Structure Holding / Child / Europe / Usa Trademark

[singlelady90]

I am running an international consulting business as self employed (currently living in a high taxes country in EU).

Now I have partners all over the world and we want to go and create a new brand, website etc. Everyone will work from his own country as self employed, I will be the Director of the project. Most of the customers are outside Europe however I do live in Europe for now.

So I was thinking about structure the business and obtain the following goals:

1. Be able to live free and work in anyplace in the world and have low yearly maintenance costs (office rental, structure, accounting , etc)
2. Assets Protection for myself + Assets protection of all income from the business
3. License Franchising to the USA
4. Save a lot of stupid expenses (address,

Can someone suggest me a proper 100% legal and safe structure?
Someone suggested me the following:

1. Holding Company
2. Child Company somewhere in Europe but I need at least substance (one office and a worker)
3. Myself living in my hometown and getting a small dividend + licence royalty from the use of the trademark (which will be registered under my name)
4.Holding Company controlling Child Company 100%
6. Child Company offer a license agreement to a US Delaware Inc (100% Controlled by a US Citizen)
7. US Partner send back to Child Company the Fees (Royalty coming from the Franchising)
8. Child Company makes an agreement with Call Center Extra EU for lead generation (so that the child Company will NOT respond for spam, etc)


I put the schema in attachment.

I am looking for the cheapest solution possible as I really want to be free and do not waste money to keep too much structure.

 

[VESTANON]

@Gediminas ,@CaptK ,and @neweraoffshore to the rescue...highly anticipating the solution to OP request...i know @Admin would also have some valuable input..OCT

 

[neweraoffshore]

This is a little more complex, as you want to do call center operations which conflicts with GDPR and various other marketing rules in Europe. So operating with the callcenter within europe is not recommended. You can have european workers, but the company which is providing the callcenter service should not be in europe.
Most businessman open a callcenter company in Turkey, however every country is ok which can't be practically sued for GDPR and marketing laws violations. (Just contracting a call center to call in your name while the the company for which they call is incorporated in the EU won't work. The EU company will be liable.)
The Franchising, logo and royality invoicing is not recommended. I know that most lawyers are going this approach, but showing the value to not violate transfer pricing rules is almost not possible if your brand name is literally unknown. So if you incorporate in Europe and send high license costs to the US it may get you into trouble. It's better to shift profits with for example website construction invoices, callcenter IT invoices etc. with changing invoice topics.

To give you further advice it would be best to tell us what your callcenter is doing exactly, as there are different rules for example for B2C, B2B. Call center activities are not always forbidden. Just to give you an example: I am running a call center in Germany to sell car parts to garages. This is not forbidden, as their contact adresses are public and car parts belong to their daily business. But if i would sell insurances, i would not be allowed to call garages, as this doesn't belong to their daily business. However there are a lot more rules and laws to take care of. Maybe there is no option for you at all to incorporate in Europe.
And would also be good to know what passport you hold and where you live, because mostly taxes have to be paid where your center of life is, doesn't matter if you incorporate offshore or not. To make the tax saving part legal you have to relocate or become full PT (which gets more and more difficult as you can only get bank accounts with very good connection and high deposits)

I know i say this very often and it should actually be clear. There is no 100% safe and legal structure if you want to pay out money for your daily living, fringe benefits or pay money to your personal bank account without relocating or becoming PT. All offshore approaches (including mine) aim to hide you from tax so you can spend money undetected.

 

[ertes84]

Hi, there are many solutions low price.

 

[JustAnotherNomad]

Everyone will work from his own country as self employed

Where can we find that part in the graphic?

Basically you can’t do any active work for the company in your country if you want to avoid being taxed - and even as a passive investor, it can still be taxed under your country’s CFC rules. You also most likely won’t be able to get the money out from the holding company without paying tax.

Why don’t you just move to a country with lower taxes?

 

[neweraoffshore]

Hi, there are many solutions low price.

