Seychelles IBC owned by Estonian company setup?

[coolosrs]

So, I'm a PT citizen and PT tax resident.

I'm a software developer and I've recently finished my product, which I would like to sell worldwide. To do this, I will be using "Paddle" as a Merchant of Record (meaning customers will be purchasing my product through Paddle, and Paddle handles all sales tax/compliance/etc.). Paddle is a UK entity.

First and foremost, I'm not looking to evade tax authorities in Portugal. However, I do not want to disclose my name in any public registries.

To do this, I was thinking about:

- Becoming an Estonian e-resident and incorporate there. This would allow me to receive payouts from Paddle into a Transferwise business bank account without any problems.
- Registering a Seychelles IBC with nominee director. The IBC would be owned by the Estonian company. This would allow me to get SSL certificates and Code Signing certificates, under my Seychelles IBC. The website's product would also show the Seychelles address, Seychelles phone number, etc. Anything that is public would have Seychelles data.

Would this work, in your opinion? Would it be better to have nominee shareholder as well? Or no nominees necessary at all? I was wondering if nominees would be necessary at all, as I'm not planning to hide from tax authorities (just from curious people/competitors)

If my interpretation is correct, I'd "only" pay 20% dividend tax when distributing profits from Estonia into my personal account in Portugal (there's a double taxation treaty).

This would be a first setup. Once revenues start going up considerably (i.e. a year or two) the plan would be to incorporate in UAE and get a residency visa, which from what I've read would allow me to get 0% tax and privacy. I would then dissolve the Seychelles IBC.

Thank you very much for your time.

 

[Martin Everson]

If your selling a product to the public why do you want to hide your identity?

 

[coolosrs]

So my personal identity isn't visible to competitors or curious people.

 

[Martin Everson]

Sounds ok in theory. But plans seem a bit overkill just to hide your name. Not to mention the banking issues you will have to deal with in 2021 for such a setup.

 

[coolosrs]

What kind of banking issues would I have considering Paddle would be sending payouts to Estonian company (with TW business acc)? Seychelles IBC would be used for all public-facing information, but payouts would go to EE.

It does seem a bit overkill, I agree, but it's cheaper than going with a UAE setup and I can't afford UAE setup right now.

 

[Martin Everson]

Ok so you plan on saying nothing to TW or Paddle about the setup with the Seychelles company in that case? Then the Seychelles company will just be to have client facing duties and the EE company will be just the processing company? You don't think Paddle or TW will do a spot check at some point? I am just trying to figure what info you will give TW for this to work. Seems an easy way to get your account blocked if you don't explain full picture to them.

 

[coolosrs]

I'm not sure how TW KYC process works for businessess (I currently only have a personal account there), but for TransferWise it'd be a "Estonian e-commerce/software company". I also do some freelancing on the side so I could use the Estonian company for that too.

Paddle theoretically shouldn't be a problem as I have a competitor which has an Austria address on website (a "Shipito" address), a USA SSL/Code Signing Certificate and they run on Paddle as well, so I don't think they check if "address on website" matches "address on payout settings".

Spoiler

The way I see it, even if TW blocks me at some point, with an EE company there are 10's of EMIs I could use. On the contrary, with a Seychelles IBC options are quite limited.

 

[UndividedNomad]

Wouldn’t your Estonian company be considered a PT tax resident company under permanent establishment rules? And hence taxed at PT rates?

 

[Don]

Without a proper structure, yes.

 

[coolosrs]

That's pretty much the only issue I have right now (besides knowing if this setup would actually work), and I have to confirm it with a PT fiscal lawyer.

 

[troubled soul]

UAE will be the best option for that .
Zero tax .
But keep in mind that Freezone Corp registration will be expensive .
If you have high figure income than than it is worth .
$4000+ USD will be a license fee.

 

[fshore]

Are you sure you need that kind of ssl, why not just a common ssl certificate from letsencrypt etc.
You don't have to put an address on the website.

 

[coolosrs]

U

UAE will be the best option for that .
Zero tax .
But keep in mind that Freezone Corp registration will be expensive .
If you have high figure income than than it is worth .
$4000+ USD will be a license fee.

