax in Monaco?

- I understand that moving from an offshore jurisdiction to Monaco may be somewhat more complicated in terms of compliance with the origin of funds. But if you move there from a European Union country with funds that have been taxed, how simple is the procedure?

I have chosen Monaco because I want to live in Europe, and not on a Caribbean island or in a Middle Eastern country.

Based on Estonias 20% tax rate, you have made 10MEUR in profits in the last 3 years... So Monaco would be unbeatable probably, i would say go for it.

It all depends on the type of business you are doing, if your customers are from the EU, if you have subscriptions locked in Stripe for example.

 

[baltic7]

If you really have an inclination towards living in Monaco, you may want to try living there for a few months first and see if you like it. After the initial novelty wears out you may find yourself not liking the place.

To be honest, if we talk specifically about tax and cost of living optimization, the best option nowadays is to move out of Europe, especially if you have significant income.

If it's from websites ads or subscriptions, you can easily set it all up wherever you want and live in territorial tax countries like Thailand, Malaysia, Panama, etc. and pay personal income tax on your own terms (usually on remittances, which you can plan accordingly). Spain also doesn't consider the aforementioned SEA countries to be tax havens.

And if you want to spend 250k EUR a year in SEA... well, welcome to Heaven.

I have not lived in Monaco, I have only been there for vacations. But it seems like a nice and safe place to me. In Spain before moving abroad I lived for two years in Marbella, which although it is different from Monaco, is similar in some aspects of daily life. And I liked Marbella.

Seriously, really the lifestyle in Monaco is no problem at all. From Monday to Friday, I am busy with my business most of the time, going to the gym or going out for drinks or dinner. In any city in the world, be it London or New York, my life during the week would be more or less similar, and I would move around the area where I was living.

On weekends, if Monaco becomes boring after a while, I can go to Cannes, Nice, Italy or even take a plane to many European destinations. And as I said in the previous message, I make several trips a year so I don't feel locked in one place.

I don't like Southeast Asia to live in. Great for a couple of weeks of vacation, but for me the Mediterranean climate is what I like the most. Panama directly ruled out, although it is one of the safest countries in Latin America, security has nothing to do with Europe. And my family lives in Europe, which is another incentive to live in Monaco. It would be less than 2 hours on a direct flight in my hometown from Nice.

In addition to other things like the time zone, since I run my business during European time.

Based on Estonias 20% tax rate, you have made 10MEUR in profits in the last 3 years... So Monaco would be unbeatable probably, i would say go for it.

It all depends on the type of business you are doing, if your customers are from the EU, if you have subscriptions locked in Stripe for example.

All customers in Europe. Some in the European Economic Area and others in other surrounding countries.

A part of the business is subscription based, but can be transferred to another Stripe account or another payment processor.

Not in one day, but it is a transition that can be completed in 4-6 months without problems. Customers are not subscribed to a single product, there are different products/services that are marketed individually (different brands), even if they are currently marketed by the same company.

 

[Konstanz]

If you really have an inclination towards living in Monaco, you may want to try living there for a few months first and see if you like it. After the initial novelty wears out you may find yourself not liking the place.

To be honest, if we talk specifically about tax and cost of living optimization, the best option nowadays is to move out of Europe, especially if you have significant income.

If it's from websites ads or subscriptions, you can easily set it all up wherever you want and live in territorial tax countries like Thailand, Malaysia, Panama, etc. and pay personal income tax on your own terms (usually on remittances, which you can plan accordingly). Spain also doesn't consider the aforementioned SEA countries to be tax havens.

And if you want to spend 250k EUR a year in SEA... well, welcome to Heaven.

I disagree. Thailand, Malaysia, Panama yes it's cheap. But it's not safe and to say politely these are quite poor countries with not what person with 5m+ net-worth is looking for. There is Singapore , but it's not cheap, it has tax and 60% tax on real estate.
The same with Caribbean. Most of these are 3rd world countries. Sometimes it's just enough to see it for week. Really not for everyone. Maybe except Saint Barthelemy, which can be comparable to Monaco.