If the provider doesn't care about the client, yes.
The 500€ Seychelles company formation ticket to jail... . Bank account at Euro Ponzific Bank included

 

[singlelady90]

This is a little more complex, as you want to do call center operations which conflicts with GDPR and various other marketing rules in Europe. So operating with the callcenter within europe is not recommended. You can have european workers, but the company which is providing the callcenter service should not be in europe.
Most businessman open a callcenter company in Turkey, however every country is ok which can't be practically sued for GDPR and marketing laws violations. (Just contracting a call center to call in your name while the the company for which they call is incorporated in the EU won't work. The EU company will be liable.)
The Franchising, logo and royality invoicing is not recommended. I know that most lawyers are going this approach, but showing the value to not violate transfer pricing rules is almost not possible if your brand name is literally unknown. So if you incorporate in Europe and send high license costs to the US it may get you into trouble. It's better to shift profits with for example website construction invoices, callcenter IT invoices etc. with changing invoice topics.

To give you further advice it would be best to tell us what your callcenter is doing exactly, as there are different rules for example for B2C, B2B. Call center activities are not always forbidden. Just to give you an example: I am running a call center in Germany to sell car parts to garages. This is not forbidden, as their contact adresses are public and car parts belong to their daily business. But if i would sell insurances, i would not be allowed to call garages, as this doesn't belong to their daily business. However there are a lot more rules and laws to take care of. Maybe there is no option for you at all to incorporate in Europe.
And would also be good to know what passport you hold and where you live, because mostly taxes have to be paid where your center of life is, doesn't matter if you incorporate offshore or not. To make the tax saving part legal you have to relocate or become full PT (which gets more and more difficult as you can only get bank accounts with very good connection and high deposits)

I know i say this very often and it should actually be clear. There is no 100% safe and legal structure if you want to pay out money for your daily living, fringe benefits or pay money to your personal bank account without relocating or becoming PT. All offshore approaches (including mine) aim to hide you from tax so you can spend money undetected.

Thanks for your super kind answer.

1.- Call Center will call US Businesses to ask if they are facing problems with Corona and they want to (a) Sell their business OR (b) get a restruction plan. The idea would be to approach also EU Businesses by Email or phone but as we know it is very illegal GDPR so the only way would be a letter by post (according to my legal advisors) what do you think about this? Thanks for sharing your example. So you sell car parts to garage and as garage are in your same businsss niche the law does not prohibite you to send email and make cold calls, correct? I have a French Passport but I spend time in Spain so I keep double residence.
2.- So you are saying that even If we hire a call center in Turkey or oversea and they call on our behalf, this is in EU illegal however in US is Legal. So in EU only mail per post right?
3- I want to keep all income in the holding and make sure the liability of the company (as there are many workers working ob behalf of the company) get stuck at subsidiary level. How to do it in a cost effective way?
4. If the Director of the Inc. in Delaware is a US Citizen (partner), how can we legally make sure they return our licence fees? If they use our brand trademark name for something wrong or they get to court, are we liable in anyway?

 

[singlelady90]

Where can we find that part in the graphic?

Basically you can’t do any active work for the company in your country if you want to avoid being taxed - and even as a passive investor, it can still be taxed under your country’s CFC rules. You also most likely won’t be able to get the money out from the holding company without paying tax.

Why don’t you just move to a country with lower taxes?

Thanks for your comment. Yes I can move to a lower tax country but my mother need medical support so I will need to stay with her many times. How to solve this problem? can I just have a company in a low tax country (with a office which can make substance) and then tax my director salary in my country and get money without any insurance on it thanks to royalties?

 

[VESTANON]

If the provider doesn't care about the client, yes.
The 500€ Seychelles company formation ticket to jail... . Bank account at Euro Ponzific Bank included

@neweraoffshore With you on this, secure offshore services and setups with highlevels of anonymity that works longterm requires major bucks....


Offshore setups with claims of the cheap tag, incurrs nothing but headaches/time wasted/money spent/and worst case scenario no solution or service offered....

OCT members here, who own and operate a longterm offshore setup would as well attest to this..

Final note, nothing about offshoring is cheap, get your funds right, get due diligence done and then Sail Away....

 

[JustAnotherNomad]

Thanks for your comment. Yes I can move to a lower tax country but my mother need medical support so I will need to stay with her many times. How to solve this problem?

