Show stopper: Management must be in offshore country

[Macky]

I have consulted offshore company formation with few local tax advisors, everyone says that having me in front of my computer at home and doing SEO for my affiliate websites and at the same time claiming the revenues in offshore country is illegal. (EU laws)

"... business must be conducted from offshore destination they say...."

I cannot afford to pay complicated offshore structure like Google or Facebook Having directors, employees and offices is not needed for automated online affiliate business.

What I am trying to achieve is Privacy + to pay fair share in my home country only WITHOLDING DIVIDEND tax from offshore company profit I move to my private account...

 

[laurie]

I have consulted offshore company formation with few local tax advisors, everyone says that having me in front of my computer at home and doing SEO for my affiliate websites and at the same time claiming the revenues in offshore country is illegal. (EU laws)

That's it , doing offshore is legal what is illegal is not to declare revenues when they have to be declared.
If the Tax Office find out that the activity is not really performed offshore they will settle the effective place of business onshore. That's why when you invoice from a company located in Delaware, Seychelles, Cyprus (ect...), you take a risk as Tax Office look at them with suspicion.

A very used trick reside in the use off reputable jurisdictions with no/low taxes such as UK, Ireland, Singapore, HK, NZ to name a few to act as a facade in your offshore set-up.

If you want help, you will need to disclose where you reside and where are your client.

 

[diablo]

If the Tax Office find out that the activity is not really performed offshore they will settle the effective place of business onshore. That's why when you invoice from a company located in Delaware, Seychelles, Cyprus (ect...), you take a risk as Tax Office look at them with suspicion.

exactly what happens and how the tax office see it! You need to Consult a local tax advisor or consultant to help you if or once you enter into discussions with your tax man.

A very used trick reside in the use off reputable jurisdictions with no/low taxes such as UK, Ireland, Singapore, HK, NZ to name a few to act as a facade in your offshore set-up.

This will require a real office and some sort of rented staff, it's not very expensive but most often too expensive for the average Joe !

 

[negon]

If you want help, you will need to disclose where you reside and where are your client.

actually that would help, agree....

 

[Milky Moon]

How to Have an Offshore Company with Substance.
White Paper: Investment Funds – Why Substance Is Key - Wealth Management - Guernsey

Most of high tax western europe.

The 'newest' route is finding out where 'decisions' are made:
- In the offshore country -> offshore company.
- In the home country -> you are tax liable in your home country (they will not care about the offshore company)

 

[Macky]

Many thanks to auric, diablo, laurie, Milky Moon who want to truly help !

I have tax residence and nationality in Eastern Europe but unfortunately we are part of AEOI and European Union too.
My clients are binary options brokers who reside mostly in Cyprus or Gibraltar but can send money anywhere.
From what I saw my country has signed Double Tax Treaties with UAE Emirates, Cyprus and Malta, USA, UK and all 28 EU states.

Profit tax in my country is 28%

What do u suggest please ?

 

[Brutus]

A nominee in the offshore jurisdiction would solve this issue. The nominee would act as management on paper, but of course you control all of their actions.

 

[Milky Moon]

A nominee in the offshore jurisdiction would solve this issue. The nominee would act as management on paper, but of course you control all of their actions.

This fails the 'dicision' test, so would would potentially still be considered illegal.

Using a nominee with 200+ 'in office companies' ofcourse will not raise any flags

 

[Brutus]

This fails the 'dicision' test, so would would potentially still be considered illegal.

Using a nominee with 200+ 'in office companies' ofcourse will not raise any flags

That would be very hard to proof, although I agree with your 2nd point.

OP if you live in a country that has low tax on dividends like some EU countries do, dividends might be a potential setup route.

 

[laurie]

You may be expected to prove that you are not managing the company (No management of the Bank Account, No power of Attorney).

You may have to proove that he is effectively a decision to get an effective decision maker you will need more than a "nominee".

In many EU countries you would be expected to prove your good faith.

