UK online biz, where to move?

[chaplin]

Hi all,

So I'm pretty sick of living in the UK. I want a change, somewhere warmer and somewhere I can pay less tax. Doesn't even need to be full-time. Maybe just part-time outside the UK in winter.

I run an online education business so I'm lucky in that I can live anywhere. My primary income is from a couple of US marketplaces and this is classed as royalties so subject to a Withholding tax of 30% unless I am somewhere with a treaty such as the UK where I am now.

I also have my own website which will be the main focus in the future.

At the moment I pay dividends and income but I'm pretty much maxed out on this and any more will mean 40% tax. There are also raises in corporation tax coming not to mention the general cost of living increases in the UK.

So where do I go? I thought about Dubai and a free business but then I will be subject to 30% withholding. Is there a way to go via my UK business to get the best of both worlds?

What other treaty countries are there that may be attractive? I'm not really trying to pay 0% but don't want to be in 40% either.

 

[Marzio]

I guess you are receiving royalties from Amazon or something like that, if that's the case you could potentially pay 0% tax by moving to Georgia.

Georgia, from US point of view, is part of the old USSR treaty so withholding tax will be 0% and since Georgia is a territorial taxation country for individuals, all royalties received from Amazon or similar will be tax free.

Not bad, right?

It's not warm by any means but if you don't live there full time.

 

[chaplin]

I'm not sure that's a part of the world I want to be in right now.

I'm interested in this idea of not living somewhere full-time but being there for tax purposes. though. My ideal location would be the USA but hard to get a visa and if you do get a green card you are stuck with paying US taxes wherever you go.

Maybe Malta or Cyprus would be better.

 

[Marzio]

I'm interested in this idea of not living somewhere full-time but being there for tax purposes.

That's what i was talking about.

How much are you earning?

If you earned at least 60K in the last 3 years you can apply for HNWI program and be tax resident in GE without spending time there.

Malta or Cyprus would be better

Malta has a 10% US withholding tax on royalties to begin with.

Cyprus has a 0% WHT and 60 days minimum stay to be considered tax resident as a non dom BUT you have to start a LTD and all the hassle that goes with it (accounting, audits, paying taxes).

 

[chaplin]

If you earned at least 60K in the last 3 years you can apply for HNWI program and be tax resident in GE without spending time there.

Yes, more than that a year.


Thanks, there seems to be pro's and cons to all options. I need to put together a list.

 

[Mr Gus]

Both Malta and Cyprus are great options for you, both have a tax treaty with the UK as well as with the US.

Climate in Cyprus and Malta is pretty similar and a lot of UK influence in both countries.

You can use the UK Statutory Residence Test Flowchart to see when you will be tax resident in the UK.

In Cyprus you will pay around 12.5% + 2.25% and no withholding taxes.

In Malta you will pay 35% with a 6/7 refund but with 10% withholding taxes, however you can get a tax credit for taxes paid abroad.

Example: 100K revenue

10% withholding tax = 10K
35% corporate tax at 90K = 31.5K

Now you will get a tax credit for the 10K so you are left with 21.5K and on that amount the 6/7 refund will apply so you are left with 3.071 in corporate tax.

So in total you will pay the 10K + 3K in corporate tax leaving you with an effective tax rate of 13% in Malta and 14.5% in Cyprus.

 

[kekmaw]

US/UK Partnership + Georgia residency (through HNWI program and spend like no time in Georgia itself) = 0% tax and quite low costs to maintain.

Or am I missing something for the more seasoned tax experts?

 

[Marzio]

Or am I missing something for the more seasoned tax experts?

Not really, that's the same advice i gave.

 

[Mr Gus]

Yeah the Georgia setup is a great option if you want to achieve zero tax since there is no LOB clause in the tax treaty between US and Georgia. However you will have to make sure you will not trigger tax residency somewhere else.

 

[matihop]

Hi, I'm also changing the country. I'm moving from Poland to Mexico. For me more important is the factor how is the life in the targeted country. I think Mexico can offer a very good life. From the tax perspective, CIT is high: 30%, but dividends are low: 10% if the source is from abroad. So, the best idea for Mexico could be the ltd company in a low CIT tax country + 10% dividends for Mexico.

 

[Mr Gus]

Hi, I'm also changing the country. I'm moving from Poland to Mexico. For me more important is the factor how is the life in the targeted country. I think Mexico can offer a very good life. From the tax perspective, CIT is high: 30%, but dividends are low: 10% if the source is from abroad. So, the best idea for Mexico could be the ltd company in a low CIT tax country + 10% dividends for Mexico.

Why even bother paying taxes there? It's f*cking Mexico

 

[chaplin]

Is that government taxes or cartel taxes?

 

[JimBeam]

Both Malta and Cyprus are great options for you, both have a tax treaty with the UK as well as with the US.

Climate in Cyprus and Malta is pretty similar and a lot of UK influence in both countries.

You can use the UK Statutory Residence Test Flowchart to see when you will be tax resident in the UK.

In Cyprus you will pay around 12.5% + 2.25% and no withholding taxes.

In Malta you will pay 35% with a 6/7 refund but with 10% withholding taxes, however you can get a tax credit for taxes paid abroad.

Example: 100K revenue

10% withholding tax = 10K
35% corporate tax at 90K = 31.5K

Now you will get a tax credit for the 10K so you are left with 21.5K and on that amount the 6/7 refund will apply so you are left with 3.071 in corporate tax.

So in total you will pay the 10K + 3K in corporate tax leaving you with an effective tax rate of 13% in Malta and 14.5% in Cyprus.

Could he setup a company in UK (or somewhere else) and then use Malta's non-dom and just pay €5k flat on the first €35k he remits to Malta?

 

[Marzio]

Could he setup a company in UK (or somewhere else) and then use Malta's non-dom and just pay €5k flat on the first €35k he remits to Malta?

It won't work because he needs to incorporate a company in a country that has a DTT with US, that has 0% WHT on royalties and no LOB clause.

In his case the easiest solution is Georgia.

 

[Mr Gus]

Could he setup a company in UK (or somewhere else) and then use Malta's non-dom and just pay €5k flat on the first €35k he remits to Malta?

No just like what @Marzio said. There is a LOB clause in the tax treaty between the US and Malta and 10% withholding tax.

Potential other option is the Greek 100K flat tax, however very costly. There is also no LOB clause in the US-Greece tax treaty.

Bulgaria is also an option leaving you with 7.5% tax because of tax credits given.

 

[Luxxxtino]

Hi, does anyone know if the 30% withholding would also apply to Amazon.com FBA businesses run out of, say, UAE companies?

 

[Marzio]

No because you are not receiving FDAP income