You might be able to do this by only spending time in your home country to visit your mother, never working from there - at least on paper. Talk to a tax lawyer from your home country, they should be able to guide you.

 

[neweraoffshore]

If you call from overseas and never incorporate in the EU than you can practically call. Theoretically it's illegal, however if you never appoint an EU representative who is liable for GDPR there is no way someone could sue you. The GDPR "requires" all foreign companies to appoint someone or a company in the EU (calling on behalf of an EU company counts as the appointed company), however US law doesn't force you to appoint an EU company, so no one can practically sue you.

If you want to do it legally, the French and Spanish CFC rules will make the use of any offshore construct useless unless you really left these countries.

For the holding I can recommend Wyoming as they have very good asset protection laws and piercing of the corporate veil lawsuits are very difficult. However you have to use the Wyoming company in a certain way to assure asset protection. Having a holding which can directly "control" a company may allow a piercing of the corporate veil lawsuit. Therefore I wouldn't recommend to structure it as a holding, more structure it separately and shift profits there.

Why do you want to give your logo and trademark out of your hand to someone where you already fear he could misuse it? As you want to do everything legal anyway, you can also have this company on your own name and control it by yourself. Because if you make profits in your "holding" or the "trademark company" wouldn't change anything for you.

Then just keep it simple. Make one US company for the IP, make one for the profits and make one for the daily business operations. Tell your tax authorities about the companies and regularly tax them, or officially relocate. If your business is legal in the US and you are legally allowed to make cold calls in the US you can also phone from the US to Europe (you may get an EU number though, if the provider doesn't require you to appoint an EU representative) and then no one in the EU can sue you regarding GDPR.

Fun fact: All US companies processing customer data from European clients are technically violating GDPR because of the patriot act....lol...

Of course you could merge the IP and profit company to one, as you want to desperately save costs, however for asset protection it is recommended to form one company per asset class or even per asset.

 

[Gediminas]

I am running an international consulting business as self employed (currently living in a high taxes country in EU).

Now I have partners all over the world and we want to go and create a new brand, website etc. Everyone will work from his own country as self employed, I will be the Director of the project. Most of the customers are outside Europe however I do live in Europe for now.

So I was thinking about structure the business and obtain the following goals:

1. Be able to live free and work in anyplace in the world and have low yearly maintenance costs (office rental, structure, accounting , etc)
2. Assets Protection for myself + Assets protection of all income from the business
3. License Franchising to the USA
4. Save a lot of stupid expenses (address,

Can someone suggest me a proper 100% legal and safe structure?
Someone suggested me the following:

1. Holding Company
2. Child Company somewhere in Europe but I need at least substance (one office and a worker)
3. Myself living in my hometown and getting a small dividend + licence royalty from the use of the trademark (which will be registered under my name)
4.Holding Company controlling Child Company 100%
6. Child Company offer a license agreement to a US Delaware Inc (100% Controlled by a US Citizen)
7. US Partner send back to Child Company the Fees (Royalty coming from the Franchising)
8. Child Company makes an agreement with Call Center Extra EU for lead generation (so that the child Company will NOT respond for spam, etc)


I put the schema in attachment.

I am looking for the cheapest solution possible as I really want to be free and do not waste money to keep too much structure.

View attachment 1725

Hey,

The initial proposal does not provide enough information to determine the effective tax rate for the whole structure. As you probably know, royalties are subject to withholding tax in most of the countries, particular rates depend on the country as well as what is written in the Double Tax Treaty (DTA) between this country and the US. I believe a US company is taxed as a corporation in the US (i.e. not as a “pass-through” entity)? If so, DTA should apply, so you need to check the provisions. However, there will be another question – how the US will tax received payments and how will consider payments from the company (any risk for withholding tax?). Moreover, as it was mentioned above transfer pricing rules, CFC, and PE rules are also important. So if the above questions are already answered and the total effective tax rate is acceptable then you need to check only GDPR and related questions. But if not, I would never go with this structure, since it is quite complicated and you need to be sure about all aspects of complicated structure.

At least in my view, a simple alternative might be an operational company outside the EU, not in the blacklisted country. The following aspects need to be considered: PE, CFC, how you take money from that company, and how they will be taxed, legal questions.