As I said above, I can't afford a UAE setup at this time so I have to look into alternatives.

Are you sure you need that kind of ssl, why not just a common ssl certificate from letsencrypt etc.
You don't have to put an address on the website.

The SSL isn't an issue, as I can just use CloudFlare Universal SSL. The issue is the "Code Signing Certificate" which is used to digitally sign software. Those are Organization Validated.

 

[Don]

You are probably best off with Georgia IT licensed company using nominees. Pay 5% tax legally with Portugal residency. No CRS or public UBO register.

 

[Martin Everson]

People missing the point talking about tax. He stated clearly his issue is not tax related but privacy related (see quote below).

First and foremost, I'm not looking to evade tax authorities in Portugal. However, I do not want to disclose my name in any public registries.

I'm not sure how TW KYC process works for businessess (I currently only have a personal account there), but for TransferWise it'd be a "Estonian e-commerce/software company". I also do some freelancing on the side so I could use the Estonian company for that too.

Opening process for an Estonian company is actually straight forward and approval process is quick if plain vanilla business with single shareholder, director and activity. Biggest issue is if you have multiple clients, streams of income and have a website etc they do look at site and may periodically look at it I guess.

 

[Don]

Yes, opening a company in Estonia is a very simple process, but I don't really see any benefit if you create a structure abroad with no substance and not getting any tax benefits. In this case, you might be just creating more bureaucracy for yourself.
Why not then incorporate a company in Seychelles for certificates and receive payments to your company in Portugal?

 

[coolosrs]

To be quite honest, the only reason why I'd need the Seychelles company is to be able to have a Code Signing Certificate which has no links to me personally as they contain the corporation information which needs to be VALIDATED. I can't just request a Certificate to "FluffyDogs&Cats Inc." or whatever fictional name.

Everything else can be done "privately" via TW (or another EMI) and Paddle (or another PSP/Merchant of Record), as they don't disclose info to "normal people" (and if they do to govt authorities, that's fine as I'm not hiding anything).

The issue with paying out directly to a company in Portugal is:
- The HUGE amount of bureaucracy;
- The fact that companies here are taxed based on their profit at the end of every fiscal year. Here in Portugal, in December, you can see a lot of company owners trying to create expenses (by purchasing cars f.i.) so that their profit as low as possible.

An Estonian company would allow me to keep growing as much as I can and only be taxed when I distribute dividends or take a salary (which I don't plan on taking since I'm already employed, this is a side gig from which I'd only be distributing dividends).

Also like I said initially, I'd only keep this setup for a year or two until I feel like revenues have grown enough for me to get a UAE setup, which would be long-term.

 

[fshore]

An Estonian company would allow me to keep growing as much as I can and only be taxed when I distribute dividends or take a salary (which I don't plan on taking since I'm already employed, this is a side gig from which I'd only be distributing dividends).

Did you think about that the estonia company would be tax resident in Portugal?

 

[Martin Everson]

Did you think about that the estonia company would be tax resident in Portugal?

Thats very true but one also needs to read the terms of the double tax agreement between Estonia and Portugal also.

 

[coolosrs]

That's definitely an aspect I'd need to take into account.

I just had an epiphany (or maybe it's just a dumb thought, you tell me). Instead of going with a Seychelles + Estonia Setup, I'd go with a Wyoming + Portuguese company setup OR a dual Wyoming setup. Why?

It seems that I can incorporate a Wyoming LLC with minimal requirements. Keep in mind the Wyoming LLC doesn't need EINs nor Bank Accounts. I just need a formed LLC with a verifiable street address (registered agent) and a Yellow Pages entry for phone verification with a Skype U.S. phone number f.i.. This LLC will have no revenue nor clients nor nothing. From what I've read some registered agents don't request ID copies or anything, so this LLC could be owned by "Donald Duck" or whatever. Alternatively I could use darks.

Then:
a) I'd just use my PT company for Paddle, and get paid directly into my company bank account. Wouldn't even need Transferwise.
b) Or I could use a second "properly setup" Wyoming LLC with EINs etc etc and a Mercury corporate account, and distribute dividends to myself.

Dumb Thought?