Transferwise - Belize company - Registering issues

[sergeylim88]

Hello, I own a Belize company with bank account in Cyprus.
Till this year my PayPal company account was working fine. I had to issues receiving and withdrawing money from it. This year, my PayPal couldn't receive any money, so right now I am looking for an alternative for the customers to send me payments using credit cards.
I process around 10 payments a month, all of them are above 2k USD, but under 10k USD.

I decided to use TransferWise. I was able to register the account there and I sent them all the data they required (cert.of incumbency, cert.of good standing, copy of my passport...).

Now they ask me to send them a proof of operational address for business outside of Belize.
That can be a utility bill for the company, bank statement that has an address outside the Belize...but the thing is, I don't have anything like that.

Did you guys ever had a problem like this setting up TransferWise account? How did you solve it? Did I make a wrong step that could have caused this thing?

 

[Tepesch]

I have heard from a corporate service provider that Transferwise now sometimes request the utility bill for operational business address for offshore corps. Seems like they started doing int recently. Do they request a utility bill in the name of the company - or would a utiliy bill in your personal name also do the trick?

Also how did you get the bank account in Cyprus for your Belize Company?

 

[sergeylim88]

I have this company for quite long time (more than 2 years), and back than there wasn't any problem to open bank account in Cyprus.
Problems started in 2018.

TransferWise asks for utility bill on company's name, and location has to be outside Belize.
I can not give them my personal utility bill since they will not accept it.

 

[Tax Cow]

If your company has no address or permanent establishment, then YOU as the ultimate beneficial owner are the permanent establishment. Send them your personal utility bill, voting card, personal bank statement or similar...

 

[Tax Cow]

I have this company for quite long time (more than 2 years), and back than there wasn't any problem to open bank account in Cyprus.
Problems started in 2018.

TransferWise asks for utility bill on company's name, and location has to be outside Belize.
I can not give them my personal utility bill since they will not accept it.

Whether they accept it or not is not up to them to decide. Give them an explanation. Sometimes the low level financial workers are not competent. It's by OECD framework that place of management can be considered effective business address. You only should be concerned at this point if you gave them conflicting information about your business residency when first opening an account. And for whatever reason they may also decide to not work with offshore companies that have "low substance" due to higher risk profile.

 

[sergeylim88]

So, if the place of management is my home country, where I personally live, could this cause any problems to me tax wise?
My sole point is that all the money belongs to company, I don't issue any dividends, but I am beneficial owner.
I was thinking that if the banks report to my home tax authorities, I just tell them the money belongs to company and that I didn't issue any dividends therefor there is no personal income tax.
Company profit tax is paid at rate of 0% in Belize.

Any comments on this from experienced people? Did I make these assumptions right?

 

[Tax Cow]

So, if the place of management is my home country, where I personally live, could this cause any problems to me tax wise?
My sole point is that all the money belongs to company, I don't issue any dividends, but I am beneficial owner.
I was thinking that if the banks report to my home tax authorities, I just tell them the money belongs to company and that I didn't issue any dividends therefor there is no personal income tax.
Company profit tax is paid at rate of 0% in Belize.

Any comments on this from experienced people? Did I make these assumptions right?

If this did not cause tax issues, then everybody would incorporate in 0% jurisdiction.

You are correct in assuming that your home country will likely want to tax your offshore company the same way local companies are taxed (usually under CFC rules). Having undisclosed offshore companies and bank accounts does not work any more. Flying under the radar was relatively safe in 80's and 90's. Now it's only relatively safe as long as your account balance is uninteresting for your local tax office.

In case of dispute, you will need to demonstrate to your local tax office that your Belizean company is indeed operating a real business in Belize (employees, real office, etc. - this is called substance)

 

[negon]

So far didn't noticed any troubles with transferwise and Belize companies. At least not for current active accounts.

 

[AMD]

In case of dispute, you will need to demonstrate to your local tax office that your Belizean company is indeed operating a real business in Belize (employees, real office, etc. - this is called substance)

That is what apply worldwide right?

 

[Tax Cow]

That is what apply worldwide right?

Not all but most of the world. And since 2000's many barely solvent socialist hellholes in EU have started making rules even stricter. Having a real office, all employees and all of business activities take place in an offshore jurisdiction might not be enough to bypass local reporting and taxation (if you're the sole shareholder and director living in the socialist state). As companies like KPMG, Deloitte, PwC, EY come up with new legal tax optimization plans for their clients, the bankrupt hellholes come up with more obstacles, bloating the tax code with 100 new pages of situational content. The most viable legal option is to move yourself as well as the business in a country where you find the tax rate to be acceptable.

 

[sergeylim88]

Thanks for the information.
I guess I will have to pause the TransferWise for now.
Xzars can you take a look at another thread of mine located on: Looking for the best solution

 

[negon]

Not all but most of the world. And since 2000's many barely solvent socialist hellholes in EU have started making rules even stricter. Having a real office, all employees and all of business activities take place in an offshore jurisdiction might not be enough to bypass local reporting and taxation (if you're the sole shareholder and director living in the socialist state). As companies like KPMG, Deloitte, PwC, EY come up with new legal tax optimization plans for their clients, the bankrupt hellholes come up with more obstacles, bloating the tax code with 100 new pages of situational content. The most viable legal option is to move yourself as well as the business in a country where you find the tax rate to be acceptable.

I agree so much with this!

Or you simply base your business on darks and do a rense and repeat model!

 

[AMD]

Not all but most of the world. And since 2000's many barely solvent socialist hellholes in EU have started making rules even stricter. Having a real office, all employees and all of business activities take place in an offshore jurisdiction might not be enough to bypass local reporting and taxation (if you're the sole shareholder and director living in the socialist state). As companies like KPMG, Deloitte, PwC, EY come up with new legal tax optimization plans for their clients, the bankrupt hellholes come up with more obstacles, bloating the tax code with 100 new pages of situational content. The most viable legal option is to move yourself as well as the business in a country where you find the tax rate to be acceptable.

thank you! it means I will have a need to setup real office, real staff and real director in Belize so it will work?

 

[Tax Cow]

@AMD. Those are the basic minimum requirements if you want to be OK'd by your local tax office to have your offshore entity tax exempted.

But then you need to consider the costs. Offshoring like that will generally not make sense unless your annual revenue is 250K and up. An employee on minimum wage and a small rented hut with a roof that leaks rainwater will not do. In case of investigation, it will be obvious that the whole operation is a masquerade and actual business value is created elsewhere. Tax investigators should not be taken for idiots.

If you run multiple businesses that each generate less revenue, I'd probably consider darks and/or flying under the radar strategy. Yes, the line of legality will be crossed but if you manage to keep it up for a few years and generate enough revenue, you will eventually have enough to re-arrange into a fully legal setup.

 

[Tax Cow]

Fun fact: Sir Richard Branson started his entrepreneur life by illegally avoiding VAT for many years. Now he's fully legal and a reputable business tycoon.

 

[AMD]

Thank you @xzars it makes sense.

 

[Tepesch]

Same situation for me they didnt accept utility bill in my own name even though I explained it is an Online Business. They want utility bill in company name.
You think if I mention a big turnover they will reconsider?

 

[JohnLocke]

Same situation for me they didnt accept utility bill in my own name even though I explained it is an Online Business. They want utility bill in company name.
You think if I mention a big turnover they will reconsider?

Usually not, that will even make the entire situation more worse for you.