 

[Macky]

A nominee in the offshore jurisdiction would solve this issue. The nominee would act as management on paper, but of course you control all of their actions.

I would say nominee does not solve the problem, as long as I am UBO of bank account.

 

[Macky]

That would be very hard to proof, although I agree with your 2nd point.

OP if you live in a country that has low tax on dividends like some EU countries do, dividends might be a potential setup route.

Brutus, yes dividend tax is very low here. Yes my original idea was to move dividends *profit share* to my home country bank account at the end of fiscal year and claim it to tax office and pay only dividend tax. But then the question is, how to proove in case of questions, that effective place of business is really in offshore.... since we talk about really passive "hands-off" affiliate type of business, it will be difficult or easy to proove that decision maker is abroad ??

Or 2nd idea is to incorporate quickly in jurisdiction like Delaware (incl. USA bank account) which does not report to AEOI ??

 

[icecold]

Most of high tax western europe.

The 'newest' route is finding out where 'decisions' are made:
- In the offshore country -> offshore company.
- In the home country -> you are tax liable in your home country (they will not care about the offshore company)

Is this new or just new to this thread ?

then the question is, how to proove in case of questions, that effective place of business is really in offshore....

Management and shareholders need to be located in the offshore jurisdiction, solution, nominees but not just nominees you need a professional agent that will act on behalf of the company.

Or 2nd idea is to incorporate quickly in jurisdiction like Delaware (incl. USA bank account) which does not report to AEOI ??

problem will be how to get the bank account it's not easy if possible at all for non us citizens

 

[Milky Moon]

The whole idea of offshore corporation is that you are a mere shareholder.

All the 'action' takes place in the offshore location. So people hire a real office, hire a cheap clerk just to show there is substance to the claim there is a real company 'over there'. Still some tax authorities have a feeling there is more to it than that, so they 'invented' the discision argument. They now state the difference between a mere shareholder (of for instance Shell) and a shareholder of a offshore company it that the former has no say in the day-2-day business while the latter decides on the day-2-day business activities as if he were there. Therefore the latter should be fully tax liable in the home country.

So having an office and employees alone is not a free out of jail card. You now also have to prove that the descision center is in the offshore location -IF- the tax man requests that.

 

[mnschwarz]

I have consulted offshore company formation with few local tax advisors, everyone says that having me in front of my computer at home and doing SEO for my affiliate websites and at the same time claiming the revenues in offshore country is illegal. (EU laws)

"... business must be conducted from offshore destination they say...."

I cannot afford to pay complicated offshore structure like Google or Facebook Having directors, employees and offices is not needed for automated online affiliate business.

What I am trying to achieve is Privacy + to pay fair share in my home country only WITHOLDING DIVIDEND tax from offshore company profit I move to my private account...

This entire thread is speculative without knowing your country of residence as @auric also mentioned. The main issue to be discussed is CFC laws. Your country may or may not have them. Once you work that out you can consider your options better.

 

[icecold]

The whole idea of offshore corporation is that you are a mere shareholder.

All the 'action' takes place in the offshore location. So people hire a real office, hire a cheap clerk just to show there is substance to the claim there is a real company 'over there'. Still some tax authorities have a feeling there is more to it than that, so they 'invented' the discision argument. They now state the difference between a mere shareholder (of for instance Shell) and a shareholder of a offshore company it that the former has no say in the day-2-day business while the latter decides on the day-2-day business activities as if he were there. Therefore the latter should be fully tax liable in the home country.

So having an office and employees alone is not a free out of jail card. You now also have to prove that the descision center is in the offshore location -IF- the tax man requests that.

Do you know of an agent who can setup all of this "cheap" ?

 

[DrKlau]

Do you know of an agent who can setup all of this "cheap" ?

I have been looking for an agent who can setup all of this "expensive" and I can find none!

 

[Milky Moon]

I have been looking for an agent who can setup all of this "expensive" and I can find none!

You need to look for a tax lawyer or accountant to set this up properly.